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1 podio Control over the contendentes Decision Point, Le Point of Good com.ng/loching portion of Milestones estones or to the sees canto stones can be specified in terms of Seten 3 months of the deg som specific activities are completed 7.1.12 Industries for Target Costing Some Industries areas where Target Casting is include the following 1. Assembly-oriented Industries, as opposed to reperne Deko Industries Battute homogeneous pour 2 Entities which are involved heavily with the diversification of the product lines 3 computer-titled Design, Flotile Mandarin Systems, Office Potomation, and Computer-Aided Manufacturing 4 Entities which have experienced shortes Product lite des where the produtos Pas Petrusion tyczy be achieved in a short time, 5. Entities which must develop systems for reducing costs during the planning, deling and terment stages. Product's Life Cyde. 6. Entities which are implementing management methods like Just-in-Time, Value Engineering, and Tozluty Com 7.1.13 Target Costing in Service Sector 1 Target Costing is applicable for Service Sector also, today at the stage or actual implementation of service 2 in the Manufacturing sector, Teget Costing is useful I applied in the Product Design Szegenwerts. Homie, Service Sectisa, Target Casting can be applied even at the implementation or service providing phase 3. In the Service Sector, the Target Costing Team can observe and analyse the di provision services to custo and provide suggestions for cost reduction, by re-configuring / streamining the activities becomed by endo the course of rendering the service 4. Application of Target Costing at the Production prese in Service Sectior, will - (a) lead to cost and wastage red (b) improve productivity of employees, and (c) enhance the quality of services provided to customers. Concept Illustration Size whether and why the following statements are valid or not valid Statement Answer I Reason Valid. Target Costing seeks to provide competitive advantage over de Taga Corting is not applicadle which is not applicabile in case of a Monopoly Market. (See below to a logo Market atemative) Target Casting ignores Hon Invalid. Target Costing seeks to ensure that only Value Added Ad Value Added bones. performed, in an effective manner. Hence, it seeks to study Non- Activities, and suggest measures to eliminate them NokeFor (i) above, Alternative View is as under: Given Statement is Invalid. Even in a Monopoly Mar Criting sks to manasse costs effectively, and increase the profitability of the Entity. 7.2 Cost Reduction Aspects Beneficiary (a) Individual - Society Country as a whole Advantages Improvement in profits leading to stability, continuity and growth, Enhancement in value of Share, and increase in Wealth of them Aty of goods and services of proper quality at reasonable prices. Reduction in cost of producing goods and services Increase of Market Share in Exports and increased Foreign Exchange Savings. Increase in Government's Tax Revenue. 7.2.2 Cost Reduction vs Cost Control Particulars Meaning Permanence Saving Focus 5. Performance Evaluation Nature of 7. Cost Reduction Cost Control Cost Reduction is the achievement of real and Cost Control involves a comparison of permanent reduction in unit cost of products actual with the standards or budgets, to manufactured / services rendered. regulate the actual costs. Permanent, Real and genuine savings in cost. Could be a temporary saving also. Saving in Cost per unit. Saving either in Total Cost or Cost per unit. Product Quality Product's Utility, Quality & Characteristics are retained. Quality Maintenance is not a guarantee It is not concerned with maintenance of performance investigating variances and taking remedial The process involves setting up a target, according to standards. measures to correct them. Control is achieved through compliance Continuous process of critical examination, includes Standards with standards. Standards by themselves analysis and challenge of standards. are not examined. Dynamism Fully dynamic approach. Less dynamic than Cost Reduction Universally applicable to all areas of business. Does not depend upon standards, though target cost for which standards can be set. Limited applicability to those items amounts may be set. Nature of on Emphasis here is partly on present costs and largely Emphasis present and pa Costs on future costs. behaviour of costs. To find out substitute ways and new means, e.g. 10. Analysis waste reduction, expenses reduction and increased competitive analysis of actual resu with established norms. production. 11. Nature of Corrective Action - operates even when efficient Preventive Function Cost Varia cost control systems exist. There is room for Function are analysed, evaluated and investigat reduction in the achieved costs. 12. Tools & See List below. Budgetary Control and Standard Costa Techniques Coverage 7.7 Concept Illustration: Classify the following under Category (CC) - Cost Control or Question (i) Costs exceeding Budgets or Standards are investigated. (ii) Preventive Function (iii) Corrective Function (iv) Measures to standardize for increasing productivity (v) Provision of proper Storage Facilities for Materials. (vi) Continuous comparison of actual with the standards set (vii) Challenges the standards set (viii) Value Analysis