ACCA PM · Chapter 3 · Question 4 of 9
A cost gap has been identified for a new kitchen appliance. Which of the following actions is most consistent with closing the gap through value engineering?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Removing design features that customers do not value and using standardised components
Explanation
Value engineering redesigns the product to reduce cost without reducing the value perceived by customers, for example by removing unvalued features or using common components. Raising price above the market level or abandoning the profit target defeats the purpose of target costing, and cutting valued features reduces customer value.
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