A) “I work for a non-profit organization, so all this talk of the full cost of your product or service really isn’t applicable to me.” I would have to disagree with the statement, as full cost of product or service is applicable; however, the majority of the time people or companies will donate or give a discount if asked. For example, if you work for a non-profit organization and are in need of office supplies, why not buy locally from people who support you such as Staples or Office Depot, if these stores are around your area. Local store managers at these stores, when approached, have the authority to donate items to nonprofit organizations. One way you might try this is to have your list of items you need and tell the manager up front that you plan to purchase the items at their store, but you would love their help and support if he could donate any portion of these items. Regardless if anything is donated, a thank you note should be sent to thank the manager at least for their time and/or for their donation.
B) “Why would anyone use target costing? It is just too risky if you don’t cover your costs.” I would have to disagree with the statement, as target costing provides a decent amount of advantages for some companies that would help them overlook the risk. Obviously a primary reason why companies use target costing is to plan or project the costs of products before they are introduced, and to ensure that low-margin products are not introduced which do not bring sufficient returns. There are, however, additional purposes for which companies have introduced target costing which vary from company to company. A number of other reasons are: to reduce costs before they are locked in, to control design specifications and production techniques, as an analysis which highlights other problems, as a driver for cost improvement, and to encourage a focus on the