: Cost Management; Strategic Decision Making
Cost management is one of the responsibilities given to management of the company. Every business organization incurs costs in the production of goods and services. The company should manage it costs so that it is in position to make profits. From accounting concepts, profit of the company is the amount of revenue that exceeds costs incurred by the business. Incase the costs of the company exceeds the revenue that the business receive, the business will be running at a loss and thus it is not feasible to continue the operation. In a nut shell the company should endeavor to reduce costs and maximize revenue. Thus there are techniques that the businesses apply to manage costs which include target costing, product-specific costing, general costing, functional-group management and the product costing (Leonard, 2005).
Target costing
The target costing technique of the cost management is applied by the companies during the design stages of the products. In this technique, the product engineers redesign the product in such a way that the cost is reduced at the same time ensuring that the product quality and quantity is enhanced
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