cost account University Accounting Question USING TARGET COSTING TO DELIVER VALUE AND RESPONSIBILITY

College of Administration and Finance Sciences
USING TARGET COSTING TO DELIVER VALUE AND RESPONSIBILITY
Course Name: Cost Accounting
Student’s Name:
Course Code: ACCT 301
Student’s ID Number:
Semester: 1st Sem 2023-2024/ 1445 H
CRN:
Instructor: Dr Fathimunisa Hanfy
Marks Obtained: –
-/10
High/Middle/Low
INTRODUCTION
❖Target costing aligns costs with customer value
❖Enables responsible pricing to meet profit goals
❖Delivers value and features customers want
❖Promotes social responsibility to customers
IMPORTANCE
❖Social responsibility improves brand image
❖It demonstrates ethics and sustainability to
stakeholders
❖Consumers and investors increasingly value
responsibility
❖Can give competitive advantage over less
responsible firms
KEY TERMS
❖Target costing: Designing to a specific cost
target
❖Customer value: Benefits relative to price
paid
❖Social responsibility: Sustainable, ethical
operations
❖Value analysis: Engineering to meet cost
targets
METHODOLOGY
❖Research customer needs and desired price points
❖Set target costs to deliver value at price points
❖Use value analysis to engineer products to target
❖Iterate designs until target met within constraints
POTENTIAL CHALLENGES
❖Increased costs from additional product features
❖Difficulty forecasting customer value perceptions
❖Engineering redesign delays time-to-market
❖Stakeholder pressure to reduce costs
OVERCOMING CHALLENGES
❖Leverage value analysis and pilot testing
❖Conduct extensive market research
❖Set timeline buffers for redesign iterations
❖Communicate value of investment to stakeholders
BENEFITS AND RESULTS
❖Increased customer satisfaction and loyalty
❖Competitive differentiation and brand reputation
❖Greater employee engagement on product teams
❖Stronger supplier relationships through collaboration
CASE STUDY EXAMPLE
❖Company X used target costing for new product launch
❖Delivered additional safety features customers wanted
❖Saw 20% gain in market share year-over-year
❖Ranked top in industry for customer satisfaction
COST ACCOUNTING DATA
❖Energy consumption, material waste, scrap
generation
❖Labor costs, production bottlenecks, downtime
❖Inventory carrying costs, obsolete inventory
❖Logistics costs, transportation efficiency
INTERPRETATIONS
❖Customers value safety and willing to pay $50
premium
❖Target costs set to include desired safety features
❖Value analysis achieved cost through simplified
components
❖Result aligns with customer needs and prioritie
DISCUSSION
• Target costing uses cost data to price responsibly
• Delivering fair value and features shows accountability
• Managing costs ethically reflects social responsibility
• Aligns business success with customer and societal
value
CONCLUSION
❖Cost data identifies waste and highlights
sustainability opportunities
❖Managing operations ethically conserves resources
❖Reducing waste and optimizing usage promotes
responsibility
❖Cost accounting supports profitability and social
responsibility
REFERENCES
❖Kapoor, S., & Kumar, N. (2019). Does packaging influence purchase decisions of
food products? A study of young consumers of India. Academy of Marketing
Studies Journal, 23(3), 1-16.
❖Cakranegara, P. A., Kurniadi, W., Sampe, F., Pangemanan, J., & Yusuf, M.
(2022). The Impact Of Goods Product Pricing Strategies On Consumer
Purchasing Power: A Review Of The Literature. Jurnal Ekonomi, 11(03), 11151120.
❖Keiningham, T., Aksoy, L., Bruce, H. L., Cadet, F., Clennell, N., Hodgkinson, I.
R., & Kearney, T. (2020). Customer experience driven business model innovation.
Journal of Business Research, 116, 431-440.
THANK YOU