Advanced Managerial Accounting Report - Essay Example

Article 8 Control Tomorrows Costs Through Todays Designs discusses the importance of managers of using the concept of target costing. Targeting costing controls exists to make sure a price is met. The use of target costing ensures development teams bring profitable products to market. Its use accomplishes the goal of ensuring that success with customers yield economic success for a company. Article 8.2 The Use of Target Costing in Developing the Mercedes-Benz M-Class is similar to the first article in that both articles focus on target costing.

Article 8.1 provides a more in-depth discussion of the topic, while article 8.2 focuses more on a specific company that used target costing, Mercedes Benz. Both articles illustrate the advantages associated with using target costing. The project phases of the M-Class project were concept phase, risk and opportunities, project realization, goal oriented, and production phase. At Mercedes Benz the usage of target costing was first brought to the company by the engineering staff, not the accountants.

A company that was mentioned in article 8.1 was Olympus. This company made the change from cost targets to target costing. At Mercedes Benz target costing was a logical choice because the company was designing the product from scratch and at the same time it was introducing a new production facility. To be successful with target costing companies have to consider a variety of factors including price led costing, customer orientation, focus on product and process design, cross functional teams, life cycle cost reductions, and value chain involvement.