Nobody downloaded yet

Costing - Essay Example

Comments (0) Cite this document
Summary
Target costing method of accounting is a cost reducing and profit scheduling process that concentrates on minimizing costs for merchandises in the RD&E (Research, Development, and Engineering) phase of the total life cycle of a good. This method studies all areas of the value…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.9% of users find it useful

Extract of sample
"Costing"

Download file to see previous pages The Target costing method is widely used in the RD&E phase of the total life cycle of a good.
The Target costing accounting method has been extensively used since time immemorial. This method dates back to the early 20th century at the height of industrial revolution in Europe and North America. Henry Ford, the famous engineer designed the first vehicle in 1908 in a factory with an aim of minimizing costs and maximizing profits through mass production. Ford managed to retail the T model vehicle at an average of $ 495 in the year 1913 (Wilson 2013). Understandably, for him to achieve that fete, the engineer and his planners had to minimize production costs to a bare minimum.
Henry Ford accounted for raw material expenses through a backward integration process, labour expenses through specialization and division of labour and other expenses through frugal behaviour. Fords Company received a boost after the end of the Second World War (WWII) for the demand for the vehicles rose sharply (Wilson 2013). With increased demand, the price for the vehicle increased upwards. Because Target costing is normally applied to fresh merchandise planning, which mostly needs investments in new tools and equipment, it is justifiably correct to say that price influences both investments and expenses.
The Total life cycle cost accounting method is a broad way for company executives to comprehend and account for costs through merchandises design, creation, and manufacturing, promotion, delivery, maintenance, service and clearance phases. It denotes a process of organizing all expenses along the value chain (Keuper 2011). By way of employing this method, cost managers are able to salvage some significant costs. By selected approximations, about 80% of goods total life expenses are committed by assessments made in the course of the RD& E phase, emphasizing the significance of managing all expenses along the value ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Costing Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1691056-costing
(Costing Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/finance-accounting/1691056-costing.
“Costing Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/finance-accounting/1691056-costing.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Costing and Traditional Costing
...Introduction: This exercise dwells on activity based costing and traditional costing. Cost allocation in companies can provide inaccurate information about the profitability of their goods and services. Traditional cost allocation methods allocate overhead cost outlays with the aid of one driver like direct labour hours, direct labour dollars, or machine hours. Sales-related costs are usually ignored. While it’s theoretically correct, in most organisations a single overhead cost driver is not enough to accurately allocate the group of overhead cost outlays to the outputs that are produced through them or...
11 Pages(2750 words)Essay
Full Costing and Variable Costing
...?Full Costing and Variable Costing Contents Full Costing and Variable Costing Instructor 1 Date 1 Contents 2 Executive Summary 3 Main Findings 4 Direct Costs 5 Indirect Costs 6 Full Costing 6 Variable Costing 7 Summary of Full Costing and Variable Costing Components 8 Making a choice between the two 9 Conclusion and Recommendations 10 References 12 Accounting for Management, 2011. Advantages and Disadvantages of Absorption Costing System. [online] Available at < http://www.accountingformanagement.com/advantages_and_disadvantages_of_absorption_costing.htm...
8 Pages(2000 words)Essay
Target costing
...?Target Costing Answer Innumerable modifications were faced by Mercedes in 1990 facing stiff competition from the Lexus. The company also underwenta lot of cultural changes which took place in the top management of the company. The company has never been in this situation of losing money before. The company is mainly known for the best of designs ever produced. This has always led to the company pricing its cars little above the cost of production and engineered designing. The demand for Mercedes has always remained high in respect to its supply as it is built for the elite class of the society. Thus the cost has never been a primary consideration for the company. But the changes which...
4 Pages(1000 words)Case Study
Process Costing
...? Process Costing Grade Outline Introduction……………………………………………………………………….…..3 Importance of the Study………………………………………………………….…...3 Literature Review……………………………………………………………………..3 Conclusion…………………………………………………………………………….6 References……………………………………………………………………….…….8 Introduction Tracing production costs can be a challenging task especially when one is dealing with both direct and indirect expenses. Companies need to know the amount of money spent on their products before they can set appropriate selling prices. Firms that fail to accurately determine process costs can find themselves setting too low prices that lead to losses or too high prices that scare away customers. Accurate process...
4 Pages(1000 words)Essay
Variable costing
...?TABLE OF CONTENTS Executive summary 2 Assumptions of marginal costing 3 Uses of marginal costing in short term decision making 3 Types of costing methods 4 Marginal costing absorption method 5 Advantages of Marginal Costing over Absorption Costing 6 Recommendation 7 Conclusion 7 Costing is one of the managerial accounting functions which needs a careful selection and evaluation of the effectiveness of every technique used by a firm. Despite the various methods of pricing a firm based on its industry should select the most effective method to the firm. Costing is the main function in every firm, the rational being every firm exists in its industry with the main aim as profit making. References 8 VARIABLE COSTING Executive summary... This is...
4 Pages(1000 words)Assignment
Kaizen Costing and Target Costing
...Kaizen Costing and Target Costing The paper revolves around two costing techniques Kaizen and Target costing. In the Kaizen costing, actual costs are compared with target cost reductions under dynamic conditions. The employees are considered to be of vital importance in the process, where as in the former approach, employees are neglected. The basis of Kaizen costing is continuous improvement. Target costing is a process that determines and realizes total cost in a way that the total cost of producing a product must be traded off with the desired profit...
8 Pages(2000 words)Essay
Absorption costing and marginal costing
...Introduction: Simpson Ltd. Wanted to manufacture and sell 30,000 units of its product in the year 2007 for which, the marketers estimated that there would be a demand slow down in that year and as such 30,000 units could not be sold easily. However, the management wanted to increase the demand by increasing the production of the product and as such produced 45,000 units with a thought that by putting the pressure, the selling agents could push the products more than the estimated sales into the market. However, only 20,000 units could be sold for which the profit ascertainment under both the absorption costing and marginal costing is calculated below: Income Statement of Simpson Ltd. For the year 2007...
9 Pages(2250 words)Assignment
Product Costing
...to place in a better and sound managerial accounting system. The proposed solutions seem to be useful for John and Mary Farmers and other agricultural enterprises. Its basic aim is to gather better and vast information for managerial purposes and such information will be used in the long term as well. As, John and Mary Farmers are more keen in knowing the differences in the cost of production between farms and the profit difference between differing commodities produced over the years. To address this issue, the managerial accounting system will have its respected costs and profit centers. This method is more commonly known as “responsibility accounting”. Each service center is given its support...
4 Pages(1000 words)Essay
Absorption Costing versus Variable Costing
...Absorption Costing versus Variable Costing Introduction Absorption and variable costing are one of the important costing techniques which facilitatean organization to allocate organizational expenses against revenues and determine profits. Both the techniques follow different processes. Absorption costing is however considered to be more appropriate than variable costing as it is recognized by GAAP. The absorption costing technique is more favourable as the profits estimated under this system are more accurate. Variable costing is seen to inflate expenses and reduce the level of profits. Both the methods are usually adopted to analyse the organizational efficiency and to estimate the expenses incurred under various heads related... to...
6 Pages(1500 words)Essay
Activity-Based Costing vs Traditional Costing
...Activity-Based Costing vs. Traditional Costing The activity-based product costing differs from the traditional product cost method in the following manner, the activity-based methods of costing regulates activities related to production, allocates a cost to the same activities and finally decides the product cost. Conversely, the traditional method of costing allocates cost at an average rate to all product-based products. The traditional method brings together any price that are indirect in the production and equally implements the costs across the board...
1 Pages(250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Costing for FREE!
Contact Us