Universität zu Köln

Homburg, Carsten ORCID: 0000-0002-5377-7898, Hoppe, Andre, Schick, Roman and Braul, Amelie (2021). Accounting for preference dependency in target costing - a note. Rev. Quant. Financ. Account., 57 (3). S. 845 - 859. NEW YORK: SPRINGER. ISSN 1573-7179

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Abstract

Target costing is a well-established strategic cost management tool in theory and practice. The original target costing model implies independence of customer preferences resulting in additive utility functions for the customer-oriented optimization of cost structures. We argue that this independence of preferences is not given until a minimum variant of a product is reached that provides its inherent functionality. This is reasonable since one cannot assign customer utility to a product that does not function in its most basic way. Our modified model accounts for the dependency of customer preferences and differentiates between the costs necessary to produce a minimum variant and those related to product features beyond this minimum variant. The customer-oriented optimization of the cost structure is then conducted only for those costs that exceed the costs of the minimum variant. This modification justifies the preference independence assumption in target costing and allows for a more reasonable assignment of required adjustments in costs per product component.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Homburg, Carsten UNSPECIFIED orcid.org/0000-0002-5377-7898 UNSPECIFIED Hoppe, Andre UNSPECIFIED UNSPECIFIED UNSPECIFIED Schick, Roman UNSPECIFIED UNSPECIFIED UNSPECIFIED Braul, Amelie UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-566094
DOI:	10.1007/s11156-021-00962-9
Journal or Publication Title:	Rev. Quant. Financ. Account.
Volume:	57
Number:	3
Page Range:	S. 845 - 859
Date:	2021
Publisher:	SPRINGER
Place of Publication:	NEW YORK
ISSN:	1573-7179
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/56609