Target Costing Calculator
Calculate target cost from a target price and either a profit amount or profit margin, then compare estimated cost.
Choose exactly one target-profit method: amount or margin percent. The cost gap is estimated cost minus target cost; positive means above target. Currency is user-defined and must be consistent.
Manual inputs stay in this browser. No external data is fetched.
Sources: OpenStax, Principles of Accounting, Managerial Accounting: Target Costing
Result
A QUICK WALKTHROUGH
How to use this tool
- Choose exactly one target-profit method: amount or margin percent. The cost gap is estimated cost minus target cost; positive means above target. Currency is user-defined and must be consistent.
- Target cost per unit = target price − target profit amount; or target price × (1 − target margin%). Gap = estimated cost − target cost.
- Manual inputs stay in this browser. No external data is fetched.
Formula
Target cost per unit = target price − target profit amount; or target price × (1 − target margin%). Gap = estimated cost − target cost.
Assumptions and limits
Choose exactly one target-profit method: amount or margin percent. The cost gap is estimated cost minus target cost; positive means above target. Currency is user-defined and must be consistent.
Sources
OpenStax, Principles of Accounting, Managerial Accounting: Target Costing
GOOD TO KNOW
Common questions
How is target cost calculated?
Subtract target profit per unit from target price, or multiply target price by one minus the target margin percentage.
What does a positive cost gap mean?
Estimated cost is above target cost by that amount, using the same currency and per-unit basis.