Target-Costing目标成本法课件.ppt

Tehran UniversityManagement FacultyManagement Accounting Presentation,Target Costing,Vina TarjomanSupervisor : Dr. NikbakhtNovember,2019,1,Tehran UniversityManagement,Target Costing,2,Target Costing$2,Outline,Definition of target costingGeneral conceptTarget costing characteristicsTarget costing processEstablishing target costAchieving target costOrganizational impactConclusion,3,OutlineDefinition of target co,What is Target Costing,4,What is 4,Target Costing,A target cost is the allowable amount of cost that can be incurred on a product and still earn the required profit from that productA strategic profit and cost management process Price-led Customer-focused Design-centered Cross-functional Life cycle oriented Value Chain-based,5,Target CostingA target cost is,General Concept,Target cost is the cost that can be incurred while still earning the desired profitSelling price desired profit = target costThe customer sets the priceProfit must be achieved through cost control,6,General ConceptTarget cost,Target Costing Characteristics,To these Contradicts the traditional approach: design product, determine cost, set priceIntense customer focusWhat do they want?How much will they pay for it?Can we make a profit on it?Want answers questions before committing to the project,7,Target Costing Characteristics,Target Costing Characteristics,Cost control from the beginning70-90% of costs are committed to at the design stageFocus on product and process design to engineer out costs from the beginning,8,Target Costing Characteristics,Target Costing Characteristics,Product, manufacturing process, delivery process designed simultaneouslyEnsures features customers demand, but within acceptable cost parametersEliminates the temptation to add costly featuresCustomers may not value the added features,9,Target Costing Characteristics,Target Costing Characteristics,Cost control at all phases of the product life cycleDesignProductionDelivery/setupCustomers cost of ownershipService and repairDisposal and recycling,10,Target Costing Characteristics,Cross-Functional Team,MarketingDesign/engineeringManufacturingPurchasingIncluding suppliers,DistributionService/supportCost accountingFinanceLegal,11,Cross-Functional TeamMarketing,Conceptdevelopment,Planningand marketanalysis,Productiondesign andvalueengineering,Productionandcontinuousimprovement,Targetprice,Profitmargin,Targetcost,Establishing theTarget Price,Achieving the target cost,The Target Costing Process,12,ConceptdevelopmentPlanningan,Target Costing Process,Two stage processEstablish the target costMarket researchProduct planning, concept development stagesAchieve the target costValue engineering, continuous improvementDesign stageContinuous improvement in later stages,13,Target Costing ProcessTwo stag,Establishing the Target Cost,Determine the product and its marketWho is the target market?What do they want?What do competitors offer?Introduce concept or prototypeEvolutionary or revolutionary?Refine until it meets customer needs,14,Establishing the Target CostDe,Establishing the Target Cost,Determine the selling priceMust be acceptable to the customerMust be able to withstand competitionExisting price +/- value of features added or deletedConsensus of focus groupPrice predicted to achieve a desired market share,15,Establishing the Target CostDe,Establishing the Target Cost,Determine the required profitReturn on salesDesired returnHistorical return for similar productsIndustry average for similar productsReturn on sales will fluctuate over the life of the productPrice and costs fluctuate,16,Establishing the Target CostDe,Establishing the Target Cost,Unit price, cost and profit are almost meaningless because they fluctuateLife cycle totals are more meaningful,Total expected revenue throughout product life- Total desired profit throughout product life = Total target cost,17,Establishing the Target CostUn,Achieving The Target Cost,18,Achieving The Target Cost18,TARGET COSTING.Achieving Target Costs,InitialCost Estimates,PerformValueEngineering,PerformCostAnalysis,DesignProducts/Processes,Release Design toProduction,COMPUTE COST GAP,DESIGN COSTS OUT,PRODUCE,CompareTo TargetCost,ACTUALCOST,EstimateAchievableCost,UndertakeContinuousImprovement,19,TARGET COSTING.Achieving Ta,Achieving the Target Cost,Must include the features the customer wants while maintaining cost at or below targetWant to meet the customers needs, but not exceed themEliminating desired features will result in an undesirable productAdding unwanted features will increase costFailing to keep cost at or below target will result in unacceptable profits,20,Achieving the Target CostMust,Achieving the Target Cost,Determine the cost gap between current cost and allowable costCurrent cost is based onCurrently used componentsCurrent suppliersCurrent manufacturing processesCurrent distribution networkEtc.,21,Achieving the Target CostDeter,Achieving the Target Cost,Decompose the cost gap (exhibit 2)Life cycle decompositionCost reduction goals are divided among the functions in the products life cycleDesign/engineeringManufacturingSales/distributionService/supportGeneral administrationEtc.,22,Achieving the Target CostDecom,Achieving the Target Cost,Value chain decompositionCost reduction targets are divided among internal and external activitiesInternal costsLabor, overhead, selling and administrative costs, etc.External costsComponents and services acquired from suppliers, etc.Often represent a large proportion of total cost,23,Achieving the Target CostValue,Achieving the Target Cost,24,Achieving the Target Cost$24,Achieving the Target Cost,Perform value engineering to design out costs without sacrificing needed featuresPerform a cost analysis of major components and activitiesList components or activities and their functionsCalculate a cost breakdownDetermine the current cost of each component or activity and convert to percentage of total costCosts include materials, labor, overhead, etc.,25,Achieving the Target CostPerfo,Achieving the Target Cost,Rank customer requirements (table 1)What does the customer want?How important is each function to the customer?What do we and our competitors currently offer?Competitive evaluation (table 2)Do our current product features meet the customer needs?Are the customers needs met, unmet or exceeded?What can we learn from our competitors products?,26,Achieving the Target CostRank,Table 1: Cusomer Requirements,27,Prouct FeaturesCustomer Rankin,Achieving the Target Cost,Relate the components to customer requirements (table 2)Develop Quality-Function-Deployment matrixIndicates which components have the greatest impact on customer requirementsDevelop a functional ranking (table 3)Indicates the importance of each component to the customerBased on the components contribution to providing the desired functions,28,Achieving the Target CostRelat,RCR= relative customer rankingCR= Competitive ranking3=strong correlation 2=modrate correlaion 1=weak correlationDegree of performance: A=excelent,B=good, C= moderate, D= low,Table 2: QFD-Matrix for Customer Requirements and Product Components,29,ProductRCRSuitServiceCRCutFabr,Table 3 : QFD- Computing the componenet value,30,ProductRCRSuitServiceCutFabric,Achieving the Target Cost,Identify components for cost reductionCalculate a value index for each major component (table 4) Component cost as a percentage of total cost divided by the components relative importance to the customerIndex greater than 1Disproportionately high cost in relation to its importanceImplies cost reduction should be consideredDo not manage by the numbers alone,31,Achieving the Target CostIdent,Table 4: allowable cost for product component,32,Product componentValueAllowabl,Achieving the Target Cost,Generate cost reduction ideasSeek ways to accomplish the goal at less costConsider the process as well as the productMore efficient manufacturing processesBetter logisticsEtc.,33,Achieving the Target CostGener,Achieving the Target Cost,Test the ideasWill they be effective?Are they technologically feasible?Estimate the achievable costsUse activity-based costing, cost tables, etc.,34,Achieving the Target CostTest,Make the Decision,Achievetargetcost?,Closeenough?,Release designfor production,Abortproject,Repeatvalueengr.?,Value engineering,Yes,No,Yes,No,No,Yes,35,Make the DecisionAchieveCloseR,Organizational Impact,PositivesCustomer focusCross-functional integrationOpen sharing of informationBetter process understanding,NegativesToo much customer focusPotential organizational conflictToo much pressure to attain targetsLonger development times,36,Organizational ImpactPositives,Conclusion,Selecting target costing processUsing of cost reduction cultureDirecting material producerSharing staff in companys achievmentUsing of complete information systems,37,ConclusionSelecting target co,reference,Alexander Krueger, Helmut Hergeth, “Target costing and mass customization”, Journal of Textile and Apparel,Technology and Management,Volume 5, Issue 1, Winter 2019.Horongren and foster, “Cost Accounting and Mongagerial Emphasis” , 8 th ed, prentice Hall. Inc, newjersey. USA, 1994 Castellano and Young, “Speed splasher an interactive team based target costing exercise” , journal of Accounting Education 2019, pp 149-155 elsevier/locate/jaccedu,38,reference Alexander Krueger, H,I busuki, U., Kaminski, P.C., 2019. “Value engineering and target costing as methodology of work in the product development process”. Master Thesis, Polytechnic School of the University of Sao Paulo, Sao Paulo.Wu. H. H. 2019. Quality management: “A Ttarget Costing Approach, Journal of Chinese Institute of Industrialo Engineers 20,1: 13-20Cooper, R. and Slagmulder, R. 2019. “Target Costing and Value Engineering” . Productivity Press, Portland, OR, U.S.A.,39,I busuki, U., Kaminski, P.C.,Thanks for your attention,40,Thanks for your attention40,Any Questions ?,41,Any Questions ?41,