A US manufacturer of personal home care products used target costing as a cost-control tool during its product and process design for its new product introductions. The company decided to launch a liquid hand soap containing Vitamin E and then: 1. Surveyed competitor prices to establish a target selling price; 2. As the company required a 46% contribution margin, it subtracted the product's contribution margin from its selling price to calculate the target cost; 3. Assigned cost targets to each ...
BPIR Categories5.1.1 Plan key production & delivery processes
3.6.1 Manage product/process/service development
2.1.1 Analyse & understand competition