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MAF 635

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by

farah nik

on 1 April 2014

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Transcript of MAF 635

MAF 635
DEFINATION
WHAT???

1) Select the target price
2) Determining the margin
3) Make sure cost meets this


TARGET COST = ANTICIPATED SELLING PRICE -
DESIRED PROFIT
PROCESS
ACHIEVING THE TARGET COSTING
REASONS OF ADOPTING LCC
- enables the management to make assessment of the profitability of a product over its life cycle

- provide useful information for decision making
TARGET COSTING &
LIFE CYCLE COSTING
market
condition
target selling
price
target profit margin
target cost
cost reduction
objective
current cost
current cost
-
target cost
=
cost reduction
objective
STEP TO REMOVE COST
cross functional team
value engineering (VE)
STEPS TO REMOVE COST
cross functional team
- extensive negotiations between team members

- identify the cost that can be reduced in the process of manufacturing of the product
value engineering
- analyzing the design of the product and production process

- modify the design of some component

- improve the efficiency in production process

- manage the relationship with supplier carefully

- improve manager ability

- build good bounding among the management team


ADVANTAGES
- detect hidden problem

- cost saving, risk reduction, schedule improvement, improved design and better collaboration
- must be perform early

- depends on team work creativity concept

- cooperation difficult to achieve

- discussion become too long
ADVANTAGES & DISADVANTAGES OF VE
DISADVANTAGES
COMPARISON OF TRADITIONAL COSTING AND TARGET COSTING
CHARACTERISTICS OF TARGET COSTNG
focus on customers' demand & price agreed
emphasis on cost reduction at early stages of product development
need consideration of whole product life cycle
involvement of whole value/ supply chain
ADVANTAGES AND DISADVANTAGES OF TARGET COSTING
TARGET COSTING
definition
WHAT???

- accumulated cost

- over product life (R&D until removal)
STAGES
STAGES
THANK YOU...
PREPARED BY
:
NIK NUR FARAHIYAH NIK ASNI
ROHANEM ISHAK
NURUL SYAFIQAH WAGIMI
LIFE CYCLE COSTING (LCC)
PROS AND CONS OF LCC
Full transcript