Value Analysis

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lilac_angel
lilac_angel Registered Posts: 66 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Hi all,
Does anyone know what Value Ananlysis is. I really wasn't sure and just put a random guess in my answer in the exam yesterday, just so i had something down.

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  • Sarahhawk
    Sarahhawk Registered Posts: 8 New contributor 🐸
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    same here!
    Is it when you take into consideration the lufe cycle cost?
    Eg, would it be cheaper to get lower quality materials if you take into account the wastage etc?
    That is what i waffled on about, I hope I'll get a few marks for that!
    Do you know how many marks that question was worth?
  • David0097
    David0097 Registered Posts: 24 New contributor 🐸
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    Just posted this in reply to someone elses query - lol :-)

    Value analysis is all about reducing the costs of production without lowering the quality of the product for the end user. All about sourcing new materials, more efficient workers etc. Cheaper production for the same quality end product.

    Target costing is where the cost of your product is pretty much determined by market forces (eg competition prices, market demand etc). You need to work out the profit margin you need to make on your product and therefore have the amount you can spend on production to meet this profit margin. Eg - Product sp is £100, your margin is 30%, you have £70 to spend on production to meet the required margin.

    Hope this helps!
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    I really didn't have a clue and just guessed that it is where you look at similar products market price's and then see whether you can make the product cheap enough to compete with your competetors and make a profit.
    Sorry i don't know how many marks it's worth.
  • David0097
    David0097 Registered Posts: 24 New contributor 🐸
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    It was only a ten minute question (recommended) out of 90 mins so would only have been worth about 11% of the marks (if that). Shouldn't worry about it if you got the rest right!

    Can't believe so many people didn't notice that the Overheads shouldn't have been included in the variance rec in Q1. That would have lost quite a few marks too as it shows lack of understanding!

    Hope you did well!!! :-)
  • AK002
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
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    David0097 wrote: »
    Can't believe so many people didn't notice that the Overheads shouldn't have been included in the variance rec in Q1. That would have lost quite a few marks too as it shows lack of understanding!

    Thank god I left them out then :), it did throw me a wee bit to start with.. but then when I did it it reconciled so i left it lol.

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