Question

Question

Utilizing the Kaizan costing system improves efficiency and therefore over time, reduces product cost.

In your own words, how are the classes and stages of benchmarking supportive to efficiencies in product costing?

Answer 1

Solution 1:

Kaizen Costing System:

Kaizen costing system is a mechanism that aims at continual reduction in the cost. However, it does not aim in any major improvement in innovation. It starts after the product is designed and strives to make continuous improvements in relatively small activities (or processes) in the production. Team work is involved to bring radical changes. Team work includes complete cooperation and commitments from the workers. This technique is developed in manufacturing sector with aim of lowering the defects, eliminating waste, increase production, encouraging workers by holding them accountable for the success in production.

The selling price is determined by the market. It is important to reduce the cost to maximise the profits. The main purpose of kaizen costing system is to bring the cost reduction below the standard level (of selling price), with zero (or no) effect on quality, staff and safety. It considers factors such working closely with the suppliers to reduce the cost in the production process, doing product re-designing at lesser cost, and reducing waste.

Kaizen costing system aims at reducing cost at smaller level in each processes of the production and gradually these smaller costs saving at each process in the production will lead to larger cost saving as a whole.

Kaizen costing system approach is usually by Plan-Do-Check-Act Cycle. In the Plan step we try to identify the problem we face in the production process. In Do step we test the potential solution. In Check step we will analyse the plan we implemented. In Act step the best analysed solution will be implemented in the production process.

Solution 2:

Efficiency of product costing involves from time the product is in design. It involves.

• Evaluating different concept of designs, when the product is in the R&D stage.
• Understanding different manufactures process and different tools that can be used in the manufacturing of the products to reduce the cost of production.
• Analysing different suppliers to make the purchases.
• Analysing different cost that cannot be avoided and takes different quotes available from the suppliers. To ensure the purchase is made at lowest available cost.