Reducing costs in manufacturing firms by using target costing technique
by Hamood Mohd. Al-Hattami; Jawahar D. Kabra; Murlidhar A. Lokhande
International Journal of Business Excellence (IJBEX), Vol. 22, No. 1, 2020

Abstract: The main study purpose is to explore: 1) whether the use of traditional methods leads to higher costs; 2) whether the use of target costing technique leads to lowering costs and increasing the profit margin of the firm. This paper is based on case study data, collected at one manufacturing firm (furniture). Target costing is a relatively simple technique and easy to understand and apply, although it has a significant impact on the profitability and competitive advantage of firms. The major study results include the following: 1) cost-based pricing in the factory leads to higher prices and an inability to compete; 2) the application of the target costing technique led to achieving a reduction in costs to the target reduction using tear-down analysis and value engineering. Moreover, it is also possible to confront local and foreign competition in a clear and orderly manner. The study also concluded that this technique has succeeded in lowering costs when applied in the factory (the study sample).

Online publication date: Wed, 02-Sep-2020

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Business Excellence (IJBEX):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email