Product cost rationalization using time-driven resource consumption accounting and Tear-down analysis

The aim of the current study is to determine the relationship between these two models and their effectiveness in achieving cost rationalization for a selected product. For this case study, the authors considered the General Company for Textile and Leather Industries, a ready-made garment factory located at Hillah, Iraq. The said company manufactures multiple products among which men’s suits were selected as the study product. In order to achieve the research objectives, the researcher collected secondary data from multiple departments and also conducted a few interviews with the working professionals and sales agents associated with the factory. Both primary and secondary data were analyzed using TD-RCA and tear-down analysis techniques. The outcomes were interpreted in alignment with the study objectives. With the application of tear-down analysis, the men’s suit lacked a few features in comparison with its competitor ‘Turkish product’ in terms of raw materials used for production and being a light-weight material. Additionally, the Turkish product also had an added advantage over exchange rate. Based on the above results, the cost that can be rationalized for the men’s suit product was determined to be 29,672 dinars. It can be concluded that both TD-RCA as well as the tear-down analysis techniques provide significant contributions towards cost rationalization. The tear-down analysis helped the case study factory to understand the features lacked in men’s product compared to the competitor. The case study established the fact that both TD-RCA and tear-down analysis techniques help the firms rationalize their product cost.