We have identified four techniques commonly used by organizations to manage costs over their value chain. The underlying objective of these four techniques-activity-based management, the target costing process, just-in-time procedures, and total quality management is to eliminate non-value-added activities from the value chain. This objective is achieved by assigning employees the responsibility for managing these.non-value added…

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The adoption of techniques demonstrates that current global competitive market conditions require firms to compete on quality and costs. I\s evidence or the importance or quality, the Mathematical Organization for Standardization has developed quality standards .recurred to as [SO 9()OO, These standards identify quality guidelines for design development, production, inspection. installation, and servicing of products…

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The primary purpose of the manufacturing efficiency ratio is to highlight the percentage of time spent in non-value-added activities. The optimal efficiency ratio is ‘which indicates that 110 time is being spent 00 non-value-added activities, In practice, however, this ratio is always considerably less than 100%. But in many cases, this ratio should.provide managers with a…

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One approach used to drive cost out of the production process is a just-in-time (JIT) manufacturing system. The phrase “just in time” refers to acquiring materials and manufacturing goods only as  to.till customer orders. JIT systems tire sometimes  as dell  because production is totally driven  customer demand ..This contrasts  more traditional slippery systems in which manufacturers…

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One aspect of target costing not yet discussed is consideration of product costs over the life of the product. Life-cycle costing is the consideration of all potential resources consumed by the product over its entire life. These costs stretch from product development and.R&O costs through warranty and disposal costs. In the Boards and More case,…

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To illustrate the target costing process, we will use Boards and More, Inc the company previously discussed, One of Boards and More’s product lines paper packaging prod. The company bids on packaging jobs for such products as laundry soap, cereal OXPS, and pancake mix. The typical value chain for the cardboard boxes is shown below.…

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ABC information must be created before management of the activity can occur. To see this, consider the ABC data from Boards and More, Inc. Suppose the external auditors for Boards and More proposed to the CPO that the external auditors could perform the internal audit function for $90,000. At the simplest level, this might be considered…

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To focus on core operations, management begins by identifying components of the organization’s value chain. In  we defined the value chain as the set of activities and resources necessary to create and deliver the product or service valued by customers. The typical components of a simple value chain are shown below. Obviously, the details of…

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When it comes to doing his homework; John F. Antibiotic is something of a fanatic. Take hist~b Interview for the top post at Blockbuster Entertainment Group last spring. Viacom Chairman Sumner M. Red stone  was quickly convinced that Antibiotic was “the guy who will turn Blockbuster around.”When Blockbuster is fixed, Viacom will fly again,” insists…

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