Focus on traditional standard costing - kaizen costing, Managerial Accounting

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What have to Focus on Traditional standard costing

In traditional cost systems focus is to meet standard cost measurement by avoiding unfavorable variances. Under kaizen coat the goal is to achieve cost reduction targets that are continually adjusted downward.

The kaizen system is in opposition to traditional costing based on work input to improve performance. Traditional standard costing assumes that engineers and managers with their technical and administrative expertise can set standards.

Cost improvement through kaizen is obtained by reducing variable and fixed costs. Function analysis is applied at the design stage for a new product and a target cost. After the first year of production for a new production. This process of continuous improvement is known as kaizen costing and encourages continual improvements by tightening the standards.

Variable costs and fixed and reduction are determined by separate methods. For variable costs the actual prior year s production cost serves as a standard base for current production. A resection rate considered a target which is lowered by a reduction rate.

 


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