This is a 1500 word report excluding references and appendices. Due date is november 5. Need atleast 5 harvard peer reviewed references. All the instructions are attached below.

Part A
A.
Target Costing: Target costing is the costing where the estimation of the product cost if done by subtracting the desired profit margin (profit from each product) from the market price. Target costing is more consumer focused.
Kaizen Costing: The estimation of the cost in kaizen costing is done with the help of continuous improvement, here the department/company tries to keep the cost level constant so that with more production the desired cost levels are achieved.
The major difference between the two methods of costing is the usage, and the application where the two are used, like the target costing is applied to the product’s design stage, whereas the Kaizen costing which is a more comprehensive method of costing is applied during the manufacturing stage.
B.
Information needed for Target Costing:
· Competitive Market Price
· Desired Profit Margin (Minimum and Maximum)
· Maximum cost
Information needed for Kaizen Costing:
· Various costs related to product manufacturing (supply chain, product redesign, manufacturing cost, marketing, and distribution costs, etc.)
· Desired Cost levels
C.
Biased estimates are no big deal for managers because biased estimates are the outcome of overestimation and underestimating costs/revenues. For example when the product and sales from the product are very high the prices can be calculated on the basis of target costing using by decreasing the profit margin and that will mean that the sales volume are increased. Both the costing methods require time estimation by the labor and that can be biased on the basis of best circumstances and not on average circumstance basis. Basically when the manager is biased and is using the target costing to estimate the cost, therefore the sales volume, time all these can effect the costs. And when the managers are using the Kaizen costing the best way to make a biased estimate is by underestimating the volumes/prices, and at the same time overestimating the cost.
Part B
A.
The proportion of the costs expended by Zelda Limited is as follows:
Prevention Cost: 33.33%
Appraisal Cost: 41.67%
Internal Failure Cost: 8.33%
External Failure Cost: 16.67%
B.
The proportion of the costs which are expended by Zelda Limited, are different for different categories, where appraisal cost has the highest percentage of expenditure which is good because as part of the environmental cost the expenditure should be more on appraisal because that will mean that the environment is taken into consideration very importantly. The second highest expenditure by Zelda is Prevention cost with a 33.33% proportion, then comes the external and internal failure cost with a percentage of 16.67% and 8.33% respectively.
Zelda is managing the environmental performance better than its competitor Creata Ltd. with a great spread of the expenditure to various categories, but the expenditure done by Dextra is much larger than that of Zelda which may mean that Dextra is better off, but that can only be confirmed by seeing the company size which we don’t have, but Dextra Ltd. has the highest exposure to External Failure Cost which means that the company is expecting that the external impact will be more, and therefore we can say that Zelda Ltd. is managing the environmental performance than its competitors.
Part C
A.
Profitability Analysis:
     
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