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Cost Management: Task 9 "Chapter 13: Ex. 13-28 & Ex.13-31"

1. This document provides information about two target costing exercises for MaxiDrive and Rick's restaurant. It details production and cost data for a part MaxiDrive manufactures and customer priorities for Rick's restaurant. 2. For MaxiDrive, the task is to calculate the target cost to maintain market share and profitability given a competitor's lower price, and determine if the target cost can be achieved. 3. For Rick's restaurant, the task is to determine the importance index for components like the menu, wait staff, and ingredients based on customer priorities, and draw conclusions by comparing this to the component costs.

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Joel Christian Mascariña
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335 views3 pages

Cost Management: Task 9 "Chapter 13: Ex. 13-28 & Ex.13-31"

1. This document provides information about two target costing exercises for MaxiDrive and Rick's restaurant. It details production and cost data for a part MaxiDrive manufactures and customer priorities for Rick's restaurant. 2. For MaxiDrive, the task is to calculate the target cost to maintain market share and profitability given a competitor's lower price, and determine if the target cost can be achieved. 3. For Rick's restaurant, the task is to determine the importance index for components like the menu, wait staff, and ingredients based on customer priorities, and draw conclusions by comparing this to the component costs.

Uploaded by

Joel Christian Mascariña
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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COST MANAGEMENT

TASK 9
“Chapter 13: Ex. 13-28 & Ex.13-31”

RIFA SALSABILA (023131019)


HENDAR MUHAMMAD R (023131044)
YULINASARI PRIMADITA (023131120)

EXCELLENT CLASS OF ACCOUNTING


TRISAKTI UNIVERSITY
2015
13-28 Target Costing MaxiDrive manufactures a wide variety of parts for recreational
boating, includinga gear and driveshaft part for high-powered outboard boat engines. Original
equipment manufacturers such as Mercury and Honda purchase the components for use in large,
powerful outboards. The part sells for $610, and sales volume averages 25,000 units per year.
Recently, MaxiDrive’s major competitor reduced the price of its equivalent unit to $550. The
market is very competitive, and Maxi-Drive realizes it must meet the new price or lose
significant market share. The controller has assembled these cost and usage data for the most
recent year for MaxiDrive’s production of 25,000 units:

Required
1. Calculate the target cost for maintaining current market share and profitability.
2. Can the target cost be achieved? How?
13-31 Target Costing Using Quality Function Deployment (QFD) Rick’s
is a popular restaurant for fine dining. The owner and chef, Rick Goetz, is pleased with his
success and is now considering expanding his existing restaurant or perhaps opening a second
restaurant. Before making his decision, Rick wants to find out more about his competitive
position. There are three other restaurants that compete directly with him on food quality and
price. Rick knows that his profitability depends on his ability to provide a satisfying meal at the
market price. His first step is to gather some information about his customers, using an
independent market research firm, which informed him that his customers were looking for taste,
comfort (the ambiance, service, and overall presentation of the food), and enjoyment (the
distinctiveness of the dining experience, a degree of excitement). He was surprised to find that
comfort and enjoyment ranked highest.

Next, he worked with his key wait staff and chefs to try to identify the three main components,
and related cost, of the service Rick’s provided:

Having the customer criteria and components,


Rick now again worked with his staff to assess how
each component contributed to the desired customer criteria.

Required
1. Using the information Rick has developed, determine the importance index for each
component (menu and food preparation, wait staff, and food ingredients).
2. Compare your findings in Part 1 to the cost of the components. What conclusions can you
draw from this comparison?

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