Product-Level Target Costing: Key Steps and Strategies PPT
This PPT slide, part of the 23-slide Target Costing PowerPoint presentation, presents an overview of the second phase of the Target Costing Process, specifically focusing on product-level target costing. The primary aim here is to align product design with the allowable cost parameters that meet customer expectations. This phase is critical as it initiates the transformation of allowable costs into actionable target costs, thereby exerting necessary pressure on product designers to optimize costs effectively.
The slide outlines key components, starting with an overview that emphasizes the importance of designing products that adhere to the allowable cost. This sets the stage for achieving target costs that are not only realistic, but also competitive in the market. The influencing factors listed highlight the significance of product strategy and characteristics, which play a vital role in determining the feasibility of achieving these target costs.
Key steps are clearly delineated, providing a structured approach to implementing product-level target costing. The first step involves establishing a product-level target cost, which is essential since allowable costs do not account for design capabilities or realistic manufacturing costs. The second step stresses the need for discipline in the target costing process, particularly in monitoring the relationship between target costs and estimated product costs throughout the design phase. The cardinal rule is emphasized: total target costs at the component level must not exceed the overall product target cost.
Finally, methods for achieving target costs are suggested, including Value Engineering, Design for Manufacture and Assembly, and Quality Function Deployment. These methodologies are crucial for ensuring that the product remains within financial constraints while still meeting quality and performance standards. This slide serves as a foundational guide for organizations looking to enhance their cost management strategies in product development.
This slide is part of the Target Costing PowerPoint presentation.
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Cost Reduction Assessment Costing Product Strategy Cost Management Quality Function Deployment Product Development Manufacturing
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