By Lianabel Oliver
Supplying a multidisciplinary roadmap for the layout, improvement, and implementation of a strategic fee approach, this booklet exhibits find out how to layout a price process to turn into a greater decision-making software and a resource of aggressive virtue for the association. It describes the right way to constitution a price structures layout venture and talk about the problems that are meant to be addressed prematurely from a administration, operations, and costing point of view.
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Additional info for Designing Strategic Cost Systems: How to Unleash the Power of Cost Information
We then modified our accounting procedures to properly classify these costs in the general ledger and developed reports that would segregate costs in the correct categories for management reporting. Even with workarounds, it may not be possible to implement the design of your cost system given the system limitations. For example, another client has a cost system that calculates fixed overhead as a percent of either labor or materials costs. Their choice is either to calculate the fixed overhead costs outside of the system and enter the cost manually, or to use the overhead cost calculation provided by the system, which may not reflect the true costs of manufacturing.
Competitor prices are equal to your costs. One of my clients repeatedly encountered this symptom. Its competitors not only outbid them for orders, but their prices were equal to my client’s production cost. 3. Supplier bids are lower than expected. When outsourcing a product or service, a company can compare the bid to the cost of providing the product or service internally. If the supplier’s bid is significantly lower than your costs and they use similar technologies and processes, your cost system might be providing inaccurate information.
It should describe the key attributes of the new system and what information it should provide to the user community. • A statement of project objectives. The project objectives should clearly define the intent of the new cost system in terms of what information will be provided and how the information will be used. For example, the cost system could be designed with an external focus attempting to understand product or customer profitability and thereby impact the sales and marketing strategies of the organization; however, it could have an internal focus identifying the resources consumed by the product or service to uncover cost reduction opportunities and process efficiencies.