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    Manufacturing Costing Page 8

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    Bazi
    The document discusses activity-based costing (ABC) and target costing. It notes that while ABC is often used to supplement traditional costing methods, target costing takes a different approach by engineering products and manufacturing processes with a specific cost model and profitable selling price in mind from the start. The document also mentions that some target costing implementations do not heavily involve accountants but rather involve other roles like product managers and engineers.

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    Manufacturing Costing Page 8

    Uploaded by

    Bazi
    26 views1 page
    The document discusses activity-based costing (ABC) and target costing. It notes that while ABC is often used to supplement traditional costing methods, target costing takes a different approach by engineering products and manufacturing processes with a specific cost model and profitable selling price in mind from the start. The document also mentions that some target costing implementations do not heavily involve accountants but rather involve other roles like product managers and engineers.

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    Manufacturing Costing Page 8

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    The document discusses activity-based costing (ABC) and target costing. It notes that while ABC is often used to supplement traditional costing methods, target costing takes a different approach by engineering products and manufacturing processes with a specific cost model and profitable selling price in mind from the start. The document also mentions that some target costing implementations do not heavily involve accountants but rather involve other roles like product managers and engineers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    26 views1 page

    Manufacturing Costing Page 8

    Uploaded by

    Bazi
    The document discusses activity-based costing (ABC) and target costing. It notes that while ABC is often used to supplement traditional costing methods, target costing takes a different approach by engineering products and manufacturing processes with a specific cost model and profitable selling price in mind from the start. The document also mentions that some target costing implementations do not heavily involve accountants but rather involve other roles like product managers and engineers.

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    © All Rights Reserved
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    Download as pdf or txt
    of 1

    However, many successful ABC implementations use it as a supplement to, rather than a

    replacement for, standard methods. Advocates of ABC have begun to formulate ways in which
    ABC can be better integrated with conventional methods so that companies can enjoy the
    benefits of both. In 1999 the Institute of Management Accountants (IMA), the leading
    professional organization for managerial accountants, published renewed guidelines for
    companies wishing to implement ABC practices, following a series of previous statements on
    using ABC dating back to the early 1990s. The IMA's statements included a number of cautions
    against potential pitfalls in establishing an ABC system.

    TARGET COSTING.

    A related practice that has also enjoyed quite a bit of attention since the mid-1990s is target
    costing, which is a method of engineering a product and its manufacturing process from the start
    with a specific cost model in mind. This approach, which is essentially an elaboration of the
    engineering costing approach, attempts to create an optimally efficient process from the start—
    with a profitable yet marketable selling price in mind—rather than waiting until a product is
    already being manufactured and then setting prices and looking for cost savings. Some
    implementations of target costing actually don't involve accountants as much as they invlolve
    product marketing managers, engineers, and others who are part of the actual design and
    production processes. IMA guidelines also exist for target costing systems.

    SEE ALSO : Cost Control ; Managerial Accounting

    [ David Kucera ]

    FURTHER READING:

    "ABC and Target Costing Guidelines." Strategic Finance April 1999.

    Chandler, Alfred Dupont. The Visible Hand: The Managerial Revolution in American Business.
    Cambridge, MA: Belknap Press, 1977.

    Johnson, H. Thomas. "Toward a New Understanding of Nineteenth Century Cost Accounting."


    Accounting Review, July 1981.

    Keegan, Daniel P., and Robert G. Eiler. "Let's Reengineer Cost Accounting." Management
    Accounting, August 1994.

    Meigs, Robert F., ed. Accounting: The Basis for Business Decisions. 11 th ed. New York:
    McGraw-Hill, 1998

    Winicur, Barbara. "Cost Accounting Essentials." National Public Accountant, April 1993.

    Read more: http://www.referenceforbusiness.com/encyclopedia/Cos-Des/Costing-Methods-


    Manufacturing.html#ixzz2RXNspgAo

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