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Target costing and BPR

Forums › ACCA Forums › ACCA APM Advanced Performance Management Forums › Target costing and BPR

  • This topic has 1 reply, 2 voices, and was last updated 13 years ago by Ken Garrett.
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  • April 6, 2012 at 5:56 pm #52137
    taiwodarams83
    Member
    • Topics: 6
    • Replies: 7
    • ☆

    Good afternoon,

    Here is my question:

    The use of Target costing would invariably lead to cost gap as a result of difference between estimated cost and the target cost.

    Would it be reasonable to say techniques such BPR could be used to close this gap?

    Thank you.

    April 6, 2012 at 9:30 pm #96116
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10617
    • ☆☆☆☆☆

    Well, a cost gap isn’t inevitable. However, if actual cost is above target then BPR might bea way of closing the gap (production efficiency increased). Another way would be to simplify the product through value analysis.

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