A survey on target costing(TC) in New Zealand's Private Training Establishments(PTEs): the level of awareness among managers and the degree of adoption
Abstract This dissertation explores the occurrence and use of target costing in New Zealand Private Training Establishments (PTEs) and examines the level of target costing (TC) implementations in different TC PTEs. I find that there is a relatively moderate adoption rate of target costing (33.3 per cent) in the PTE sector in New Zealand. More than half of these PTEs, which adopted target costing (referred as TC PTEs), have only a basic level of target costing implementation. This dissertation also identifies factors that contribute to a more complete implementation of target costing in PTEs, by empirically examining the association between eight identified factors and the completeness of target costing implementation. Five management techniques/tools (factors) have been found to be significantly associated with the completeness of target costing implementation: 1) top management support in the implementation of target costing; 2) cross-functional teams; 3) a structural reporting system; 4) performance rewards based on achievement of target costs; and 5) active participation of suppliers and other external stakeholders in the program development. This suggests PTEs with a higher level of target cost implementation are more likely to adopt these techniques/tools. This research also empirically examines the effect of the target costing adoption on cost reduction performance, quality level of services, and customer satisfaction level in the PTE context, as well as the impact of completeness of target costing implementation on these three aspects. The findings from this study suggest that the adoption of target costing has positive influences on cost reduction performance and quality level of services in PTEs. Moreover, the effectiveness of target costing in reducing cost also increases when the TC PTEs have a more complete target costing implementation.