Target cost per unit

Target cost per unit is estimated long-run cost per unit of a product or service that enables the company to achieve its target operating income per unit when selling at the target price. Target cost per unit is derived by subtracting the target operating income per unit from the target price.

Definitions

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Target cost per unit. Estimated long-run cost per unit of a product or service that enables the company to achieve its target operating income per unit when selling at the target price. Target cost per unit is derived by subtracting the target operating income per unit from the target price.