Target Costing at Tesla

• Values:
  • Market Price of Product: $40,000
  • Desired Profit Margin: 20%
  • Target Cost per Unit: $32,000
  • Current Cost per Unit: $34,000

• Requirements:
  1. Calculate the target cost gap for Tesla.
  2. Discuss the role of target costing in product pricing.
  3. Analyze the factors influencing the target cost per unit.
  4. Suggest cost reduction strategies to achieve the target cost.