How to calculate the cost budget of a certain year with the target cost method?

Abstract: With the development of China economy and the establishment and perfection of market economy system, enterprises in China are facing increasingly fierce market competition. This paper focuses on the challenges faced by target cost management and the problems existing in its application in China, and puts forward some suggestions to solve the problems, so as to standardize enterprise cost management and improve enterprise economic benefits.

Keywords: internationalization target cost management internationalization stage path

First, the understanding of target cost management

Target cost is set according to the profit target of the enterprise and the established production and operation targets such as price, that is, target cost = target income-profit target. It plays an overall control role in the cost development trend of enterprises in a certain period in the future.

As the standard of cost control and assessment of all departments and production links in enterprises, target cost is conducive to introducing market competition mechanism into enterprises and forcibly promoting the cost level of enterprises to meet the requirements of market competition. Through the decomposition, implementation, control and assessment of the target cost, it is a scientific management method to implement comprehensive management of the production and business activities of enterprises in order to achieve the goal of enterprise benefit.

Second, the application of target cost method in the cost management of modern manufacturing enterprises

Target cost method is one of the main methods of cost management. At present, one of the reasons why the economic benefits of some enterprises are not ideal is that they have not adopted advanced cost management methods. At present, the urgent task of manufacturing industry is how to adapt to the characteristics of today's times, use the target cost system to effectively control costs, improve the competitiveness and economic benefits of enterprises, so as to make enterprises in a favorable position in the competition.

1. Target cost forecast. The core work of target cost method is to formulate target cost, and the prediction of target cost is the central link of implementing cost target management in enterprises and the essence of target cost method. Specific methods are:

(1) profit cost forecast analysis method. By determining the sales revenue and profit target during the planning period, the target cost reference value is directly squeezed out according to the sales revenue, profit target and tax payable.

Target total cost = estimated sales revenue-tax payable-profit target.

(2) Forecast and analysis methods of output, cost and profit. According to the internal relationship among product sales, product sales cost and product sales profit, on the basis of forecasting product sales quantity, product sales price and product profit target, the product sales cost is squeezed out as the forecast target cost.

Target total cost = (estimated sales volume * estimated sales price) *( 1- tax rate)-profit target

2. Decomposition and implementation of target cost. The decomposition of target cost refers to the decomposition of target cost step by step from top to bottom according to the enterprise organizational structure after feasibility analysis, and it is implemented in relevant responsibility centers.

Its decomposition methods mainly include: ① according to the management level, the target cost is decomposed by general factory, branch factory, workshop, team and individual. (2) According to the process of product design, manufacturing and product sales, the cost is decomposed to form the target cost of each process.

After decomposition, it is necessary to make all departments and individuals have responsibilities to follow, and make this responsibility clear, specific and available, and enhance their sense of responsibility, so as to promote all departments to strive to complete the cost indicators and finally achieve the overall cost goal.

3. Target cost implementation evaluation. The implementation of target cost can be assessed by monthly assessment and cumulative calculation. Once the cost index is determined, it will not change easily in a certain period of time, but in actual production activities, the monthly cost cannot be equal. When monthly assessment is adopted, the change of objective factors is not considered, and the cumulative completion is the main basis for distribution, which is not only convenient to operate, but also reasonable. Three, China enterprises in the application of target cost management problems.

At present, all units know that reducing costs is the top priority of their work, and many units think that their cost management is in place. However, compared with foreign enterprises, there are still some misunderstandings in the company's cost management: first, the focus of enterprise cost management is on the surface and administrative management, and some costs and expenses that are easy to be caught and seen, such as the reduction of raw material prices, business entertainment and travel expenses. In the face of cost reduction that is not easy to be caught and seen, it is rarely considered. Second, cost management is most worried about the leaders and financial personnel of enterprises. Cost control plays an important role in cost management. Employees only work to achieve the goal of cost control and lack initiative. Third, cost management does not pay attention to strengthening the training of enterprise employees and improving people's labor efficiency. Fourth, the company's old equipment and idle new equipment coexist. On the one hand, I hope to use the policy of not mentioning or less depreciation to reduce costs, which is not allowed by the operating rules of listed companies. On the other hand, the service life of spare parts is not considered in overhaul, and blind updating not only does not reduce manufacturing costs, but also reduces the sustainable viability of enterprises.