Answer Happy

Assume that you are the management accountant at Zelda Limited,
a manufacturer of cables for the telecommunication industry. During
the coffee break, you are having a conversation with Sandy, another
colleague in your office. Sandy is confused about the differences
and similarities between target costing and kaizen costing. Another
colleague, Kevin, overhears your conversation with Sandy and
insists that neither of these methods is beneficial. Kevin argues
that some companies run into financial problems using these methods
because their managers manipulated the cost estimates to appear
however they wanted. If the managers wanted to launch a new product
or keep an old one, they made sure their cost estimates supported
their decision. Required: Write a summary report to explain the
following to Sandy and Kevin. • How target costing and kaizen
costing are different. • Compare the information needed to apply
the target costing and kaizen costing methods (hint: mention the
types of relevant information needed for each method) • Ways in
which managers might be able to create biased estimates under a
target or kaizen costing system.