Beyond Target Costing: Manufacturing Cost Policy Deployment for New Products


Article Preview

The purpose of this paper is to present a method to quantify the costs of potential losses from production processes for new products to prioritize improvement projects based on the target cost and provide data and information for feasibility studies of continuous improvement projects. The specificity of the manufacturing cost policy deployment for new products is to identify the percentage of cost of future production phases which does not add value from a customer perspective, dynamically throughout the product life cycle. The percentage of non-value added cost is based on loss of each manufacturing process and is determined scientifically based on data and facts. Using the proposed method helps manufacturing companies in the acceptance of certain orders which at first glance are unprofitable. Moreover, the proposed method will help develop scenarios for continuous cost reduction after starting production through continuous improvement of productivity and quality required. The empirical results are based on the study during a year and a half in the automotive company, using action research methodology.



Edited by:

Laurentiu Slatineanu, Vasile Merticaru, Florin Negoescu, Margareta Coteata, Razvan Pacurar, Gabriela Strnad, Irina Tita, Gheorghe Oancea, Petru Dusa, Eduard Nitu and Oana Dodun




A. Posteucă and M. Zapciu, "Beyond Target Costing: Manufacturing Cost Policy Deployment for New Products", Applied Mechanics and Materials, Vols. 809-810, pp. 1480-1485, 2015

Online since:

November 2015




* - Corresponding Author

[1] G. Burrows, R.H. Chenhall, Target costing: first and second comings. Accounting History Review. 22 (2012), 127-42.


[2] Y. Monden, K. Hamada, Target costing and kaizen costing in Japanese automobile companies. Journal of Management Accounting Research. 3 (1991) 16-34.


[3] R. Cooper, R. Slagmulder, Developing profitable new products with target costing. Sloan Management Review. 40 (1999) 23-33.

[4] Y. Kato, Target costing support systems: lessons from leading Japanese companies. Management Accounting Research. 4 (1993) 33-47.


[5] I.P.J. Ahuja, J.S. Khamba, Total productive maintenance: literature review and directions. International Journal of Quality & Reliability Management. 25 (2008) 709-56.


[6] K. Shirose, TPM: Total Productive Maintenance: New Implementation Program in Fabrication and Assembly Industries: JIPM, Tokyo, (1999).

[7] D.K. Narong, Activity-based costing and management solutions to traditional shortcomings of cost accounting. Cost engineering. 51 (2009) 11-22.

[8] J. Ma, M. Kwak, H.M. Kim, Demand Trend Mining for Predictive Life Cycle Design. Journal of Cleaner Production. 68 (2014) 189-99.


[9] K. Arai, H. Kitada, K. Oura, Using profit information for production management: evidence from Japanese factories. Journal of Accounting & Organizational Change. 9 (2013) 408-26.


[10] A. Chiarini, E. Vagnoni, World-class manufacturing by Fiat. Comparison with Toyota Production System from a Strategic Management, Management Accounting, Operations Management and Performance Measurement dimension. International Journal of Production Research. 53 (2014).


[11] A. Lindholm, P. Suomala, Learning by costing: Sharpening cost image through life cycle costing? International Journal of Productivity and Performance Management. 56 (2007) 651-72.


[12] A.A. Posteucă, Management branding (MB): Performance improvement through contextual managerial behavior development. International Journal of Productivity and Performance Management. 60 (2011) 529-43.


[13] D. Coghlan, T. Brannick, Doing action research in your own organization: Sage, London, (2014).

[14] P. Horváth, S. Niemand, Wolbold M. Target Costing: State-of-the-art-report: Consortium Advanced Manufacturing International Texas, USA, (1993).