Answer plans M7

Question 1

Usefulness of Lifecycle Costing in relation to new product development?

Answer 1

*Lifecycle Costing- Estimating and monitoring cost of product over its lifespan

+Total Cost Commitments
+Strategic Pricing
+Marketing & Resource Allocation

Question 2

Usefulness of Target costing in relation to new product development?

Answer 2

*Target Costing - cost management approach that begins with market price and works backwards to achieve desired profit

+Ensures products are affordable yet profitable

+Establishes ‘Target Cost’ (maxium cost to produce, market and distribute)

+Promotes Early collaboration (all depts liasing to meet cost targets)

Question 3

How TM can use Business Process Reengineering (BPR) to improve pricing process across TM’s franchised salon network?

Answer 3

(BPR) - fundamentally rethinking and redesigning core business processes to achieve big improvements in performance

-Redesigning Price setting process

-Improving price consistency/maintaining Flexibility

-Responsive to market conditions

Question 4

How ABM can be useful in relation costing and pricing different services at TM Salons?

Answer 4

*ABM- system that allows organisations to understand cost of delivering products/Services by tracing costs to specific activities

+ABM provides accuracy
+ABM can show resources that are consumed by certain treatments