Competitive advantage therefore can be achieved by establishing cost leadership. The ultimate challenge faced by any company would be to leverage between the escalating operational costs and falling revenues so as to maximise the profits. Determine the costing procedure of an airline industry and the various possible efforts it takes to reduce the costs. The airline industry employs a trend and horizontal analysis to evaluate its performance and productivity. This industry can be categorised into international
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AACE International Recommended Practice No. 34R-05 BASIS OF ESTIMATE TCM Framework: 7.3 – Cost Estimating and Budgeting Acknowledgments: Todd Pickett‚ CCC (Author) Peter R. Bredehoeft‚ Jr. Ted A. Downen Larry R. Dysert‚ CCC Bruce G. Elliott‚ CCC John K. Hollmann‚ PE CCE Copyright 2010 AACE International‚ Inc. Stephen M. Jacobson CCC Carlton W. Karlik‚ PE Christopher L. Kinney Donald F. McDonald‚ Jr. PE CCE PSP Bernard A. Pietlock CCC Richard A. Selg‚ CCE AACE International Recommended Practices
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2. Establishing a Selling Price for the product Based on the market research of a new product and also the market condition‚ the selling price is established. The desired profit margin is subtracted from the target selling price to determine the target cost. If the target cost is below the company’s current cost‚ the company may decide to introduce the product and functional cost analysis may attempt to reduce cost to an acceptable level. If the target cost is above the current cost‚ functional
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Defining‚ Modeling & Costing IT Services Integrating Service Level‚ Configuration & Financial Management Processes In our cost driven economy IT is facing increasing pressure to account for and reduce cost wherever possible. The old axiom “You must do more with less” has never had such an impact on IT operations and support as it does today. Thousands of IT managers are being placed in a situation which forces them to defend their staffing levels against both internal as well as external threats
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* Standard Costing Introduction Cost figures‚ in general‚ can be divided into two broad categories. They are Historical Costs and Standard Costs. Historical costs are available‚ after they are incurred. Such cost figures may have some value‚ once they are analysed. By analysis‚ the inefficiencies and deficiencies in production may be detected. However‚ the damage would have occurred‚ by the time the analysis under Historical costs is made. Analysis can be done only after the completion of the
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Advantages and disadvantages of variable costing Many managers use variable costing for internal reporting and decision making since it has number of advantages (Myers par. 1). First‚ on variable costing reports costs are organized by behavior which makes it easier to understand. Also‚ variable costing statements facilitate cost volume profit (CVP) analysis because it separates cost behavior by fixed and variable. Under variable costing‚ changes in inventory or production do not affect the
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Product Costing Module in ERP for L&T Kansbahal Works‚ Kansbhal‚ Orissa : A Case Study 1 Seema G. Bhol‚ 2Arun Mishra & 3Srikanta Patnaik Sambalpur University‚ Burla‚ Orissa‚ India‚ 2Head (IT Services)‚ L&T‚ Kansbhal‚ Orissa‚ India‚ 3 Department of Computer Science ITER ‚ SOA University ‚ Bhubaneswar‚ Orissa‚ India E-mail : guptaseema@hotmail.com‚ arun-kbl@kbl.ltindia.com‚ patnaik_srikanta@yahoo.co.in 1 Abstract - One need to be very accurate in what the products and services are costing. Inaccurate
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2.0 KAIZEN COSTING 2.1 What is Kaizen costing? Kaizen is a Japanese term that means continuous improvement. Kaizen events can be defined as making improvements through a process that emphasize small incremental amounts rather than large or radical improvement. Therefore in order to achieve this kaizen costing not include only continuous cost reduction but also continuous improvement of performance by increase the efficiency throughout the process. 2.2 Why we need Kaizen costing? Market prices
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STANDARD COSTING (VARIANCES) 1.1 Material costs variance = (Standard quantity x Standard Price) – (Actual quantity x Actual price) MCV = (SQ × SP) – (AQ × AP) 1.2 Material price variance = Actual quantity × (Standard price – Actual price) MPV = AQ × (SP – AP) 1.3 Material usage variance = Standard price (Standard quantity – Actual quantity) MUV = SP × (SQ –AQ) 1.4 Material cost variance = Material usage variance + Material price variance MCV = MUV + MPV 1. Material Variance Material usage
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Komatsu‚ Ltd. (A) Target Costing System Komatsu • • • • • • • Founded 1917 Takeuchi Mining Co.‚Komatsu Ironworks 1921 Komatsu‚ Ltd. 1991- International Firm Revenue Y989 bn NI Y31bn Construction Equipment‚ Industrial Machinery- Core Business. Electronics applied products – New Business : 80% • Rest from construction‚ unit housing‚ cheimcals‚ plastics and SW Development • 1989: “3G” : Growth‚ Globalisation and Group Diversification • 1995 : Exp Y 1.4 Tn; Worldwide production by 2000; Develop
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