Target-Costing目标成本法课件.ppt

1、Tehran UniversityManagement FacultyManagement Accounting PresentationVina TarjomanSupervisor:Dr.NikbakhtNovember,20191$2$34nA target cost is the allowable amount of cost that can be incurred on a product and still earn the required profit from that productnA strategic profit and cost management proc

2、ess Price-led Customer-focused Design-centered Cross-functional Life cycle oriented Value Chain-based$5 Target cost is the cost that can be incurred while still earning the desired profit Selling price desired profit=target cost The customer sets the price Profit must be achieved through cost contro

3、l$6 To these Contradicts the traditional approach:design product,determine cost,set price Intense customer focus What 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$7nCost control from the beginning 70-90%of costs are com

4、mitted to at the design stage Focus on product and process design to engineer out costs from the beginning$8nProduct,manufacturing process,delivery process designed simultaneously Ensures features customers demand,but within acceptable cost parameters Eliminates the temptation to add costly features

5、nCustomers may not value the added features$9nCost control at all phases of the product life cycle Design Production Delivery/setup Customers cost of ownership Service and repair Disposal and recycling$10 Marketing Design/engineering Manufacturing Purchasing Including suppliers Distribution Service/

6、support Cost accounting Finance Legal$11ConceptdevelopmentPlanningand marketanalysisProductiondesign andvalueengineeringProductionandcontinuousimprovementTargetpriceProfitmarginTargetcostEstablishing theTarget PriceAchieving the target cost$12nTwo stage process Establish the target cost Market resea

7、rch Product planning,concept development stages Achieve the target cost Value engineering,continuous improvement Design stage Continuous improvement in later stages$13nDetermine the product and its marketqWho is the target market?qWhat do they want?qWhat do competitors offer?nIntroduce concept or pr

8、ototype Evolutionary or revolutionary?Refine until it meets customer needs$14nDetermine the selling price Must be acceptable to the customer Must be able to withstand competitionnExisting price+/-value of features added or deletednConsensus of focus groupnPrice predicted to achieve a desired market

9、share$15nDetermine the required profit Return on salesDesired returnHistorical return for similar productsIndustry average for similar products Return on sales will fluctuate over the life of the product Price and costs fluctuate$16nUnit price,cost and profit are almost meaningless because they fluc

10、tuate Life cycle totals are more meaningful Total expected revenue throughout product life-Total desired profit throughout product life=Total target cost$1718InitialCost EstimatesPerformValueEngineeringPerformCostAnalysisDesignProducts/ProcessesRelease Design toProductionCOMPUTE COST GAPDESIGN COSTS

11、 OUTPRODUCECompareTo TargetCostACTUALCOSTEstimateAchievableCostUndertakeContinuousImprovement$19nMust include the features the customer wants while maintaining cost at or below targetnWant to meet the customers needs,but not exceed themnEliminating desired features will result in an undesirable prod

12、uctnAdding unwanted features will increase costnFailing to keep cost at or below target will result in unacceptable profits$20nDetermine the cost gap between current cost and allowable cost Current cost is based onnCurrently used componentsnCurrent suppliersnCurrent manufacturing processesnCurrent d

13、istribution networknEtc.$21nDecompose the cost gap(exhibit 2)Life cycle decomposition Cost reduction goals are divided among the functions in the products life cycle Design/engineering Manufacturing Sales/distribution Service/support General administration Etc.$22 Value chain decompositionnCost redu

14、ction targets are divided among internal and external activities Internal costsLabor,overhead,selling and administrative costs,etc.External costsComponents and services acquired from suppliers,etc.Often represent a large proportion of total cost$23EXHIBIT 2CO ST G AP BREAKDO W N BY LIFE CYCLE AND VA

15、LUE CHAINLife CycleTargetCurrentG apTargetCurrentG apTargetCurrentG apResearch and developm ent0.30$0.50$0.20$0.30$0.50$0.20$M anufacturing4.00 5.00 1.00 13.00$15.00$2.00$17.00 20.00 3.00 M arketing and distribution1.50 2.00 0.50 4.50 5.00 0.50 6.00 7.00 1.00 Service and support0.25 0.50 0.25 0.25 0

16、.50 0.25 G eneral adm inistration0.75 1.00 0.25 0.75 1.00 0.25 Total6.80$9.00$2.20$17.50$20.00$2.50$24.30$29.00$4.70$Internal CostsExternal CostsTotal CostsValue Chain$24nPerform value engineering to design out costs without sacrificing needed features Perform a cost analysis of major components and

17、 activities List components or activities and their functions Calculate a cost breakdown Determine the current cost of each component or activity and convert to percentage of total cost Costs include materials,labor,overhead,etc.$25nRank customer requirements(table 1)What does the customer want?How

18、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?$26Prouct FeaturesCustomer Ra

19、nkingRelative Customer RankingGreat fit30%0.30Large selection15%0.15High product quality15%0.15Trendy appearance10%0.10Reduced shopping time15%0.15Advising,consulting5%0.05Delivery time10%0.10Sum:100%1.00$27 Relate the components to customer requirements(table 2)Develop Quality-Function-Deployment m

20、atrix Indicates which components have the greatest impact on customer requirements Develop a functional ranking(table 3)Indicates the importance of each component to the customer Based on the components contribution to providing the desired functions$28ProductRCRSuitServiceCRCutFabric and access.Mea

21、surementsCustomerGreat fit0.301=0.253=0.75DBig choice0.153=0.751=0.25CHigh product quality0.153=0.751=0.25BTrendy appearance0.103=0.602=0.40BReduced shopping0.153=1.00DConulting0.053=1.00BDelivery time0.101=0.201=0.203=0.60ASum:1.00RCR=relative customer rankingCR=Competitive ranking3=strong correlat

22、ion 2=modrate correlaion 1=weak correlationDegree of performance:A=excelent,B=good,C=moderate,D=low29ProductRCRSuitServiceCutFabric and access.MeasurementsCustomerGreat fit0.300.25*0.30=0.080.75*0.30=0.22Big choice0.150.75*0.15=0.110.25*0.15=0.04High product quality0.150.75*0.15=0.110.25*0.15=0.04Tr

23、endy appearance0.100.60*0.10=0.060.40*0.10=0.04Reduced shopping0.150.15*1.00=0.15Consulting0.050.05*1.00=0.05Delivery time0.100.25*0.10=0.020.20*0.10=0.020.60*0.10=0.06Sum:1.000.160.280.220.3430 Identify components for cost reduction Calculate a value index for each major component(table 4)Component

24、 cost as a percentage of total cost divided by the components relative importance to the customer Index greater than 1 Disproportionately high cost in relation to its importance Implies cost reduction should be considered Do not manage by the numbers alone$31Product componentValueAllowable Cost per

25、unitValue indexCut0.160.16*$324=$51.240.16/0.20=0.8Fabric and accessories0.280.28*$324=$90.270.28/0.25=1.12Measurement0.220.22*$324=$71.280.22/0.20=1.1Service0.340.34*$324=$110.160.34/0.35=0.9732 Generate cost reduction ideas Seek ways to accomplish the goal at less cost Consider the process as well

26、 as the product More efficient manufacturing processes Better logistics Etc.$33 Test the ideas Will they be effective?Are they technologically feasible?Estimate the achievable costs Use activity-based costing,cost tables,etc.$34Achievetargetcost?Closeenough?Release designfor productionAbortprojectRe

27、peatvalueengr.?Value engineeringYesNoYesNoNoYes$35nPositives Customer focus Cross-functional integration Open sharing of information Better process understandingnNegatives Too much customer focus Potential organizational conflict Too much pressure to attain targets Longer development times$36 Select

28、ing target costing process Using of cost reduction culture Directing material producer Sharing staff in companys achievment Using of complete information systems$371.Alexander Krueger,Helmut Hergeth,“Target costing and mass customization”,Journal of Textile and Apparel,Technology and Management,Volu

29、me 5,Issue 1,Winter 2019.2.Horongren and foster,“Cost Accounting and Mongagerial Emphasis”,8 th ed,prentice Hall.Inc,newjersey.USA,1994 3.Castellano and Young,“Speed splasher an interactive team based target costing exercise”,journal of Accounting Education 2019,pp 149-155 elsevier/locate/jaccedu 38

30、4.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.5.Wu.H.H.2019.Quality management:“A Ttarget Costing Approach,Journal of Chinese Institute of Industrialo Engineers 20,1:13-206.Cooper,R.and Slagmulder,R.2019.“Target Costing and Value Engineering”.Productivity Press,Portland,OR,U.S.A.3940?41