Costing

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Christian Babbini 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What are the attributes of an outdated activity-based costing (ABC) system?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.
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

The Decimal Suite's unique proposition 

PROCESS MANAGEMENT
Decimal Suite has been based on process management. Early versions were mainly used as sequential transformation processes. Soon after, the Decimal Suite was developed to support the more traditional cost allocation models often used by service companies. Today, these service companies are increasingly adopting the concepts of operational companies who are more likely to optimize and relocate resources to struggling sectors, control operational constraints and bottlenecks, analyse cost structure and behaviour, etc, to keep businesses running and profitable.
GLOBAL COST AND BUDGETING APPROACH
The Decimal Suite follows a global cost and budgeting approach. The Suite's modules support the implementation of a complete cost and budget establishment system. Budgeting process results allow users to determine costs of products and services. Conversely, the design of a cost model is used as a foundation for designing the budgetary process. This unique global approach ensures two things; first, that sales objectives are based on an informed selection of products and services, second, that managers keep track of results and effectively catch and understand discrepancies in the budget.

The Collaborator module, is decentralized to allow managers of different executive groups to personally enter their budgetary data. It is built directly within the Modeler module, which analyses trends in company costs. 
COMPARISON OF COMPETING COST MODELS
This provides management with a global and detailed view of the affordability of each model's performance. Designed to modelize budgetary, actual, forecasted and hypothetical results such as acquisitions, relocalization, and other major decisions, the Decimal Suite consolidates and compares results and shares this business intelligence with a company's key players.
DEVELOPMENT OF STANDARD MODELS
Ensuring effective benchmarking between operational entities (factories, departments, etc). At the same time, the managers of these entities may define data according to their operational realities directly within the global structure of the master template. This approach allows users to benefit completely from the thoroughness of a centralized system and the flexibility of a spreadsheet.
MAXIMUM SCALABILITY FOR PROJECTS
The application services clients of all sizes. Whether it's for profit organization, a private or public company or a public organization (municipal, provincial or federal), the Decimal Suite clarifies the strategic decision-making process, allowing companies to reach corporate objectives. Regardless of the number of users or information required by management, the Decimal Suite offers a unique and scalable potential.
ACTIVITY-BASED MANAGEMENT PROCESS
In any company in which individual entities can establish performance evaluation guidelines and consistent comparison criterions. Companies will see the success of the solutions implemented, as the strategic decisions taken will have measurable impact on the general performance of the company.


Strategic Cost Management brochure