Question
Question 18 Which of the following best describes how Kaizen costing differs from target costing? Kaizen costing is applied during the design stage of a product's life. Kaizen costing focuses on achieving incremental cost savings Target costing is applied during the manufacturing stage of a product's life Kaizen costing focuses on the planned product selling price.
Answer
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(175 Votes)
Millie
Master · Tutor for 5 years
Answer
Kaizen costing best differs from target costing by focusing on achieving incremental cost savings. This is accomplished through frequent improvements during the manufacturing stage of the product's lifespan. Kaizen costing does not typically occur during the design stage, instead placing an emphasis on continuous enhancement during the production phase. Target costing isn't typically applied during the manufacturing stage as it's established before the product enters this phase. Target costing techniques primarily set costs to ensure that they fulfill the pre-determined or target selling price, while Kaizen aims at further lowering the already determined target costs set during the design phase.
Explanation
## Step1:The first term to be understood is Kaizen. Kaizen is a Japanese term that means "continuous improvement" which involves strategies to ensure constant improvements in a company through incremental changes. Kaizen costing is focusing on the continuous reduction of costs incurred during the manufacturing stage of a product.## Step2:The second term to be understood is Target Costing. This methodology is generally used by firms during the design and development stage of a product. These firms aim to reduce or keep within the allowable cost of producing the product to meet a target selling price thereby, ensuring profit.