A Study on Impact of Target Costing on Profitability of Selected Automobile Companies in India

Vol 10 , Issue 1 , January - June 2023 | Pages: 23-40 | Research Paper

Article has been added to the cart.View Cart (0)

https://doi.org/10.17492/jpi.mudra.v10i1.1012302

Published Online: June 03, 2023

Author Details ( * ) denotes Corresponding author

1. * Harish V. B., Research scholar, commerce , Vijayanagara Sri Krishnadevaraya University, Ballari, Karnataka, India (harishvb59@gmail.com)

2. Sadyojathappa S., Associate Professor , commerce, Vijayanagara Sri Krishnadevaraya University, Ballari, Karnataka, India (dr_jathappa@yahoo.co.in)

Manufacturing firms must remain focused on adopting technology and processes rather than observing competition between rival firms. Better cost accounting practices must be adopted by businesses in order to reduce the cost of goods and services and to develop a successful automobile industry in India. This study looks into the Target Costing (TC) implementation process in Indian automobile industry. Target costing was used as a dependent variable in this study, whereas profitability, net tangible assets (NTA), EPS, and return on assets were used as independent variables. The study used a convenience sample of the top five Indian automobile companies listed on the BSE, and panel data from the years 2012–13 to 2021–22 was used. The descriptive statistical analysis and method of Pearson’s Correlation was used to analyse the data. According to Pearson’s correlation results, there is a negative association between target costs and profitability.

Keywords

Target costing; Application; Automobile industry; India

Ansari, S., & Bell, J. (1997). Target costing, the next frontier in strategic cost management. Chicago, IL: The Cam-I Target Cost Core Group.
Ansari, S., Bell, J. & Okano, H. (2007). Target costing: Uncharted research territory. Retrieved from https://www.arataumodular.com/app/wp-content/uploads/2022/06/Target-Costing-Uncharted-Research-Territory.pdf.
Cooper, R., & Slugmulder, R. (1999). Develop profitable new products with target costing. Sloan Management Review, 40(4), 23-35.
Ellarm, L. M. (2006). The implementation of target costing in the United States: Theory versus practice. Journal of Supply Chain Management, 42(1), 13-26.
Ellram, L. M. (2006). The implementation of target costing in the United States: Theory versus practice. The Journal of Supply Chain Management, 42(1), 13-26.
Fridh, G., & Borgernas, H. (2003). The use of target costing in Swedish manufacturing firms. Retrieved from https://gupea.ub.gu.se/bitstream/handle/2077/1839/03-04-3D.pdf;jsessionid=AE8D3EAC74BF9375854A09CB1286CE3E?sequence=1.
Hashim, H. B M., Embong, A. M. & Sharif, M. A. M. (2018). The impact of strategic management accounting adoption on organizational effectiveness in Malaysian manufacturing companies. International Journal of Academic Research in Business and Social Sciences, 8(11), 1840-1847.
Narsaiah, N. (2020). Application of target costing and performance analysis: Evidence from Indian automobile industry. Journal of Accounting, Finance and Auditing Studies 6(3), 148-174.
Tanaka, M. (1993). New approach to the function evaluation system in value engineering. International Journal of Production Research, 23(4), 625-637.