388 CHAPTER 14 STRATEGIC COST MANAGEMENT Oniosaingamoto no 109 st Volem? EXAMPLE 14.1 e.g. Havin has uses Exampls 6390 bu the num most os purchas me red The in the (STOS) VAISIASA NOSSY yd meer over The Digital Electronics Company manufactures cameras and video equipment. It is in the process of introducing a top of the range camcorder that incorporates today's most advanced technologies The company has undertaken market research to ascertain the customers' perceived value of the product, based on its special features and a comparison with competitors' products. The results est. the survey, and a comparison of the new camcorder with competitors' products and market prices: have been used to establish a target selling price and projected lifetime volume. In addition, cost estimates have been prepared based on the proposed product specification. The company has set a target profit margin of 30 per cent on the proposed selling price and this has been deducted from the target selling price to determine the target cost. The following is a summary of the information that has been presented to management: orionib goniteoo 1900 OOTS Projected lifetime sales volume 800 2011ald Target profit margin (30% of selling price) OTO machir mated uct's / camer reduc target Prit speci uct's is 2 200 and neer the orde per exe of LOT DE 0810 og annen som 300 000 units be alisoi Target cost (800 240) Seling price), san 560sbrio 10 15 ai clair Projected cost balsojuma sai gelbtexe anitz 700 bovina art to us bns The excess of the projected cost over the target cost results in an intensive target costing exercise. After completing the target costing exercise the projected cost is 555 which is marginally below the target cost of 560. The analysis of the projected cost before and after the target costing exercise is as follows: 19var grilshebnu bns nolitegmoonism ali mol avab oameo to Salmia ofni aldpieni obivad of gebyoombo on pr Before zovic 2 After 9219V9A baronus ad lliw i jabro () wan () Olane () () Manufacturing costi diw yieaolo DOTATOW MBSI 199jong en diw outober Direct material (bought in-parts) o lliw 1390 gieeb won yinel 325 sve do Direct labour commu ed ol bamseb eis 100tonulynis atsnin 80 als ons lace SWD Direct machining costs mun ari ni molto 20 roplaeb beli20 Ordering and receiving art abg bubb 82 niliw ahoq bosimo 2 amos Quality assurancerit ni hoidubay Inson 60 sai aativilos atay 50 5 Rework also te eelsmiteo 1200 b 15 er at dere og hov brs Engineering and design 10 603 491 1200 Topo Non-manufacturing costs Marketing emels ingveitib erit yli nebi 40 alay sms Bulby nil 25 ono molto Distribution of bowelvioni 918 ejemoteo 30 slobos abroom: 20 ons and After-sales service and warranty costs 27nul en 97 59 no 1964 ulsen 555 Total cost emoteno yd boulev Tom as eqyoto 9100buloni ad su mentaliscondidikan TO dobbnis also in ID ESB en visiting Jon 25 1200 10 pit and is boibni de colore 1205 bis guarantee quality prior to delivery. In addition, the marketing, distribution and customer after-sales services relating to the product are subject to an intensive review, and process improvements are made that result in further reductions in costs that are attributable to the camcorder. The projected cost after undertaking all of the above activities is 555 compared with the target cost of 560 and at this point the target costing exercise is concluded COS de (1 ca of 3 8 C ic 388 CHAPTER 14 STRATEGIC COST MANAGEMENT Oniosaingamoto no 109 st Volem? EXAMPLE 14.1 e.g. Havin has uses Exampls 6390 bu the num most os purchas me red The in the (STOS) VAISIASA NOSSY yd meer over The Digital Electronics Company manufactures cameras and video equipment. It is in the process of introducing a top of the range camcorder that incorporates today's most advanced technologies The company has undertaken market research to ascertain the customers' perceived value of the product, based on its special features and a comparison with competitors' products. The results est. the survey, and a comparison of the new camcorder with competitors' products and market prices: have been used to establish a target selling price and projected lifetime volume. In addition, cost estimates have been prepared based on the proposed product specification. The company has set a target profit margin of 30 per cent on the proposed selling price and this has been deducted from the target selling price to determine the target cost. The following is a summary of the information that has been presented to management: orionib goniteoo 1900 OOTS Projected lifetime sales volume 800 2011ald Target profit margin (30% of selling price) OTO machir mated uct's / camer reduc target Prit speci uct's is 2 200 and neer the orde per exe of LOT DE 0810 og annen som 300 000 units be alisoi Target cost (800 240) Seling price), san 560sbrio 10 15 ai clair Projected cost balsojuma sai gelbtexe anitz 700 bovina art to us bns The excess of the projected cost over the target cost results in an intensive target costing exercise. After completing the target costing exercise the projected cost is 555 which is marginally below the target cost of 560. The analysis of the projected cost before and after the target costing exercise is as follows: 19var grilshebnu bns nolitegmoonism ali mol avab oameo to Salmia ofni aldpieni obivad of gebyoombo on pr Before zovic 2 After 9219V9A baronus ad lliw i jabro () wan () Olane () () Manufacturing costi diw yieaolo DOTATOW MBSI 199jong en diw outober Direct material (bought in-parts) o lliw 1390 gieeb won yinel 325 sve do Direct labour commu ed ol bamseb eis 100tonulynis atsnin 80 als ons lace SWD Direct machining costs mun ari ni molto 20 roplaeb beli20 Ordering and receiving art abg bubb 82 niliw ahoq bosimo 2 amos Quality assurancerit ni hoidubay Inson 60 sai aativilos atay 50 5 Rework also te eelsmiteo 1200 b 15 er at dere og hov brs Engineering and design 10 603 491 1200 Topo Non-manufacturing costs Marketing emels ingveitib erit yli nebi 40 alay sms Bulby nil 25 ono molto Distribution of bowelvioni 918 ejemoteo 30 slobos abroom: 20 ons and After-sales service and warranty costs 27nul en 97 59 no 1964 ulsen 555 Total cost emoteno yd boulev Tom as eqyoto 9100buloni ad su mentaliscondidikan TO dobbnis also in ID ESB en visiting Jon 25 1200 10 pit and is boibni de colore 1205 bis guarantee quality prior to delivery. In addition, the marketing, distribution and customer after-sales services relating to the product are subject to an intensive review, and process improvements are made that result in further reductions in costs that are attributable to the camcorder. The projected cost after undertaking all of the above activities is 555 compared with the target cost of 560 and at this point the target costing exercise is concluded COS de (1 ca of 3 8 C ic