CONSIDERATIONS REGARDING TERGET COSTING METHOD APPLICATION WITHIN THE ELECTRICAL LIGHTING INDUSTRY

Mihaela Stefan () and Florina-Laura Sandru ()
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Mihaela Stefan: Universitatea 1 Decembrie 1918 Alba Iulia Facultatea de Stiinte Economice
Florina-Laura Sandru: Universitatea 1 Decembrie 1918 Alba Iulia Facultatea de Stiinte Economice

Annals of Faculty of Economics, 2017, vol. 1, issue 2, 85-94

Abstract: This article aims to highlight the Target Costing method, and the possibility that it may be used in the electrical lighting industry. The article analyses the Target Costing concept method starting from speciality literature, right since the time of the method so far.By careful examination of the literature it is shown that this method actually is a method of management for economic entities.To correlate the speciality literature, the financial results have chosen as example, by implementing the method of electrical lighting equipment industry within the economic entity Electromax S.R.L. By applying Target Costing method, the company plans in advance the stages of price, cost and product targets which they want to achieve. If a product can not comply with these criteria then the product will be phased out completely. This method is a powerful tool that the management team can use to monitor the products entering the design team and all the product’s life cycles. Target Costing method allows planning the cost of products before they are placed into production, which allows products whose margins do not generate profits or generate insufficient profits not to be placed into production. Specifically with Target Costing method, producers will be able to monitor and control the various stages of the product life by analysing its costs from its definition phase, depending on its characteristics and its selling price. Applying the Target Costing method within the economic entities in the industry of electrical lighting, as a method of cost calculation, will help to ensure that new products will be profitable throughout its life cycle, allowing tracking of costs over its lifecycle, comparing them between forecasts and achievements, and reporting to the retail price competition. With Target Costing, the term of the product design will be reduced, the development costs can be lowered and in this way it ensures swift amortisation thereof, allowing for better organisation of relations with the suppliers and customers of the economic entity; providing mobilisation and motivation of all powers within the economic entity, through an approach that allows for greater competitiveness.

Keywords: Target-Costing; light fixtures; managerial accounting; profit target (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2017
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