This simulation is somewhat different from traditional teaching cases, and depending on how it is taught, there are no right or wrong answers. Similar to the approach taken by Drake, Haka, and Ravenscroft (2001), the students actively participate in a process where they combine the use of cost information and their own creativity to develop innovative ways to manage costs. For this particular case, students learn to build and develop an activity-based product cost for a Lego™ model truck. Working in teams, students then strive to reduce the cost of the truck's design, subject to certain design specifications and quality constraints. As the teams evaluate potential new designs, they actually use the detailed cost information from the product costing system to guide their design decisions. By simulating the target costing process, students also gain an appreciation for working across functional boundaries to achieve a common business goal. Furthermore, they...
Truck Redesign Case: Simulating the Target Costing Process in a Product Design Environment
This paper benefited from the helpful comments of participants at the 2012 AAA MAS Midyear Meeting, and we thank the Institute of Management Accountants for receiving the Best Case Award at this conference. An earlier version of this paper benefited from comments by participants at the 2010 MAR Conference in Ghent, Belgium, and the 2009 EAA Conference in Tampere, Finland. We appreciate the help of Tami Capperauld, with The Boeing Company, and members of the Consortium for Advanced Management-International's (CAM-I) Target Costing Interest Group for their help in developing the case. We also appreciate Janet Samuels' and Mohan Gopalakrishnan's help on a research project that was the basis for this case, and comments from Evelien Opdecam and Evelyn Van der Hauwaert for their assistance during the trial versions and helpful comments on the case. Finally, we thank William R. Pasewark (editor), the associate editor, and two anonymous reviewers for their valuable comments on the paper.
Please do not make the Teaching Notes available to students or post them on websites.
Supplemental materials can be accessed by clicking the links in Appendix B.
- Views Icon Views
- Share Icon Share
- Search Site
Patricia Everaert, Dan W. Swenson; Truck Redesign Case: Simulating the Target Costing Process in a Product Design Environment. Issues in Accounting Education Teaching Notes 1 February 2014; 29 (1): 110–128. https://doi.org/10.5555/iace-50623TN
Download citation file: