Value added

CJE

Do you think value added will come up in the exam?:001_unsure:

SandyHood

I am not expecting it
I might be wrong, but my 50p would be on Value Added not being tested in the context of Sales Revenue less Direct Materials and Components.

Enhancement of Value such as value engineering related to achieving a target cost is a possible

pink

Is value engineering something along the lines of designing a product at minimul costs, and before before finishing the product look to see if there is something that is not necessarily needed to reduce the cost?
Hopefully that makes sense!

SandyHood

The sandpaper on only one side of a match box is one example.
The costs were reduced without detracting from the value perceived by the customer.

pink

Oh so you mean, it still does the same job but cost less to make it as it only has one sand papered side rather than two..

SandyHood

Yes
Value Engineering links to target costing
You start with an expected cost say of £15

Then you hear the price will be £17 and the required profit is £7
so value engineering is used to see if the expected cost can be brought down to £10 without losing the attributes that attract customers at £17.