TC, KC & LCC Essay

Question 1

In today’s fast-evolving

Answer 1

In today’s fast-evolving manufacturing landscape, traditional costing methods often fall short in addressing the demands of global competition, rapid technological changes, and shorter product life cycles.

Question 2

Companies increasingly adopt alternative cost techniques like

Answer 2

Companies increasingly adopt alternative cost techniques like Target Costing (TC), Kaizen Costing (KC), and Lifecycle Costing (LCC) to stay competitive.

Question 3

Each method offers unique ads

Answer 3

Each method offers unique advantages for different stages of product development and production, improving cost control and decision making.

Question 4

Traditional costing primarily focuses on

Answer 4

Traditional costing primarily focuses on post-production cost control, which is reactive and often ineffective for dynamic markets.

Question 5

Shank and Fisher (1999) highlighted this limitation through a case study

Answer 5

Shank and Fisher (1999) highlighted this limitation through a case study on Montclair Mill, which struggled under traditional costing but achieved better cost management with TC, aligning production more closely with market demands.

Question 6

Hibbets, Albright, and Funk (2003) argue that

Answer 6

Hibbets, Albright, and Funk (2003) argue that intensified competition, globalisation, and technological shifts require proactive cost management techniques like TC, KC, and LCC that support both cost leadership and differentiation strategies.

Question 7

TC, developed in

Answer 7

TC, developed in Japanese firms like Toyota, is a proactive cost management approach.

Question 8

TC starts with a target price

Answer 8

TC starts with a target price based on customer expectations, from which the desired profit margin is subtracted to determine allowable costs.

Question 9

This ensures cost manag. is integrated

Answer 9

This ensures cost management is integrated into product development, aligning with market demands from the start.

Question 10

Butscher and Laker argue that

Answer 10

Butscher and Laker argue that TC helps firms maintain competitiveness by meeting customer expectations without compromising profitability.

Question 11

Shank and Fisher (1999) found TC effective in

Answer 11

Shank and Fisher (1999) found TC effective in aligning product costs with customer expectations in highly competitive markets.

Question 12

However, TC’s success depends on accurate market

Answer 12

However, TC’s success depends on accurate market insights; fluctuations in customer demand or input costs can complicate maintaining fixed target costs.

Question 13

KC emphasizes continuous improvement

Answer 13

KC emphasizes continuous improvement and incremental cost reduction, involving all employees in minimizing waste throughout production.

Question 14

Modarress, Ansari, and Lockwood (2005) note that

Answer 14

Modarress, Ansari, and Lockwood (2005) note that KC fosters a cost-conscious culture, with firms like Boeing achieving significant savings through employee-driven efficiency improvements.

Question 15

KC is particularly effective in

Answer 15

KC is particularly effective in lean manufacturing environments where adaptability is crucial.

Question 16

It not only reduces costs but also

Answer 16

It not only reduces costs but also boosts morale by empowering employees to contribute directly to production outcomes.

Question 17

However, KC can face challenges when employees

Answer 17

However, KC can face challenges when employees resist continuous changes.

Question 18

Sustaining incremental improvements requires strong

Answer 18

Sustaining incremental improvements requires strong organizational commitment, which can be difficult if there is high employee turnover or fatigue from ongoing changes.

Question 19

LCC takes a comprehensive view of product costs

Answer 19

LCC takes a comprehensive view of product costs over its entire life cycle, from design to production and post-sale.

Question 20

By evaluating long-term costs, LCC supports

Answer 20

By evaluating long-term costs, LCC supports decision-making that considers total profitability over a product’s lifespan, enhancing investment decisions in design and development stages.

Question 21

Cooper and Slagmulder (2004) highlight how firms like Olympus

Answer 21

Cooper and Slagmulder (2004) highlight how firms like Olympus benefit from integrating LCC with other cost methods, allowing better control over total product costs and reducing the risk of cost overruns.

Question 22

However, LCC relies on robust data systems and

Answer 22

However, LCC relies on robust data systems and accurate forecasting, which can be challenging in fast-changing industries with unpredictable demand.

Question 23

Together, TC, KC, and LCC provide a holistic

Answer 23

Together, TC, KC, and LCC provide a holistic approach to cost management across different stages of production.

Question 24

TC aligns costs with market demands

Answer 24

TC aligns costs with market demands during product design, KC facilitates continuous improvement in production, and LCC supports long-term profitability.

Question 25

Cooper and Slagmulder (2004) emphasize that integrating these

Answer 25

Cooper and Slagmulder (2004) emphasize that integrating these methods allows companies to manage costs effectively.

Question 26

Although, Adler, Everett, and Waldron (2000) note potential barriers

Answer 26

Although, Adler, Everett, and Waldron (2000) note potential barriers such as resistance to change, resource limitations, and challenges in moving from traditional costing.

Question 27

In conclusion, TC, KC, and LCC each address

Answer 27

In conclusion, TC, KC, and LCC each address distinct stages of cost management, collectively providing a comprehensive approach to the challenges of a modern manufacturing environment.

Question 28

While each has limitations

Answer 28

While each has limitations, their combined use enables companies to meet immediate cost targets, sustain ongoing cost control, and plan for long-term profitability.

Question 29

For firms competing in dynamic

Answer 29

For firms competing in dynamic markets, adopting these techniques is essential for maintaining competitive advantage.