To what extent are you attached to your costing method?
Costing is more a question of perception than it is of method
What does offer the Decimal Suite for an effective cost management?
What are the attributes of an outdated activity-based costing (ABC) system?
- Trouble to justify profit margins;
- Managers want to abandon certain products/services;
- The prices for complex products undercut those of the competition;
- Competitors’ / subcontractors’ prices are significantly lower than yours;
- Many different costing systems within the organization;
- You are the only company that provides a given product/service;
- No complain from customers about price increases;
- A lot of time spent analyzing your costs;
- You are not sure what price you should quote in order to make a reasonable profit;
- Your managers are skeptical about the cost of operations.
Implementing a production activity-based costing (ABC) model enables companies to:
- Facilitate project financing decisions,
- Improve managers’ grasp of cost and the organization as a whole,
- Control and measure organizational, economic and demographic changes within the company,
- Establish accurate production costs per products/services,
- Justify sales prices to clients,
- Have a better understanding of margins when negotiating with clients,
- Achieve a balanced budget,
- Justify requests for additional resources,
- Easily grasp how human and financial resources are being used,
- Justify implementing and measure the impact of organizational changes.
Additional advantages of a good production activity-based costing (ABC) model:
- Easily initiate the budget preparation and forecasting process,
- Evaluate different scenarios,
- Ensure cost visibility,
- Strengthen manager accountability,
- Measure capability and efficiency at the operational and organizational level so you can “Offer more for less”,
- Establish closer ties between cost centres and break organizational silos.
Download the strategic cost management brochure.
Timekeeper or the way to determine the best activity-based costs
Compiling time data using regular electronic spreadsheets has become cumbersome for large organizations, and often leads to errors. DECIMAL developed TimeKeeper to centralize employee time entry and classify it according to projects and activities.
More on TimeKeeper