Remanufacturing System Cost Management Based on Integration of Target Costing and Activity-Based Costing

Abstract

Cost management plays a very important part in the implementation of remanufacturing. This paper has firstly described the remanufacturing process which includes disassembling, sorting, inspecting, cleaning, refurbishing, re-inspecting etc. Then after the brief introduction of target costing (TC) method and activity-based costing (ABC) method, the integrated system of the two methods are established which will allow remanufacturing companies to account and control costs both at the strategic level and the operational level. Through an example of an automotive component remanufacturing company, the application and effectiveness of the integrated system are shown and a series of meaningful conclusions have been got, such as the rank of activity cost of each kind of product, the possible reasons of higher activity costs etc. Finally, some strategies are given for cost control. The integrated system put forward in this paper will be of great help and practical significance for cost management of remanufacturing companies.