ACCA Applied Knowledge · Management Accounting · Cost reductions and value enhancement
A manufacturer redesigns a product before it goes into production, aiming to cut cost while keeping the functions the customer values. Which technique is this?
This is value engineering. It reduces cost by redesigning a product before production begins, while preserving the functions customers value. Value analysis is similar but is applied to products already being made, so it does not fit this description.
- AValue engineeringCorrect
- BValue analysis
- CKaizen costing
- DLife cycle costing
Explanation
Value engineering applies cost reduction at the design stage, before production starts. Value analysis looks at existing products already in production, so it is the key distractor. Kaizen costing relies on continuous small improvements during production, and life cycle costing tracks costs over the whole product life.
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