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Kaizen costing is a cost reduction system used a product's design has been completed and it is in production. [1] Business professor Yasuhiro Monden [2] defines kaizen costing as . The maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level. [citation needed]
Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project [1] or the construction of a building. [2] In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. [3]
Overall costs of capital projects are known to be subject to economies of scale. A crude estimate is that if the capital cost for a given sized piece of equipment is known, changing the size will change the capital cost by the 0.6 power of the capacity ratio (the point six to the power rule). [16] [d]
Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in a large batch, which might include an entire month's production. Eventually, costs have to be allocated to individual units of product.
Quality, cost, delivery (QCD), sometimes expanded to quality, cost, delivery, morale, safety (QCDMS), [1] is a management approach originally developed by the British automotive industry. [2] QCD assess different components of the production process and provides feedback in the form of facts and figures that help managers make logical decisions.
Target costing is defined as "a disciplined process for determining and achieving a full-stream cost at which a proposed product with specified functionality, performance, and quality must be produced in order to generate the desired profitability at the product’s anticipated selling price over a specified period of time in the future."
In business economics cost breakdown analysis is a method of cost analysis, which itemizes the cost of a certain product or service into its various components, the so-called cost drivers. The cost breakdown analysis is a popular cost reduction strategy and a viable opportunity for businesses.
C 1 is the cost of the first unit of production; C n is the cost of the n-th unit of production; n is the cumulative volume of production; a is the elasticity of cost with regard to output; These effects are often expressed graphically. The curve is plotted with the cumulative units produced on the horizontal axis and unit cost on the vertical ...