Studies On Target Cost Management Theory And Application

In the era of information and global economic integration, there's no getting away from the vigorous market competition. In the competition, lower price is one of the important competitive means, the key of price competition is cost, price competition is cost competition. At present, most state owned enterprise are inefficient and afford the pressure of economic globalization in our country, they need to find a perfect and effective method of the cost management in order to manage the cost effectively, increase their competing power and economic benefit. Target cost management is one of the modern cost management methods. At the present day, this method has been adopted widely in many industries in the world. This paper based on the target cost management theory innovate the target cost management model, in order to update the old cost management theory and improve it. Target cost management is a pricing method based on marketing and market competition. It shows the market oriented for being calculated by competitive market price and target profit, at the same time, the target profit shows the of the enterprise sustainable development which combine business strategy with market competition. The model of target cost management include: target cost prediction, target cost decision, target cost plan (division), target cost carrying out and control, target cost calculation, target cost analysis, target cost evaluation and so on. In this model, the target cost should include all expenses in order to realize the target profit, the target cost worked out should be scientific, effective, competitive and combine with the enterprise developing strategy, the approach to realize the target cost should be thought to utilize the value engineering and the Activity Based Costing Management, and this paper analysis the real situation of the 3511 factory's cost management, put forward the suggestion to perfect the target cost management model.