Best Practices In Target Costing Accounting Essay

1. Full mention inside informations for article ( utilizing Harvard citing manner ) Provide adequate information about the article to enable readers to happen it. Make certain that you include the writer, rubric and when and where the article was published.

Swenson, D, Ansari, S, Bell, P & A ; IL-Woon, K 2003, ‘Best patterns in mark bing ‘ , Management Accounting Quarterly, March, pp. 2-17, viewed 25 March 2010, hypertext transfer protocol: //

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2. Purpose. State what the writer was seeking to accomplish in the article. Was the intent to inform, carry, compare two positions, argue a point, advertise a piece of research or something else? Here, it is utile to see the publication that the article appeared in and the readership of that publication.

To get down of with, this article talks about mark costing and its rules and procedure adapted by few companies which has proven to be really effectual in footings of cost control and net income sweetening. The writers are seeking to convey a message that different ways of mark bing techniques have been applied in a assortment of industries followed by the degree of success and mensurable betterments achieved along with the factors that influenced the success of these applications. The research began with a study conducted by The Consortium for Advanced Manufacturing, the American Institute of CPAs and the University of Akron analyzing the consequences and choosing four large companies as holding best patterns in mark costing. The chief intent of this article was to inform the readers about the benefits of using mark costing system which the writers are clearly able to show. However, there is no intent of carrying the readers to prosecute in such system. The writers are merely showing the study consequences and analyzing the information for the readers to derive some cognition and exposure about mark costing system. A similar chance has been approached by Ewert ( 1999 ) in his article ‘Target costing, co-ordination and strategic cost management’A who analyses the strategic dimensions added to the job of cost direction. He evaluates distinguishable features of Target bing on the footing of its market orientation and its interaction with other long term impacting factors. The readership of his publication was conveyed a message that mark costing has many advantages over other systems and that it should be implemented to cut down cost efficaciously.

3. Overview. Supply an nonsubjective overview of the subject and the chief points the article covers, in the order that the writer made them.

The whole aim of mark costing is that it ‘s comparatively new and is being classified as a best pattern in some industries. The writers have drawn up extended consequences of the study which is discussed in-depth. There are a figure of chief points mentioned in the article. Some of them are target bing rules, mark bing procedure, mark bing enablers, merchandise development and supply concatenation. The article besides refers to an illustration of mark bing applied by one of the companies named Caterpillar and besides incorporates legion illustrations of value analysis.

The writers describe mark costing as a systematic procedure of cost direction and net income planning. They provide six cardinal rules of mark costing and briefly describe them separately measuring the of import points and how each of these rules is consistent and interconnected. The following point mentioned in the article is about mark bing procedure. The writers here are giving illustrations of companies who have often maximised cost control and enhance net income betterment by puting up comparatively aggressive marks. The procedure begins with the top direction set uping a mark cost for new merchandise ( e.g. Chrysler Neon ) which is so de-composed as a whole into cost marks for single constituent parts illustration engine, seats etc.

Furthermore, the following of import point mentioned in the article is target bing enablers. The writers visited the four companies carry throughing their aim of documenting ‘best patterns ‘ in forming cardinal elements of mark costing. At each company, mark costing was supported by a matrix organizational construction followed by an illustration in the U.S where operations for DaimlerChrysler had five platform squads each including members from design technology, fabricating technology, buying, production and finance. Performance end and cost aims of each platform squad were an of import factor which reflected squad members ‘ one-year public presentation reappraisal. Besides, there was a ‘toolbox ‘ attack of direction at DaimlerChrysler which reduced cost and improved productiveness. The tool chest included value technology, value analysis, design for fabrication, paper kaizen and thin fabrication and each of this was implemented through workshops composed of multifunctional squads.

Traveling on, Product development procedure is the following point which the writers try to explicate by giving some illustrations of mark bing attack and the benefits of it. The Boeing Company adapted mark costing system which tried diminishing client necessities and incorporating alterations that will provide value to a big client base. The Boeing Company designed a new merchandise to fulfill an aim of salvaging money for them and its clients. Through mark costing, the costs associated with adding new parts or altering aircraft constellations must be met by consumers willing to pay the incremental costs of the alteration. Therefore, mark bing dramas an of import function in planing new merchandises for a alteration.

The following point mentioned in the article is about supply concatenation. Some of the best pattern companies wholly depend on cost salvaging chances from its supply concatenation to run into mark costs. Supplier ‘s drama a critical function in accomplishing mark bing ends. Few companies such as DaimlerChrysler and Continental Teves evaluate the public presentation of their providers on annual footing based on their cost decrease on one-year gross revenues. Cost decrease merely means that any supplier gives thoughts to the purchasing companies which will ensue in lower cost and benefits for the company.

The writers have exhaustively researched good and the study consequences genuinely shows that mark costing is effectual to an extent and that it has proven to be effectual for few companies who has implemented it.

B. THE CRITIQUE: Give your position of the text, sing some or all of the undermentioned factors: What was the intent of the article and where was it published? Did the writer achieve his/her purpose? Was it written in an appropriate manner? Is it clearly organised and easy to understand? Have positions or claims been supported with grounds? Does the logical thinking look logical? Has the subject been dealt with in sufficient deepness?

This article was published on cyberspace under the rubric ‘Best Practices in Target Costing ‘ . It was besides included in ‘Contemporary Management Accounting ‘ text edition. The chief intent of this article was to inform the readers about mark costing ( based on the study ) in more item and besides the advantages of it followed by few illustrations. It was good written in an appropriate manner with a batch of simpleness of understanding the context of the cardinal overview of mark bing system. The usage of sub-headings and points highlighted in bold maximised the capacity to understand how things work and what methods are being applied in respects to this context. It besides made it easier for readers to mention back to some of import high spots much rapidly and efficaciously. Besides, the usage of existent corporate illustrations and other beginnings were extremely demonstrated in an appropriate mode.

Furthermore, the writers have slightly achieved their purpose on this article, nevertheless there are a few points which are losing based on the research from other beginnings on mark costing. To get down on this, some of the views/claims of this article are non supported rather good and besides it makes readers inquire why certain things do n’t hold disadvantages about the merchandise development or supply concatenation as portion of the article. Harmonizing to an article ‘Target costing can hike your bottom line ‘ by Boer ( 1999 ) , he clearly criticizes the consequence of design determinations in merchandise development as a complexness which carries ‘downstream ‘ and has hapless consequences. He concludes that acquiring involved in merchandise development is non an easy undertaking of incorporating mark bing method. He supports his statements by indicating out a few downstream consequences which are: the sum of work and labour cost additions, quality may be hapless as complex merchandises are difficult to piece, it takes longer to develop clients to cover with complex merchandises and besides extra parts are needed for excess storage of stock list. These consequences are clearly apparent that merchandise development procedure is non an effectual characteristic of mark costing and has got some major disadvantages which are non mentioned in this article by the writers.

Traveling on, another illustration is shown in an electronic diary by Crow ( 2002 ) who is the president of DRM associates in direction consulting and instruction house. He points out a few stairss required to put in a complete mark bing attack within an organisation. With the usage of diagrams, he is able to compare traditional cost direction attack and mark cost construct. He evaluates how each system is functioned and what return it contributes towards the companies. Furthermore, merchandise development is mentioned here once more.

The writer focuses more on actions that can be taken during the merchandise development stage alternatively of concentrating more on cost decrease. As most of the merchandises cost are influenced by determinations made during the development of a merchandise, some applied scientists are committed to concentrating on fulfilling client ‘s demands. The writer concludes here that its common for the merchandise costs to be higher than desired because it ‘s a dependent variable that is influenced by determinations made about merchandises maps, quality and public presentation capablenesss. Therefore, these information is non discussed in item in the article.

However, the writers have been successful in measuring the grounds of implementing mark bing system and its nucleus factors but there are a few things which need wider attending to the readers. The subject of mark costing has n’t rather dealt with in sufficient deepness. The writers have been successful in depicting what mark costing is all about and why there is an increasing demand for it, but in an article written by anon. , he describes and construe different scenarios of mark costing in an international company by indicating out few advantages and at the same clip, disadvantages. This small peace of critical information is losing in this article. There are certain factors that promote mark costing and certain things that can present some jobs. One of the disadvantages of mark costing is that the emphasis is excessively high on the design squad of companies utilizing mark bing attack. Second, manufacturers might do usage of cost-based mark bing to compact the net income borders of providers, hence acquiring stuffs at the lowest monetary value possible. This over-emphasis on cost cuts frequently blind manufacturer to the existent significance of mark costing. Besides, design squads can hold some troubles in meeting cost mark from clip to clip which can take to hapless usage of clip and attempt. An illustration of an international fabrication company is shown that promoted the usage of mark bing but at the same clip, confronted some jobs excessively. These fabricating companies misuse mark costing and do the error of shriveling the provider ‘s net income borders merely like it was mentioned antecedently. As in certain states where the cost of life is high, makers should understand that their providers need to gain plenty in order to last. Therefore, the mark cost set should be sensible or else the design squad will endure force per unit area to force down cost and might compromise quality which is non what aim bing hopes to accomplish. All this piece of information is available to an extent in this article but the writers are losing some few of import points which was demonstrated and discussed in the articles mentioned above.


Your decision. Make your place on the article ‘s virtue clear to the possible reader. e.g. ‘This article provides a utile background toaˆ¦ ‘ or ‘In this article, the writer adds a new position to the argument onaˆ¦ ‘

On the whole, this article is a sincere attempt by the writers supplying some utile background of mark bing information to the readers with the presentation of of import factors. It truly goes more in item with the nucleus illustrations of mark costing but would hold been better and effectual if more information was researched in deepness along with the study in conformity to other of import beginnings.

C. REFERENCES: You must include all the mentions you have used in your assignment utilizing the Harvard referencing manner. Full inside informations of the citing system can be found at: hypertext transfer protocol: //

Swenson, D, Ansari, S, Bell, P & A ; IL-Woon, K 2003, ‘Best patterns in mark bing ‘ , Management Accounting Quarterly, March, pp. 2-17, viewed 25 March 2010, hypertext transfer protocol: //

Ewert, R & A ; Ernst, C 1999, ‘Target costing, co-ordination and strategic cost direction ‘ , European Accounting Review, Vol. 8, Issue.1, pp. 23-49, viewed 25 March 2010, hypertext transfer protocol: //

Boer, G & A ; Ettlie, J 1999, ‘Target costing can hike your bottom line ‘ , Strategic Finance, March, pp. 1-4, viewed 26 March 2010, hypertext transfer protocol: // ? tag=content ; col1

Crow, K 2002, ‘Target Costing ‘ , DRM Associates, viewed 26 March 2010, hypertext transfer protocol: //

Baxter, J 2005, ‘Managerial deductions of mark bing ‘ , Competitiveness Review, viewed 26 March 2010, hypertext transfer protocol: //


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