As a prevalent methodology, Concurrent Engineering (CE) is advocated to reengineer the traditional sequential process such that the multifunctional expertise and resources can be integrated into a collaborative course to design, manufacture, and deliver products. Accordingly, products of improved overall performance with respect to manufacturability, assembly, service, recycle, and logistics can be produced with reduced development time and cost. Many authors agree that 70-80% of a product cost is committed during the concept phase. The consequences of traditional accounting systems used to estimate costs or to support reengineering and process improvement are often imprecise. Traditional accounting systems may fail to pinpoint trouble, fail to identify value added activities, favor quick fixes, and lump non-value added activities into overhead. Common traps in estimating costs include ignoring costs that customers do not pay for, failing to separate labor costs from machine costs and failing to account for in process and movement costs. In this research, we propose a methodology to estimate product costs in the early design phase of Product Development which can be used to estimate new product cost more accurately and effectively. Based on the methodology, a Design-to-Cost System is developed to estimate (1) determine the new product costs, (2) choose cost reduction components, and (3) decide the value of reduction cost target. To provide these analytical functions, Activity-Based Costing and Target Costing are integrated and applied.
