Homework
Chapter 13
Cost Planning for The Product Life Cycle: Target Costing, Theory of Constraints, And Strategic Pricing
Cases
|13-1 |California-Illini Manufacturing (The Theory of Constraints) |
|13-2 |Blue Ridge Manufacturing (B) |
|13-3 |Nebraska Toaster Company (Target Costing) |
|13-4 |Mercedes-Benz All Activity Vehicle (Target Costing) |
Readings
13-1: “Target Costing at a Consumer Products Company” by Mohan Gopalakrishnan; Janet Samuels, CPA; and Dan Swenson, CMA, Strategic Finance, December 2007, pp. 37-41
This article looks at target costing, a process driven by the market. It goes through the five main steps in target costing and then applies these steps through a consumer products example. Target costing works best when fully integrated into the pre-existing product development process.
Discussion Questions:
1. How does target costing differ from cost plus pricing and what key elements does it incorporate?
2. Explain how fixed costs are handled in the calculation of a target cost.
3. Where do opportunities to reduce costs occur?
13-2: “Integrating Activity-Based Costing and The Theory of Constraints” by Robin Cooper and Regine Slagmulder, Management Accounting (February 1999).
The authors of this article show how ABC costing and the Theory of Constraints (TOC) methods can be compared and used in a complementary fashion.
Discussion Question: Explain how ABC and TOC can be viewed as complementary methods.
13-3: “Is TOC for You?” by Linda E. Holmes CMA, Ann B. Hendricks CMA, CPA, Strategic Finance (April 2005).
This article gives a good introduction to the objectives and techniques of the theory of constraints (TOC). There is also a
Cost Planning for The Product Life Cycle: Target Costing, Theory of Constraints, And Strategic Pricing
Cases
|13-1 |California-Illini Manufacturing (The Theory of Constraints) |
|13-2 |Blue Ridge Manufacturing (B) |
|13-3 |Nebraska Toaster Company (Target Costing) |
|13-4 |Mercedes-Benz All Activity Vehicle (Target Costing) |
Readings
13-1: “Target Costing at a Consumer Products Company” by Mohan Gopalakrishnan; Janet Samuels, CPA; and Dan Swenson, CMA, Strategic Finance, December 2007, pp. 37-41
This article looks at target costing, a process driven by the market. It goes through the five main steps in target costing and then applies these steps through a consumer products example. Target costing works best when fully integrated into the pre-existing product development process.
Discussion Questions:
1. How does target costing differ from cost plus pricing and what key elements does it incorporate?
2. Explain how fixed costs are handled in the calculation of a target cost.
3. Where do opportunities to reduce costs occur?
13-2: “Integrating Activity-Based Costing and The Theory of Constraints” by Robin Cooper and Regine Slagmulder, Management Accounting (February 1999).
The authors of this article show how ABC costing and the Theory of Constraints (TOC) methods can be compared and used in a complementary fashion.
Discussion Question: Explain how ABC and TOC can be viewed as complementary methods.
13-3: “Is TOC for You?” by Linda E. Holmes CMA, Ann B. Hendricks CMA, CPA, Strategic Finance (April 2005).
This article gives a good introduction to the objectives and techniques of the theory of constraints (TOC). There is also a