Sunzi Art of War - Toshiba

Assuming that the company’s goal is to maximize profits, the current cost system is not an appropriate tool for strategic planning. The ambiguity of the overhead costs per product makes it difficult to accurately analyze the cause and effect relationships of changes and/or improvements to specific product line.

Target Corporation (NYSE:TGT) is the leading large-format general merchandise and discount retailer in the U.S., challenging Wal-Mart in electronics, toys and apparel while also seeking to differentiate with higher-end fashions and products for an upscale audience. As of the close of their latest fiscal year (FY2011), Target operated approximately 1,760 stores encompassing 233,000 square feet in 49 states and the District of Columbia. The company is divided into the retail and credit card divisions and moves the majority of its products through a highly integrated network of 37 different distribution centers, which include four food distribution centers. Target is one of the most well-entrenched large format retailers in the U.S., has the ability to manage their pricing strategies at a level of accuracy and precision that is comparable to Wal-Mart (Henderson, 2001). Unlike Wal-Mart, Target concentrates on a value-based message that concentrates on quality and price differentiation to sustain their gross margins while Wal-Mart concentrates on supply chain efficiency and a continual reduction of supplier and transaction costs (Krishnamurthi, 2001).

Overhead costs are not in proportion to the production output because of the method they are using. This leads to inaccurate pricing and costing decisions. An Activity Based Costing System would help find the real relationship between the products produced and overhead.

While we are performing our analysis on different aspects of the company, we look at the three main types of cost. When we remain devoted to improving our costs, and the faults related, we show our same devotion to our consumers. This is portrayed by the quality of products we put on the shelves. Prevention costs, appraisal costs and Failure costs are areas

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

The costing approach should be based on per Transaction Basis rather than on per kit or per pound basis because of the following reasons:

The procurement section of Target’s supply chain is an essential part of how it replicate costs to customer requirements. The overall affiliation between customer fulfillment and the supply chain are closely linked to products that are designated based on benchmarks that have been appropriately matched to target costing structured with market criticism and feedback provided. When focusing on purchasing products to sell to customers, the organization selects and processes the best option that best matches Target’s

An organization costing system is a system that helps the management with the strategy planning while the system plays an important role in providing accurate cost information about the products and customers (Curtin, 2006). UPS utilizes the Activity-Based Costing (ABC) system. ABC assumes that activities cause costs and that cost objects create the demand for activities (Marx,

Targets service design is to offer consumers high quality goods at an affordable price, well increasing its positive ecological impact. Target does this by owning and providing exclusive brands that are offered in the store (Target, 2015, para. 5). Increased volumes due to the holiday season causes an increase in customer demand instore, which is combated by an increase in staffing. Target also uses outsourcing to reduce cost, but this does not always prove to be efficient. The CIO of Target has announced that they are working to decrease outsourcing of their Information Technology department (Rosenbush, 2015, para.1). The outsourcing decreased cost, but it was timely to fix an issue with communication of multiple people in multiple geological locations. The strategy of saving money by outsourcing has failed and is be

Businesses – from manufacturing, merchandising and service industries alike – take careful considerations for their costing systems. Setting-up competitive prices in the market can be a result of proper costing methods. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods Zauner Ornaments are currently using and upon conclusion, it will enable us to distinguish the advantages and disadvantages of each costing method.

with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was

Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.

Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.

Target costing originated from Japan in 1960s though; it was not really the first approach to product costs determination. The first idea to determine product costs can be found as early as beginning of the last century at ford in the United States, and development of Volkswagen Battles in Germany in the 1930s.with a fixed product price in order to be affordable for all people (Arnaout, 2001).

3.1 Target costing: It is the estimated price for a product that customers will be willing to pay. The estimates are made on an understanding of customers’ perceived value for a product and competitors responses. Example is in Appendix5. Benefits of target costing at the distribution centres are like helping identify value and non value activities, helping cut costs (material, handling, transportation, installation cost),Increasing