What is target costs in SAP CO-OM-ABC - Activity-Based Costing?

SAP Term: target costs

• Component: CO-OM-ABC

• Component Name: Activity-Based Costing

• Description: The costs expected to arise in connection with the performance of a particular activity. In , target costs are calculated using the planned costs of the business process and the activities to be performed. The target costs are then compared to the actual costs for the period.

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• Key Concepts: 
  Target costs are a type of cost management tool used in Activity-Based Costing (ABC) within the Controlling (CO) component of SAP. Target costs are used to set a target cost for a product or service, and then compare the actual cost to the target cost. This comparison helps to identify areas where costs can be reduced or improved. 
  
  How to use it: 
  Target costs can be set up in SAP by creating a target cost plan. This plan will include the target cost, the actual cost, and any other relevant information such as the product or service being measured. Once the plan is created, it can be used to compare the actual cost to the target cost. This comparison can then be used to identify areas where costs can be reduced or improved. 
  
  Tips & Tricks: 
  When setting up a target cost plan in SAP, it is important to ensure that all relevant information is included. This includes the target cost, the actual cost, and any other relevant information such as the product or service being measured. Additionally, it is important to regularly review and update the target cost plan in order to ensure that it is accurate and up-to-date. 
  
  Related Information: 
  For more information on target costs and Activity-Based Costing (ABC) within SAP, please refer to the official SAP documentation at https://help.sap.com/viewer/product/SAP_ERP_6.0_EHP7/7.31/en-US/f3d8f9a2b3e14c8a9f2d5b3c9f1e4d6a.html