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Target Costing Versus Customer Profitability Analysis

Introduction A manufacturing company in Coventry which is using traditional management accounting has asked for advice on improving operational performance. Following we introduce two contemporary developments (target costing and customer profitability analysis) and detailed analyze customer profitability analysis. Target Costing versus Customer Profitability Analysis (CPA) Target costing is an aggressive profit and cost management strategy implemented in the earliest stage of new product development. Different from conventional cost plus pricing methods in which the managers decide the prices based on existing costs. Target costing takes a different approach to identifying the price, profit and effectively control cost. In this process, the functional design and pricing strategy of a new product will be planned before cost and profit accounting. As Figure 1 revealed, based on market research, the analysis of market competition and willingness of target customers in paying each function will be taken as two criterions guiding the design of products. The positioning and pricing should be closely linked to each other in order to engage the product in target groups. Afterwards, with the restriction of price, the profits and costs involved in manufacturing and selling will be balanced. The profit m argin, which is estimated from expected return of investment from shareholders, is an indicator for managers to determine the proportion of profits and costs. Since theShow MoreRelatedEssay on Nissan Motor Company992 Words   |  4 PagesMotor Company – Target Costing System – Extra Question 1 – What is the purpose of Nissan’s target costing system? Nissan deployed target costing system to achieve following benefits Systematic approach: The purpose of the target costing system is to have a systematic procedure to manage costs for new product introductions in order to allow them to earn the necessary profit margin to meet corporate profitability objectives. Customer Orientation: Target costing promotes customer focused ratherRead MoreAcc 206 Final1520 Words   |  7 Pagesfashion, with the expected end target being to triple the current levels. The plan is to push sales into the targeted range of $3 million within 3 years versus the current amount which sits at $1.2 million. We will identify the perceived risk factors that may impact this aggressive strategy and its successful execution. The following will be those risk factors: i. Risk of product not meeting customer demands/expectations ii. Acceptability risk of customers with the new product being released Read MoreAbc System26363 Words   |  106 PagesC H A P T E R F I V E INTRODUCTION TO COST MANAGEMENT Activity-Based Costing and Management After studying this chapter, you should be able to . . . 1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the beneï ¬ ts and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM)Read MoreStrategic Management Accounting: Adapting to the Changing Needs of Business2686 Words   |  11 Pagesattribute costing, brand value budgeting and monitoring, competitor cost assessment, life cycle costing, quality costing, strategic costing, competitive position monitoring, competitor appraisal based on publish financial statements and value chain analysis. This paper will review some of these recommendations that have had impact on development of strategic management accounting. The term SMA was coined by Simmond (1981, 1982). Simmonds (1981) defines the concept as the provision and analysis of managementRead MoreAldi s Performance Based On Their Current Strategy1742 Words   |  7 Pagescurrent competitive market. The report will identify the mission and fundamental objective of the company. Furthermore, the report draws attention to the analysis of strategies of ALDI and evaluates the performance of their current strategy by using Porters cost leadership and differentiation strategy. In addition, the report provides an analysis of external fit with the help of Porters Five competitive forces and ALDI’s existing performance against their FO. Finally report will conclude with fewRead MorePillsbury: a Tale in Management2520 Words   |  11 PagesWritten by: Louis Maatiaha Tangiia Pillsbury: A Revolutionary Tale In Management Assignment: Pillsbury Customer Driven Reengineering Date: 28/04/2013 Student Name: Louis Maatiaha Tangiia Student ID: 4594096 Abstract This report discusses the Pillsbury Company s reasons for changing their strategy and assessment of the new strategy using Value Chain Analysis and Activity Based Costing . A brief history of Pillsbury and its old strategy is outlined initially. The discussion then focuses onRead MoreMaf6803408 Words   |  14 PagesCUSTOMER PROFITABILITY ANALYSIS Customer profitability analysis (CPA) can be defined as a method used to compare the costs of all the activities used to support a customer or a customer group with the revenue generated by that customer or customer group. It is the analysis of the revenue and costs that relates to the customers which can be determined by considering the similarities and differences in customers’ buying behaviours and customer preferences. From the definition, it shows three featuresRead MoreStrategic Cost Management and the Value Chain2097 Words   |  9 PagesStrategy. From the article also, Shank and Govindasamy stated that the primary focus of a low cost strategy is to achieve the lowest cost comparative to competitors while the main focus of the differentiation strategy is to create something that customers perceive as being unique. Furthermore, the framework of the value chain is for breaking down the chain into strategically relevant activities. Methodology There are two (2) main steps involved in the Value Chain which are to identify the value chainRead MoreRole of Management Accountant2600 Words   |  11 Pagesreferences (Total 8 pages) ANNOVIM PLC ANNOVIM PLC INTRODUCTION Managers in Annovim Plc have to understand since the early 1980s a number of ‘innovative’ management accounting techniques have been developed such as activity-based techniques (costing, budgeting and management), strategic management accounting and the balanced scorecard. From the context of the assignment, each division is regarded as a profit centre, where the divisional managers of the three divisions i.e. candy bars, chews andRead MoreProductivity and Quality4407 Words   |  18 PagesActivity Based Costing for Activity Based Management Meiklejohn Paul, Director Management Consulting 17 February 2012 Agenda 1. What is Activity Based Costing (ABC)? 1.1 What is ABC and Why should it be used? 1.2 Traditional costing vs ABC 1.3 Activity based costing processes 2. How ABC should be used to manage (Activity based management)? 2.1 When to use ABC? 2.2 How to use ABC for ABM? 2.3 Scoring High - Low value adding activities 2.4 Activity Based Management applications 3. ABC/ABM implementation

Life Through My Eyes Essay Example For Students

Life Through My Eyes Essay It was the day of my mums friend Junes wedding. Everything was fine and in place and it was a perfect sunny day. At the reception of the wedding I began to feel a pain around the back of my ribs. I thought I had just been hit there or something, so I took notice of it. I carried on with the day, talking and laughing. Feeling proud in my nice tartan kilt. When it got to dinner, it was about six oclock, I had a little bit of steak. It was nice and rare. I then started to feel sick. The pain was back, a sharp piercing pain. It felt like someone was slowly piercing my skin with a blade. The pain made me think about when my dad left us. To me the pain was the same, I missed him more than anything. Lifes evil I guess but you gotta deal with it. The party went on and I was feeling worse, I was pale white, white as a piece of chalk. We took a trip to Yorkhill Childrens Hospital later that night. The doctors immediately ran tests, I felt like I was in an experiment. I was constantly getting my bloods taken too. I was frightened that something serious was wrong, fear was stalking me and my thoughts were all over the place. Some time later the doctor came back with results, Harry you have Nephrotic Syndrome and its serious. I didnt know what it was but when I heard it was serious, my heart sank. I collapsed backwards onto the hospital bed in fear. Nephrotic Syndrome was a kidney disease, my kidneys were failing. I was treated very quickly and I was fine, Well I still felt like I went to hell and back. Who would have thought that so much of your life could be shattered at the age of three? I couldnt go abroad for nine years, I basically lived on steroids and had to go to the hospital nearly every week. Day after day I was at the hospital, It wasnt looking good, I had protein in my blood and I was taking in too much fluids. I hated being ill but loved it at the same time because I was always getting presents, It was like christmas every day. My kidneys played with me. I was fine for months then unwell for months. For years life was the same, in and out of the hospital constantly. I remember spending my birthday and New Years Day in hospital. I look back to then and feel lucky. When I was about eleven I had to get my finger pricked for bloods, In a cancer unit. It was for children and every week there would be a new patient, It was horrible. The children were always happy though and always fighting like mini versions of S. A. S in Afghanistan. When I was twelve, me and my mum were told that Nephrotic Syndrome was curable. It was a drip but it took two doses. To think that my disease could be cured felt amazing, I felt like I was on top of the world! When I got my first dose. I had to get a huge cannula, well what to me looked huge. It made me feel dizzy, sick and gave me a sore head. The eight hours id spent in hospital was paying off though. Life once again was the same as normal, just repetitive. During this time I felt lonely but I started to fit in at Rosshall and I realised I wasnt the only one who had to take regular medicine. There was someone else in the same year as me and their medicine and illness was very similar to mine. It felt great knowing someone else knew my pain. If i needed someone to talk to about it, I just turned to them, Life felt so much easier. A year and half or so later, I got my second dose of the medicine. Same as last time, nothing different or more interesting. So Im now here at this point in life, waiting

US History CR2 - Events Leading to the American Re Essays - Law

US History CR2 - Events Leading to the American Revolution Directions: Your answer must be a minimum of 5 complete sentences. Prompt: Pick any 3 of the items from the list below, and explain how each chosen event changed the American colonists' perceptions of Britain during the years 1763 to 1775. In other words, discuss how the event made American colonists think it was time for independence from Britain. Pick 3 from the following list to discuss: The French and Indian War (Seven Years War), The Proclamation of 1763, The Stamp Act, The Intolerable Acts, and Common Sense Response: The Proclamation of 1763, The Stamp Act, The Intolerable Acts, changed the American colonists' perceptions of Britain during the years 1763 to 1775. The Proclamation of 1763 was declared the same year as the 1763 Treaty of Paris, the treaty that ended The French and Indian War. The colonists help Britain with this Seven Years War over terrorist. After over 2,500 days of fighting a war, the colonists reaped no benefits. Parliament passed the Proclamation of 1763 in an attempt to prevent any more American colonists from settling beyond the Appalachian Mountains. The same land colonist were entitled to. The colonists fought alongside Britain against the French and Indians for this land, and they receive none of it. They lost their own people, sacrificed soldiers in terrifying battles of pure bloodshed, while the colonies were in its youth. Due to this, many colonists ignored this ludicrous proclamation. The proclamation is an extreme act of disrespect, demonstrating the colonists were only for Great Britain's personal gain, and nothing else. Shortly after the absurd Proclamation of 1763, the Stamp Act was established in 1765. The Stamp Act was a tax on every single piece of paper, a document, a newspaper, a letter, etc. This law required a stamp to be on the paper as proof of paying-paying with only hard currency was allowed. This act created widespread anger in the colonies. The colonists had no representation in Parliament. Thus , taxes imposed by Parliament on the colonies represented a violation of English civil liberties. In response, the Committee of Correspondence and the Sons of Liberty were created. Violent protests occurred, with murders of tax collectors, destruction of property, refusal of ships carrying stamps were denied entry, along with extremely efficient boycotts of British goods from many colonies. Including that, the stamp act was ignored by hundreds. The colonists were already deeply upset with the proclamation, and became frustrated with this new act. Not only did the British us e the colonists as pawns in a game of chess, did not give any reasonable benefits to the colonies after aid from the war, they did not let the colonists have any representation, the colonists went ignored and so did the ludicrous laws. The British response to the Stamp Act's impact on the colonists, the Intolerable Acts were created. There were five parts to the acts, the "Boston Port closed until the value of the destroyed tea was repaid, Massachusetts colonial government suspended and placed directly under the control of the royal governor appointed by the king, British officials accused of crimes would be tried in England rather than in Massachusetts, renewed the Quartering Act of soldiers in the colonies, Quebec Act expanded the border of Quebec into land claimed by other colonies". Britain neglected the colonies, and punished all efforts that displayed the colonies cries and pleas to be treated with proper rights. The colonists were aware actions had to be made, all efforts to be civil, all efforts to act out, have failed. The only option left to acquire the rights they wished for, was independence. The Proclamation of 1763, The Stamp Act, and The Intolerable Acts united the colonies to fight for independence from Britain.