Using target costing as a tool in strategic cost management and a case study

11 ABSTRACT Today companies are forced to fullfill their cost, time and quality objectives spontaneously and at maximum level due to competitively intense nature of the market and decrease of product life-cycle. Because of this they are required to present their products with higher quality, faster and at lower costs to the market when compared to their rivals in order to meet customer needs and expectations. Companies are in an effort of increasing their profits by the least cost. This effort forces companies to give importance on the cost and use accurate and reliable costing systems. In this respect, Target Costing approach which concentrates on the product design and development phases on the basis of integrating competitive elements such as quality, cost, time and avoiding costs before they occur has been developed. Target Costing is a market based approach which intends to provide the context of manufacturing according to target cost settings previously made with keeping the major elements of the product such as quality and functionality at optimum level, in the market context of our day in, which the customer needs and requests have the priority. Target Costing is a market-based approach and it considers product costing process from a wide perspective compared to traditional costing systems. Accordingly, Target Costing accepts customer expectations as its start up point for the product definition and attempts to harmonize the expectations and products' technical specifications. Main purpose of this study is to examine Target Costing approach within contemporary costing approaches Target Costing approach has strategic costing interpretation. In this manner, considerations on Target Costing approach from the theoretical point has been examined in detail and an application is included in the study.