Target costing

Esteem value - products with high esteem value will Often be associated with premium. What does this line mean ? I know esteem value means that it relates to the status and ownership . example Nokia phone

If production is increased then it may be that unit costs are reduced (for example, we may get a discount on the raw materials if we buy more because we are producing more). If we combine departments we might be able to save costs. For example, if we have two separate departments at the moment, we might be paying rent on two separate rooms. If we can combine the departments then we may need less space in total and therefore be paying less rent in total. 'Esteem value' is not a term you need to use in the exam (it is explaining the idea rather than using specific words). Apple phones is a better example than Nokia. Apple have a good reputation and therefore people are prepared to pay more for an Apple Phone. Another example - many makers of instant coffee produce a coffee labelled 'Gold coffee'. People assume that it must be better and therefore are prepared to pay a higher price. I explain all this in my lectures. Are you actually watching the lectures???

I have watched ur lectures of target costing .in that’s u have explained example of i phone, that was launched first without camera and customers were ready to buy it because it has good reputation hence cost reduction. Intangibility-i have understood that u explained example dentist service can be defined . But what does mean in intangibility that attribute cost canNot be defined Heterogeneity- example dentist ....that each person get different service . What does this mean in heterogeneity that quality and consistency varies ? thank you in advance ????

The result of value analysis is to achieve an improved value/ cost relationship. What does this line mean? I know value analysis is in which firm products are subjected to critical examination by a small group of specialists. It help to close the target cost but how value analysis is to achieve an improved value / cost relationship.