ACC35 -1203B-03
Phase 2 IP
Colorado Technical University Online
Professor Jacob Gordon
09/03/2012
I have been asked to prepare a presentation for the board of directors meeting. Managers fool decisions based on embody information, everything that leads to the bottom line. Product think and pricing are two major categories that must(prenominal) be supported by cost information. They must know if the value of the harvesting will be market determined whereby they must decide if they stool profitably produce the product in order to make a profit or if they can set their own price using cost convinced(p) pricing. Product planning is also supported by cost information. Target cost is used to concentrate their efforts on product and development design that will lend a fair profit.
Cost plus pricing uses variable be and portions of firm operating costs. It seems a fairly simple calculation. For example:
If a contrivance has a variable cost of $.75, a obstinate allocation of $.25 and a desired markup of 30% the price of the widget would be calculated like this: (.75 + .25 )*(1 + .30) = $1.30. (Investorwords).
Target costing, used in product/process design, is favored by Japanese companies in the auto industry, electronics and precision manufacturing.
It differs from traditional costing methods in which costs are based on design and markup, and determining a price. Target costing sets price first, subtracts target income and then reaches a cost. It is a time saving tool. In target costing more of the cost is allocated to the development stage which reduces costs during the labor stage. Just-in-Time, Total Quality Control, Material Requirements Planning and Value engineering are used in cost reduction practice. Just-in-Time (JIT) strain management technique, one of the systems mentioned above, minimizes inventory by having materials arrive at exactly the time they are needed for production or sale. This means less space needed for storage and...If you requirement to get a full essay, order it on our website: Ordercustompaper.com
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