Cima P2 Exam Questions 22

Question No 22:

What is the differences between Target Costing and Kaizen Costing?

One of differences is that Target Costing applies before production commences whereas Kaizen Costing applies once production has commenced. Another difference is that although both Target Costing and Kaizen Costing involve making changes to improve results, Target Costing looks at making significant changes in order to reduce the expected cost until it reaches the Target Cost necessary to achieve the Target Profit from the given selling price. Kaizen Costing deals with making a number of further small improvements as a result of involving everyone in the process.