ABSTRACT
Further, the concept of kaizen costing covers a broader scope than the traditional cost control concept, which focuses on meeting cost performance standards and investigating and responding when those standards are not met. Kaizen costing activities include cost reduction activities that require changes in the way the company manufactures existing products. ™e inadequacy of standard costs for kaizen costing purposes is obvious from the viewpoint of “kaizen” concepts.1 Also, standard costs are changed only once a year. (See Figure 15.1.)
Roughly classied, kaizen costing activities are of two kinds. ™e rst, kaizen costing for a speci„c product, consists of activities to improve performance when the di£erence between actual cost and target cost is large a´er new products have been in production for three months, or when the cost of a specic model must be reduced remarkably because of a sudden market downturn or similar circumstance. ™e second type consists of activities implemented continually every period to reduce any di£erence between target and estimated prot and thus to achieve “allowable cost.”
