1. avatar says

    Great lecture! Sir you really make our learning Interesting… I have a question that is bothering me. What if the estimate of actual cost of production turns out of to be incorrect. Afterall, it is an estimate, it would turn out to be a bad decision if the actual cost turned out to be more than what we estimated.? What would we do in that situation.? As you said we work out target cost before actually making products, if we started producing how do you see the effect of wrong estimate in the first place ?. Cheers

    • Avatar of John Moffat says

      Thank you :-)

      All of costing is based on estimations and there is always the risk that the estimates are wrong.

      The whole point of target costing is that the cost is driven by the selling price (and not the other way round as is traditionally the case).

      Obviously it is important that if they do go ahead that they make sure the control the costs. If the costs get too high then they would have to consider whether it was possible to increase the selling price or whether to accept a reduced profit, or even whether they should cease production.

  2. avatar says

    Hi Sir, what is the difference between the studio recorded lecture and the normal one apart from the normal one being longer in time. Which one should we follow or should we watch both the live and the studio one to get a better understanding?

    Thank you :)

Leave a Reply