International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (986-988), Month: October 2019 - March 2020, Available at: www.researchpublish.com
FACTORS AFFECTS THE USE OF TARGET COST AMONG INDUSTRIAL COMPANIES IN JORDAN 1
Zaid Othman Dannoun, 2Barjoyai Bin Bardai, 3Mohammad Mahmoud Alzubi 1,2,3
Al-Madinah International University
Abstract: This study examines the factors that significantly affect the use of the target cost by industrial companies in Jordan. These factors were the properties of Value Engineering (VE). This study adopted the deductive approach to reach its goals. It provides a theoretical framework for building hypotheses. The hypotheses were tested for results that could then be generalized. In this study, 40 managers from different industrial companies in Jordan participated. After reviewing several related studies, a five-point Likert scale questionnaire was designed to collect the required data, which was then analyzed using SPSS. Keywords: Target cost, Value Engineering (VE).
1. RESEARCH BACKGROUND Managerial accounting has developed like other economic and social sciences, as a result of economic and social growth. and has great value in commercial and industrial societies. According to the Institute of Management Accountants (IMA)” managerial accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy (Appelbaum et al., 2017). The current economic community is characterized by increasing competition, rapid technological development, shortening the life cycle of products and consumers' desire for renewable products of a suitable price and high quality (Zourob, 2016). Under these circumstances, each institution seeks to satisfy the wishes of the largest possible number of customers and thus maximize its market share and ensure its survival. This depends on several factors, including the ability to produce and market renewable products services that meet consumer requirements in terms of quality and price, because of these changes in the economic environment, it is necessary for industrial companies to use modern managerial accounting methods and avoid traditional methods, to maintain competitive advantage and cope with the great economic development, and to achieve high quality for products and services of these companies (Menon & Melendez, 2017). Thus, many modern methods of managerial accounting have emerged, and one of which is the target cost (TC) method. Target cost method is defined by the IFAC (2008) as “a cost management approach that is based on demand-driven production because it focuses on customer requirements for quality, cost and time” (Al-Attar & Alsoboa, 2016). Target cost method is based on the idea of studying the needs and desires of customers and determining the appropriate price that the customer can pay for a good or service, we can then implement the target cost method through several steps (target price setting, target profit setting, target cost setting (Seddeq & Yousef, 2018). Target cost method grew in Japan in (1973) as a tool for the development of some American methods and a private method to give the Japanese industries competitive advantages in terms of cost, price, and quality to meet the modern industrial business environment variables, The concept of target cost method is applied in order to improve the enterprise culture towards cost management more than traditional methods, which are limited to the cost of inventory and the combined costs (Appelbaum et al., 2017). Currently, a very large proportion of industries use this method, such as the automobile industry, electrons, household appliances and other advanced industries, and most Japanese companies such as Toyota, Nissan, Sony and Canon use this method (Basili, 2010). The study of the impact of target cost on the quality of products and services of industrial
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