Target costing is most effective at reducing costs if used during the product design phase.

Question

Quizplus · Accepted Answer

Target costing involves setting a target cost for a product and then working backward to determine how to meet that target cost while still maintaining the desired level of quality and functionality. During the product design phase, it is easier to make changes and design the product in a way that meets the target cost. Once the product has been finalized and production has begun, it becomes more difficult and costly to make changes to reduce costs. Therefore, target costing is most effective when used during the product design phase.

Target Costing Is Most Effective at Reducing Costs If Used