Research into Customer Preferences of Potential Buyers of Simple Wood-based Houses for the Purpose of Using the Target Costing

Abstract

The purpose of this paper is to present the results of a research into the customer preferences of potential buyers of simple wood-based house for the purpose of using the Target Costing methodology. Respondents’ opinions of 280 customers were obtained through direct interviews taking place at a specialized exhibition of furniture and timber constructions in Slovakia. The object of the research was a simple wood-based house, namely a weekend garden cottage, made of northern spruce at the level of target price 9,320 €. The paper contribution is represented by the use of the Target Costing methodology in the conditions of wood-processing industry while defining the customer preference for a specific product with the subsequent use for a functional cost analysis and determining the target cost index of the evaluated components. Presented results can be used as information database for decision making in the field of make or buy decisions at the level of fixed purchase prices of individual components or as the upper price limit for producing the components by the business itself.

Keywords

• target costing
• allowable cost
• profit
• price
• wood-based house