target costing Case Study example
Masters
Case Study
Finance & Accounting
Pages 4 (1004 words)
Download 0
Target Costing Answer 1 Innumerable modifications were faced by Mercedes in 1990 facing stiff competition from the Lexus. The company also underwent a 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…

Introduction

Thus the cost has never been a primary consideration for the company. But the changes which aroused the competitive environment of the company were cost competition and product innovation with its competitors. The invention of the new segment related to the sports utility vehicle and other market niches are the other factors of the competitive environment for Mercedes. Answer 2 The main changes that took place in the worldwide luxury automobiles were the introduction of the new products in the market which led to the rise in the competition of the company; partnering with the suppliers; reduction in the complexity of the system; new emphasis was being placed on the cost control of respective companies whereas Mercedes cost control was being led by engineers rather than accountants; the number of managerial level were being reduced which was still high with Mercedes; the concept of lead time were being introduced to tackle the costing of companies in an organised way but Mercedes lacked accountants specifically assigned to look after the costing of the company. Answer 3 The factors based on which MB competes with the other automobile producers are pricing of the product ranging from mid to upper zone, quality and functionality of the product maintained at a very high level. ...
Download paper
Not exactly what you need?

Related papers

Traditional accounting pricing tools are not fit for the 21st century
Basically the accounting functions may help in price determination in this modern market place because the accounting functions allow record keeping of all business transactions making it possible to easily estimate the costs and then calculating the prices to be charged accordingly. Several pricing tools have been introduced for sellers and producers in order to the prices for their products…
Strategic Management Accounting
Historically the role of management accounting conferred to operational level budgeting, target setting and control with little or no influence towards strategy development. With the passage of time, this trend has been changed because of Strategic Management Accounting as nowadays this trend and focus has been driven towards strategy formulation and development (Kader et al, 2006). This strategy…
Target Costing
One of the ways is that there is proactive focus on cost. The strategy once applied effectively, some of the unnecessary costs are thereby eliminated. The strategy determines in advance the costs to be incurred in a production process. Once they are determined, some of the costs that may have been incurred in a firm hence interpreted as loss are dropped. The firm will not incur the costs and will…
Management Accounting assignment
Cost is the most important factor which influences the management decision. The management needs to maximize its cost by different policies such as just in time, target costing etc but should not compromise on the products quality (Straus, 1989). Target Costing: Target costing is one of the new costing techniques used by managers to minimize its cost effectively. Target costing is cost based…
Process Costing
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 costing helps to set right prices or adjust the process if costs cannot allow reasonable pricing.…
Process Costing
This paper is a comparative analysis report on process costing. The paper aims to review five scholarly articles to determine that how process costing is a significant and effective cost management procedure. The objective here is to extract the comprehensive knowledge on process costing and its execution. Importance of Process Costing When an organization involves the multi-level production…
Intermediate Management Accounting past paper
Nevertheless, the target profit margin is seen to rise substantially from a low of -0.004% in year one to 10.25% in year three. (b) Issues facing firms like KZ in making decisions on the costs to cut in order to meet the specified target income level. Costs relevance: It could be difficult for firms like KZ to associate all the costs involved to products. This makes the firm continue incurring…