The aim of this final work is to clarify the Target cost method, the way of calculating target costs and to examine the familiarity and use of the mentioned method by business entities. The Target Cost Model is a complex cost management concept, encompassing a number of instruments for planning and decision making on the cost structure of products. It is not possible to realize the costs that are acceptable by the buyer and the competition with traditional planning and management, so target management is a significant step in the development of the cost management concept. This final work is divided into 5 chapters. In addition to the introduction and the conclusion, there are three main chapters that address the topic of the work. In the second chapter, we determine the difference between traditional and targeted cost management and the target cost calculation itself, target cost calculation methodology, target costs as a factor of retail prices and the application of target costs in the value analysis, which is the model by which the costs are analyzed by product components and determines which component is a candidate for cost reduction. The third chapter is an example of the calculation of target costs in company X, which is based on market research and determines the target selling price of the product it wants to produce, determines the amount of product it can sell and the desired profit per product. Based on the estimated costs, the target sales price and the desired profit, it also determines the target cost of the product. The fourth chapter explores the application of the target cost model that was conducted in the form of a survey which was done to identify business entities with modern cost accounting methods, especially with the target cost method and using the mentioned methods in their business.