Analysis Of the Implementation of Target Costing as An Effort To Save Operational Costs in Lingga Salon

Abstract

This study analyzes the application of target costing as an effort to improve operating cost efficiency at Lingga Salon. It identifies actual operating costs, calculates target cost based on revenue and desired profit, measures the cost gap, and evaluates savings alternatives through value engineering. The study uses a descriptive method with a quantitative approach supported by qualitative information. Data were collected through interviews with the owner and three employees, observation, business documentation, and literature review. The data show revenue of IDR 398,820,000 and actual operating costs of IDR 308,414,000, resulting in actual profit of IDR 90,406,000 or a 22.67% margin. With a target profit of 25% of revenue, the target profit is IDR 99,705,000 and the target cost is IDR 299,115,000. The resulting cost gap is IDR 9,299,000, equivalent to a minimum efficiency requirement of approximately 3.02%. A value engineering scenario covering salon supplies, electricity and water, maintenance, cleaning, administration/promotion, and internet produces potential savings of IDR 9,850,840. Operating costs would decrease to IDR 298,563,160, profit would increase to IDR 100,256,840, and the profit margin would reach 25.14%. These findings suggest that target costing supported by value engineering can serve as a planning and cost-control tool for salon service businesses, provided service quality is maintained