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What is the difference between target costing and kaizen costing?
In target costing the costs is determined by finding out how much the customers are willing to pay for the service or product. The selling price is adjusted for the profit which determines the cost at which the product or service should be produced. When the target cost is less that the actual costs then decisions needs to be made to reduce the costs. For example the remove non value adding features to the product or service. Kaizen costing involves the continuous addition of small costs to the product or service until it meets its desired level for the customer. Target costing can said to be retrospective costing whilst kaizen is prospective costing.
What is kaizen costing?
Kaizen costing is an extension of target costing, in which the focus is on cost reduction.Kaizen is the Japanese word for continuous improvement; therefore kaizen costing refers to continuous improvement during manufacturing.There are 2 sub-cycles in this approach. The first one is the kaizen/ continuous improvement cycle, whereby annual goals are established as part of the planning process. The ultimate goal is cost reduction, and actions and strategies are planned in order to achieve the goal. This could be in the form of more streamlined processes, more efficient use of materials, etc. As with value engineering (see here for more explanation), the costs of existing products/processes are reduced by reducing non value-added costs (which do not add value to the product from the customer's viewpoint).In time, workers become more familiar in the new strategies and actions and the cost reduction is "locked in".This is taken further in the second sub-cycle, the maintenance cycle, which maintains the cost reduction at the new standard/level.But that's not the end of the story. Remember that kaizenis all about continuous improvement, so we go back to the kaizen cycle in which further cost reductions are planned and implemented, via more efficient and cost-saving strategies. These improvements are again "locked in" via the maintenance cycle.This goes on and on throughout the life cycle of product/service, or indeed as long as manufacturing processes are continued.Note: eventhough we've discussed the use of kaizen in manufacturing processes, any small business can utilize it. It is a cost reduction mindset which is continuous - the goal posts are constantly moving further.For example, in a business, think of what can be cut out or reduced. Are there are ways to be more efficient? Can time be reduced in any actions taken? Can a process be made to achieve more than 1 objective? Can the work of a staff be structured in such a way to help him to do more without much additional effort?
What are the advantages and disadvantages of target costing?
its when a female plant talks to a male plant about smoking a joint
When does target close?
target closes at 11:00 PM
What is the difference between optimal capital structure and target capital structure?
optimal capital structure means using the resources of capital optimally, at is where they can utilised properly. target capital structure means investment made in the certain project so that they can utilise the resource of capital properly.
Define process costing its types features applications?
Job Order Costing Operation Costing Normal Costing Actual Costing Standard Costing Kaizen Costing Target Cost
What a comparison and contrast between target costing and life cycle costing?
Please help me in nswering this question
Difference between absorption costing AND target costing?
Target costing is when you have a goal for the project and its costs. Absorption costing is when you need to fix the excess spending.
What is the difference between target costing and kaizen costing?
In target costing the costs is determined by finding out how much the customers are willing to pay for the service or product. The selling price is adjusted for the profit which determines the cost at which the product or service should be produced. When the target cost is less that the actual costs then decisions needs to be made to reduce the costs. For example the remove non value adding features to the product or service. Kaizen costing involves the continuous addition of small costs to the product or service until it meets its desired level for the customer. Target costing can said to be retrospective costing whilst kaizen is prospective costing.
What are the differences between standard and target costing?
Standard costing will be the price for something. Mostly in every store. The target costing is when one says what one is willing to pay and they can negotiate the cost.
Meaning and nature of target costing?
definition of target costing
Example for backflush costing and target costing?
for backflush costing and target costing?" Refer this link www.iugaza.edu.ps/users/shelles/Horngren/ch14.ppt
What is the difference between target costing and life cycle costing?
In Target costing system, comapnies tries to achieve target prices by reducing those parts of activity which are not increasing the value of product. Life cycle costing is a concept in which companies tries to read the overall process of development of product life cycle and tries to minimise the cost at area where it is not required or not increase the value of product.
Which is the best costing system for Automobile Industry?
process costin and target costing
What are the tools and techniques of cost management?
Activity based Costing, Target costing, Just in Time,Total Quality Management,
What is the difference between target costing and cost-plus pricing?
Target Costing: It is the costing process in which company tries to reduces all costs of product to limit the selling price at specific targeted selling price. Cost Plus pricing: It is pricing method in which company uses all costs plus certain percentage of that cost as a profit margin to set selling price.
Role of target costing?
Target costing refers to the design of a product and the processes used to produce it , so the ultimately the product can be manufactured at a cost that will enable the firm to make a profit when product is sold
