target costs

Cost Center Accounting (CO-OM-CCA)

Costs that are expected to arise in connection with the performance of a particular activity.

Target costs are calculated using the planned costs for the cost center and the planned costs for the activity to be performed. The target costs are then compared with the actual costs for the period.

Product Cost Controlling (CO-PC)

Costs expected to be incurred when a given quantity is produced.

In Cost Object Controlling, the target costs are calculated on the basis of the planned values of a service unit (such as the planned cost of a production order) and the control quantities (such as the yield delivered to stock).

Target costs can be used for purposes such as the following:

To determine variances

To valuate work in process

To valuate unplanned scrap

Activity-Based Costing (CO-OM-ABC)

Costs expected to arise in connection with the performance of a particular activity.

In Activity-Based Costing, target costs are calculated using the planned costs of the business process and the activities to be performed. The target costs are then compared with the actual costs for the period.