In the traditional approach of cost management, the product costs are often not assessed until later during the product development cycle. Target costing, a technique developed by the Japanese follows a fundamentally different approach. The many U.S companies that rushed in to follow the Japanese technique have not been successful in doing so. This is because they overlooked the underlying processes that support and reinforce these techniques (Kato, 1995).

Target costing has three main goals,

• Orienting products to customer affordability and market pricing

• Target product costs as an independent variable

• Aggressively working to achieving target cost during product and process development,(Kenneth, 1999).

Target costing holds a definite promise as it is future oriented, makes designers focuses on the cost implications of their design and helps to evaluate profitability even before the product is made (Kato, 1995).

The target costing process has three major activities,

• Manufacturing experience (Kato, 1995).

Price Projections: Many factors like product concept, at

However, the lessons learnt were applied to all other new products which hence became very successful.

Target costing has its advantages and disadvantages. The disadvantages cited above do not undermine the value of a good target costing system. Managers are advised to be very cautious when implementing this technique to avoid the problems and thereby add value to the firm (Kato, 1995).

• Longer Development Time: Due to much focus on cost reduction, the product takes a long time to be developed and as a result is introduced late in the market. The product may become a failure as the electric shaver of Matsushita electric works.

The case focuses at the time when the company explored the idea of expanding globally. Current sales level, medium profit range indicated a 30% reduction in costs to profitable if expansion plans were implemented (Kato, 1995). To do so, several cost reduction efforts were applied to the manufacturing process of the electric shaver. Ultimately, they achieved their goal. However, they were late to enter the market. Therefore, the electric shaver was a failure.

Some topics in this essay:
ISSUES ACCOUNTING, Daihatsu Motors, Matsushita Electric, Target Cost, Price Projections, MATSUSHTA ELECTRIC, Target Profit, Employee Burnout, CONCLUSION Target, Market Confusion, kato 1995, target costing, target cost, target profit, life cycle, cost reduction, life cycle costs, costing technique, daihatsu motors, electric shaver, target costs, product life cycle, target costing technique, model kato 1995, target costing process,