To implement target costing for a new product, companies often set up a cross functional team with members from engineering, marketing, and cost accounting. Why is a cross functional team desirable when implementing the target costing approach?
The target cost depends on price, and marketing staff is needed to determine product features and price. Engineers are needed to determine efficient production methods given the product features. And cost accountants are needed to estimate costs given the production process. A cross functional team helps ensure good communication among these various parties, increasing the likelihood that a product will be put into production that can be produced for the target cost.