HI5017 Managerial Accounting Reflective Journal: Costing Analysis

This reflective journal, submitted by a student, analyzes two key managerial accounting costing techniques: standard costing and target costing. The student reflects on their learning experience, discussing the application and relevance of each method in contemporary business environments. The journal highlights the advantages and disadvantages of each approach, drawing insights from academic articles and case studies. Standard costing is presented as a tool for cost control in manufacturing, while target costing is emphasized for product innovation and market competitiveness. The student explores the implications of these costing systems on business performance, product planning, and long-term sustainability, providing a comparative analysis of their practical applications. The journal also includes references to support the analysis.

Running Head: MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

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Reflection on standard costing
The cost analysis of steel gear manufacturing will help in estimating the future
strategies of the manufacturing process. Scenario testing method will help in improving the
strategies in controlling and monitoring the cost of the vehicle industry. The cost of drivers
can be estimated by the case company model through standard costing method. Increasing the
rate of production, reducing the labour cost & time gap can also be done using this costing
system. But, this method did not go well in improving the cost and finding accurate measure
of cost of product price and cost of drivers (Kianian and Andersson 2018). The
manufacturing model of gear manufacturing company and proposed standard cost model did
not provide a sufficient clarification of the effectiveness of the overall Equipment. The cost
of Overall Equipment Effectiveness is higher in case of proposed model, but is not present in
the manufacturing model of the company. I can address the difficulties by enhancing a depth
knowledge in proposed model to support a proper information that can help the management
in developing the production scenarios and properly analyse and planning to improve the
performance of the manufacturing vehicle.
Reflection on target costing
From the article I have learned that, target costing is very much essential in product
innovation and technological development. This costing system is helpful in achieving a
competitive position in the environment. In today’s business environment like automation
sectors, target costing is helpful in improving the business performance. This costing system
is helpful in product life cycle stage. It helps in doing value analysis to increase the business
profitability (Potkany et al. 2017). This costing techniques helps the management in making
decisions regarding the product planning in long-term perspective of the business. But, one of
the disadvantage of using this technique is, it doesnot help to reduce the cost of the

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production process which is very important for any business. This method is also quiet
complex and depends on the market data. The information from the market data may not be
always appropriate. There are various drawbacks in target costing system in case of uncertain
business environment.
Reflections on the research experience
I got to know that, standard costing system is important in controlling the cost of the
manufacturing process. This type of costing system depends on the predetermined cost of the
product that is based on the estimation of labour cost, time gap and cost of product. This
costing system helps the management in preparing the budget and making financial decisions
according to the variations between the actual cost and estimating cost. Target costing system
helps in planning of the product price. It determines the price of the product according to the
changing conditions of the market (Park, Park and Woo 2016). This is a very important
costing technique that helps the management in improving the product and attain a
competitive advantage in the market. Target costing system is helpful in long-run
sustainability of the business. Whereas, standard costing system is helpful in short run
perspective of the business. Target costing system is time consuming technique as compared
to the standard costing technique. Target costing is very much helpful to sustain their
business in today’s business environment by reducing the cost of the product according to the
changing preferences of the environment. Whereas, standard costing system doesnot
accurately determine the cost of the product (Kariyawasam 2018). The variation in the cost of
the product may not be accurate with respect to the business environment. Target costing
technique is normally used in large firms and standard costing system is used in medium
firms. Standard costing system is a traditional system of costing method, whereas, target
costing system is a modern method of costing used in the digital and automotive business
environment.

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Reflection on relevance of two costing techniques
I have learned from both the articles that, target costing is very much useful in today’s
business environment. This costing system will help in planning of the product in product
designing stage. This costing system is helpful for businesses in today’s competitive world.
Target costing system is most widely used by digital companies to do make innovations in
order to sustain their business (Akeem 2017). Standard costing system helps in controlling
the cost of manufacturing operations. This system can be used to estimate the cost and help
the management in maintaining their budget.

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References
Akeem, L.B., 2017. Effect of cost control and cost reduction techniques in organizational
performance. International Business and Management, 14(3), pp.19-26.
Kariyawasam, H., 2018. A Study of Cost and Management Accounting Practices in Sri
Lanka’s Manufacturing Industry. International Journal of Recent Advances in
Multidisciplinary Research, 5(3), pp.3632-3634.
Kianian, B. and Andersson, C., 2018, September. Analysis of manufacturing costs for
conventional gear manufacturing processes: a case study of a spur engine gear.
In International Gear Conference 2018 (Vol. 1, pp. 393-402). Chartridge Books Oxford.
Park, S.J., Park, W.J. and Woo, S., 2016. Implementation of automated systems for target
cost management and assessing performance: a case study in a global automobile component
company. Journal of Applied Business Research (JABR), 32(3), pp.829-856.
Potkány, M., Novák, P., Kováč, R. and Hitka, M., 2017. Innovation of a Technological
Product with Utilizing the Target Costing Methodology. International Review of
Management and Marketing, 7(2), pp.130-137.