Role of Cost Accountant in Target Costing Environment

In this article we will discuss about the role of cost accountant in target costing environment.

Given the strong orientation in a target costing environment, there is obviously a considerable role for the cost accountant on a design team.

The cost accountant should be able to provide for the other members of the design team a running series of cost estimates based on initial designs sketch, activities based costing reviews of production processes, and “best guess” costing information from suppliers based on estimated production volumes.

Essentially in the earliest stages of a design, the cost accountant works with vague costing information so that he is able to provide estimates within a high-low range costs, gradually tightening this estimated cost range as more information becomes available.

The cost accountant should also be responsible for any capital budgeting requests generated by the design team since he has the knowledge of the capital budgeting process. The cost accountant plays a very important role in the design team for answer to any questions from the finance staff regarding issues or uncertainties in the capital budgeting proposal.

The cost accountant should work with the design team to help it understand the nature of various costs as well as the cost-benefit trade-offs of using different design or cost operation in the new product.

In addition, the cost accountant is responsible for bridging the gap between the current cost of a product development and design and the target cost that is the design team’s goal’ providing an itemization of where cost savings have already been achieved and where there has not been a sufficient degree of progress.

Finally, the cost accountant must continue to compare a product’s actual cost with the target cost after the design is completed and till the company sells the product. This is a necessary step to keep costs under control.

There are particular qualifications that a cost accountant must have to be included in target costing team. He must have a good knowledge of company products as well as their features and components. Also the cost accountant must know how to create an activity based system to evaluate related production cost, or at least interpret such costing data developed by someone else.

Further, he must work well in the team environment, productively assisting other members of the team in constantly evaluating the cost of new design concepts. In addition, he should have good analytical and presentation skills, since the ongoing costing results must be continually presented not only to other members of the team but also to the other members of the company.

, , , , ,

shopify traffic stats