Nissan Motor Company

Questions for Discussion

1. What is the target costing?

2. What is value engineering?
3. What is the relationship between value engineering and target costing?
4. What is the competitive environment that creates the range of products
sold?
5. What is the purpose of the Nissan’s target costing system?
6. How does Nissan determine the target margin for a new product?
7. What role does profitability play in the target costing system?
8. What is allowable cost? draft target cost? Final target cost?
9. What are strengths and weaknesses of the target costing system?
10. How does your firm (or firms with which you are familiar) determine the
cost to manufacture the new products?
 Activity Based Costing

Questions for Discussion

1. In what fundamental ways does activity-based costing differ from traditional costing
methods such as those described in Chapters 2 and 3?

2 Why is direct labor a poor base for allocating overhead in many companies?

3. What types of costs should not be assigned to products in an activity-based costing

system?

4 What are unit-level, batch-level, product-level, customer-level, and organization-

sustaining activities?

5 Why are there two stages of allocation in activity-based costing?

6. Explain the ABC system with the help of an example doing two stages of allocation.