Product Costing System

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Product costing systems in modern manufacturing organisations

Product costing refers to the process of assigning shared direct and indirect costs to individual products, customers, branches or other cost items. (USAID, 2007) Product costing is also referred to as assigning costs to inventory and production based on the expenses that go into producing or buying inventory. It is an important process for manufacturers that helps improves management information on products and helps managers and the board members to take key decisions about product design, delivery mechanisms, and especially pricing. (Lacoma, 2013)

There are several benefits of having a product costing done. These include Accuracy, Project Tracking, Decision-Making and
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The main success factors for Toyota from this model seems to be keeping less inventory at hand so that production can take place for any product. These parts are then replenished when they are used and accurate forecasting so that the right amount of stock can be stocked. (Wilson, 2010)

Computer integrated manufacturing (CIM): Is a manufacturing philosophy in which the functions for the organization, from product definition to the disposition of the final product, are designed and integrated to achieve clearly enunciated organizational goals, most efficiently and effectively. The coordination of the functions is achieved using computer, communication, and information technologies. (UYSAL, 2010) According to the U.S. National Research Council, it improves production productivity by 40 to 70 percent, decreases design costs by 15 to 30 percent, reduces overall lead time by 20 to 60 percent, and cut work-in-process inventory by 30 to 60 percent as well as enhances engineering productivity and quality. These statistics tells us that how important CIM is nowadays for most of the manufacturing industries. (Koch) The importance of CIM in financing can be the software side where most of the data is fed in the computer and all the financing and accounting part today is done with the help of computers. It also helps in forecasting and prediction
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