Book•
Target costing and value engineering
31 May 1997-
TL;DR: In this article, the authors proposed a cost management method to control cost during design, which is a combination of target costing and value engineering, and found that 90-95% of a product's costs are added in the design process.
Abstract: What would happen if everyone in your company followed a disciplined approach to cost reduction? Go ahead -- imagine it. What would it look like? How can it be done?The answer -- smart cost management.Effective cost management must start at the design stage. As much as 90-95% of a product's costs are added in the design process. That is why effective cost management programs focus on design and manufacturing. The primary cost management method to control cost during design is a combination of target costing and value engineering.Target Costing Objectives:Identify the cost at which your product must be manufactured at if it is to earn its profit margin at its expected target selling price.Break the target cost down to its component level and have your suppliers find ways to deliver the components they sell you at the set target prices while still making adequate returns.Value Engineering:The connection to function: An organized effort and team based approach to analyze the functions of goods and services that the design stage, and find ways to achieve those functions in a manner that allows the firm to meet its target costs.The result: Added value for your company (development costs on-line with added value for your company; development costs on-line with selling prices) and added value for your customer (higher quality products that meet, possibly even exceed, customer expectations.)
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01 Jan 2007
TL;DR: The Handbooks of Management Accounting Research (HOMAR) as discussed by the authors is a collection of three volumes of management accounting research, including three volumes from the American Accounting Association (AAMA) notable contribution to management accounting literature.
Abstract: Winner of the Management Accounting section of the American Accounting Association notable contribution to Management Accounting Literature Award Volume One of the Handbook of Management Accounting Research series sets the context for the Handbooks, with three chapters outlining the historical development of management accounting as a discipline and as a practice in three broad geographic settings. Volume Two provides insights into research on different management accounting practices. Volume Three features contributions from some of the most influential researchers in various areas of management accounting research, consolidates the content of volumes one and two, and concludes with examples of management accounting research from around the world. Volumes 1, 2 and 3 are also available as individual product. * ISBN Volume 1: 978-0-08-044564-9 * ISBN Volume 2: 978-0-08-044754-4 * ISBN Volume 3: 978-0-08-055450-1 * Three volumes of the popular Handbooks of Management Accounting Research series now available in one complete set * Examines particular management accounting practices and specific organizational contexts * Adopts a global perspective of management accounting practices Award: "Winner of the Management Accounting section of the American Accounting Association notable contribution to Management Accounting Literature Award."
482 citations
TL;DR: The present review investigates the different natures of the techno-economic evaluations during the development process of the supply chain i.e., standard costing with respect to Value Engineering, and Target Costing based on the projected market price.
432 citations
Cites background from "Target costing and value engineerin..."
...According to most of the production economics literature (Kato, 1993; Cooper and Slagmulder, 1997; Feil et al., 2004; Ibusuki and Kaminski, 2007), TC originates from Japan where it is commonly used since the 1960s to manage production cost and gain competitiveness advantage....
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TL;DR: In this article, the authors explore how firms enact interorganizational cost management during product design and the characteristics of the relational contexts associated with them, and discuss the implications of such developments for the make-or-buy decision.
Abstract: Many firms today form alliances with their suppliers and customers that do not fit into the classical dichotomy of hierarchies and markets. The emergence of so-called hybrid relational forms makes the make-or-buy decision more complicated than the neo-classical economic perspective indicates. One outcome of these hybrid relational forms appears to be the development of cost management techniques that cross the organizational boundary between buyers and suppliers and whose objective is to reduce costs through collaborative efforts. This paper explores how firms enact interorganizational cost management during product design and the characteristics of the relational contexts associated with them. It also discusses the implications of such developments for the make-or-buy decision.
420 citations
Cites background from "Target costing and value engineerin..."
...Target costing lies at the heart of IOCM in the sample firms as it links customer demands through product design to the parts acquisition process (Koga 1998; Cooper and Slagmulder, 1997; Cooper and Chew, 1996; Kato et al., 1995; Monden, 1995)....
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TL;DR: In this article, the authors argue that inter-organizational management controls such as open book accounting and target cost management/functional analysis create new possibilities for management intervention, and that such controls not only had a role in enabling control of and insight into interorganizational processes at a distance, but also took part in re-presenting corporate phenomena such as technology, organization and strategy.
371 citations
TL;DR: A review of the management control in inter-firm contexts can be found in this article, where the authors present the state of the art in this field and evaluate critically the corresponding achievements and assist in developing new research questions.
Abstract: Several years have passed since Hopwood (Hopwood, A. G. (1996). Looking across rather than up and down: on the need to explore the lateral processing of information. Accounting, Organizations and Society, 21 , 589–590) proclaimed the need to explore the lateral processing of information, transcending legal organizational boundaries. Since then, many contributions in the management accounting literature have been published in an effort to overcoming this shortage. The aim of this work is to investigate whether these contributions have brought the possibilities of that powerful intuition to its full potential development. To this end, the paper provides a review of the theoretical and empirical literature on management control in inter-firm contexts by organizing contributions according to the breadth of the control solutions they investigated, i.e., control archetypes, management control mechanisms, and cost and accounting controls. Our objective is not only to present the state of the art in this field, but also to evaluate critically the corresponding achievements and to assist in developing new research questions. To address the limitations of the extant literature, we propose the prominence of control problems (cooperation, coordination, appropriation concerns) as a way to integrate the different streams of research, and we highlight some important variables (structure of interests, component and cognitional complexity of tasks) that have been neglected so far by management accounting contributors but, as has been suggested in the organizational literature, may influence control choices. We also identify several areas ripe for future research.
305 citations