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Techniques relevant

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Techniques relevant

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • November 24, 2021 at 7:26 am #641440
    HamzaYusuf
    Participant
    • Topics: 45
    • Replies: 23
    • ☆☆

    Techniques that are relevant to target costing:

    1) Value analysis can be used to identify where small cost reductions can be applied to close a cost gap once production commences.

    2) Functional analysis can be used at the product design stage. It ensures that a cost gap is reached or to ensure that the product design is one which includes only features that customers want.

    3) Activity analysis identifies and describes activities in an organisation and evaluates their impact on operations to assess where improvements can be made.

    Technique that is not relevant to target costing:

    1) Variance analysis is not relevant to target costing as it is a technique used for cost control at the production phase of the product lifecycle. It is a feedback control tool by nature.

    Is that correct?

    November 24, 2021 at 7:27 am #641445
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54761
    • ☆☆☆☆☆

    Yes, that all seems fine.

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