Target Cost as a Tool for Rationalization Pricing Decisions in a Service Company a Field Study in the Algerian Insurance Company CAAT-Adrar- Algeria

Abstract

This study aims to identify the practical framework for using the target cost approach, as one of the modern cost accounting systems in the field of cost reduction and rationalization of pricing decisions in the insurance services sector. As well as the importance of using it in the rationalization of decisions related to the pricing of the service. A proposal was submitted to measure and determine the price of selling the insurance service by using the target cost approach through addressing the state of the Algerian Insurance Company "CAAT" - Adrar Agency. The study found that, the cost-accounting system adopted at the agency level is not appropriate because it is a traditional system that is unable to provide sufficient information about the cost of producing the insurance service to implement the target cost approach. The study recommends the adoption of a special section for marketing at the agency level, which includes a team of experts and specialists, to study the processes of improvement and development based on market studies and trends of competing insurance companies in the Algerian market.

Keywords

• cost accounting
• target cost
• pricing decisions
• insurance service