The Application of Target Costing as a Tool for Production Cost Efficiency to Optimize Profit at MSME Pia Dua Putri

This research aims to examine the application of target costing and value engineering as tools for improving production cost efficiency and to analyze their impact on profitability. The research object is the small mung bean pia product containing 10 pieces with a total weight of 200 grams produced by MSME Pia Dua Putri. This study employs a quantitative method with a descriptive approach. The data used includes primary data obtained from interviews, observation, and documentation, as well as secondary data consisting of production costs and sales data from 2025. The research results show that production costs before implementing target costing amounted to IDR 515,114,440. After simulating the implementation of target costing through value engineering involving raw materials, auxiliary materials, packaging, and labor hour optimization, production costs decreased to IDR 512,889,051, resulting in cost savings of IDR 2,225,389. Furthermore, optimizing idle labor time increased production capacity by 800 pieces per day, creating the potential to increase daily sales volume and revenue. By applying the target selling price of IDR 12,000 per box, the projected profit increased from IDR 91,845,560 (15.13%) to IDR 215,462,949 (29.58%). Thus, the projected profit increase was driven not only by production cost savings but also by increased production capacity and potential sales resulting from labor-hour optimization. Thus, the implementation of target costing through value engineering is proven to be effective in reducing production costs and increasing profit for the small mung bean pia product at MSME Pia Dua Putri in Malang City. These findings add empirical evidence to the literature on cost management of SMEs in emerging economies by demonstrating how target costing and value engineering can be applied to improve cost efficiency and profitability while optimizing production capacity.