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In: Accounting

how are the classes and stages of benchmarking supportive to efficiencies in product costing and Utilizing...

how are the classes and stages of benchmarking supportive to efficiencies in product costing and Utilizing the Kaizan costing system

Solutions

Expert Solution

The classes and stages of benchmarking are supportive to efficiencies in product costing as follows -

* Benchmarks are prepared on the basis of optimum utilization of resources and accordingly the resources are allocated. For eg if we purchase x material of 1000 quintals for procing 100 units of product A, then the workers will strive for the maximum production from the given material. They will try to produce 100 units Of A from 1000 quintals of X. Thus, ensures low proct costing.

* In benchmarking, the time of production is also put up as a constraint. For example if we say in 100 labor hours 100 units should be produced. So by limiting such factor we are able to cut down the cost, thus leading to cost efficiencies.

Benchmarking in utilizing kaisen costing :-

* Benchmarking initiates the business to move towards the bench marks, which lead to slow but continuous progress of organization.

* Benchmarks if improved on continuous basis as per the changing situations, it will lead to enhancement of standards and there by the underlying motive of Kaizen costing will be fulfilled.


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