Application of the Concept of Target Costing in Hospitality
Application of the Concept of Target Costing in Hospitality

Author(s): Bojana Noviićević Čečević,, Ljilja Antić, Jovana Milenović
Subject(s): Business Economy / Management, Tourism
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Target cost; Cost price; Service sector; Hospitality
Summary/Abstract: In recent decades, the service sector has become a fast-growing world economic activity, and hospitality organizations are a key element of the service sector. Providing high-quality services in this sector at lower prices than the competition is an important factor and the basic goal of companies’ business success. In order for hospitality organizations to achieve this goal, it is necessary to find an adequate way to calculate costs and determine the cost price of services provided. The application of modern costing methods enables hospitality organizations to increase profits, increase labor productivity, shorten service delivery time and reduce costs. One of the concepts of cost management in a given business environment is target costing. The concept is focused on reducing costs, primarily in the product design phase to the target amount. The paper analyzes the possibility of applying the modern concept - target costing in a hospitality company.

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