Target Costing and Its Impact on Business Strategy: Computer Program for Cost Accounting and Administration

Target Costing and Its Impact on Business Strategy: Computer Program for Cost Accounting and Administration

Constantin Anghelache (The Bucharest University of Economic Studies, Romania), Sorinel Căpușneanu (Dimitrie Cantemir Christian University, Romania), Dan Ioan Topor (1 Decembrie 1918 University, Romania) and Andreea Marin-Pantelescu (The Bucharest University of Economic Studies, Romania)
Copyright: © 2019 |Pages: 24
DOI: 10.4018/978-1-5225-8455-1.ch002

Abstract

This chapter highlights aspects of the contribution of an IT program used in cost accounting and its management according to the target costing (TC) and its impact on the business strategy of an economic entity. The authors present the historical evolution of the TC, its implementation steps, and the methodological steps that go into the management accounting. The characteristics of a software program specifically designed for cost accounting and management of TC, its design, implementation stages, execution mode, are presented. The guarantee of a managerial decision is based on the provision of real, accurate, and reliable information that can be obtained and analyzed with this software program. The theoretical and methodological aspects presented are based on the existing literature, university studies, and specialty from all over the world. Through the authors' contribution, a new conceptual-empirical framework is created to discuss issues that impact on the business environment of economic entities.
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Introduction

This century begins with a revolution in the field of computers, especially by using and implementing computerized applications, information systems and information technology (IT) in all business practices of larger or smaller companies. The emergence and adoption of Web-based applications and technologies, information, and telecommunications has multiplied the capabilities and benefits of computers. The importance of computers and software in business can no longer be ignored or overestimated. Large, medium or small businesses use Internet-based communications technologies, networks, or programs that enable employees and professionals to quickly communicate, collaborate, and work across geographic locations across the globe, thereby contributing to streamlining workflows. Starting from the overall cost targeting framework, we focused our attention on creating an IT program able to manage the flow of financial and economic operations that took place in a small company. The program presented is an original one and is based on the technology provided by Microsoft Office through Access. The main objectives of this chapter are: (1) the presentation of some aspects of the target costing method, the implementation steps and the methodological steps in the management of a small company, and (2) the creation of a computerized program necessary for the management of the target costing accounting, adapted to the general accounting plan for managerial accounting from Romania.

Key Terms in this Chapter

Kaizen Costing (KC): A cost reduction system defined as the maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level.

General Accounts Plan: A classification system consisting of a list of all accounts used in accounting by an economic entity, ordered by economic content and accounting function.

Data Base Management System (DBMS): All the programs used to create, query, and maintain a database. Includes two categories of modules: modules that are common to those of computer operating systems and modules with database-specific functions.

Activity-Based Costing (ABC): An accounting method that identifies the costs of (indirect) activities and then allocates these costs to the products. Allocation of product costs to products is done through cost drivers.

Microsoft Access: A program for creating and managing a Microsoft-based relational database that is part of the Microsoft Office suite.

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