This document provides an analysis of costs for a university. It includes sections on accounting structure, source costs, forecast reviews, and cost curves. Key points include: - An defined accounting structure is important for managing transactions and monitoring expenditures efficiently. - Source costs are categorized and assigned owners who are responsible for actual and forecast figures in areas like direct materials, labor, benefits, depreciation, and others. - Actual results are periodically reviewed and compared to other periods to aid proactive decision making. - Volume is forecast based on beginning inventory, demand estimates, and ending inventory. Cost reduction programs aim to lower costs in areas of materials, labor, and overhead.

1. Análisis de Costos
Universidad Cuauhtémoc
Campus Aguascalientes
Source Cost Methodology
Maestría en Administración

2. Contents
ACCOUNTING STRUCTURE1
SOURCE COST2
FORECAST REVIEW3
COST CURVE4
Source Cost Methodology2

3. Profit & Cost Centers Structure
Source Cost Methodology
A well defined Accounting
Structure is key to manage the
transactions and monitor
expenditures efficiently !!
3

4. Account Groups
Source Cost Methodology
By categorizing the accounts in
a Source Cost structure, we can
assign ownership and delegate
responsibility for each category.
This is very useful when
reviewing actuals and defining
forecast plans.
4

5. Source Cost Ownership
Source Cost Methodology
Cost Category Owner
Direct Material Hugo
Pay & Benefits Moni
Depreciation Pepe
Spares Ivonne
Supplies Lety
Utilities Armando
Freight Abraham
Others Rocio
Owners are responsible for actuals and forecast figures
5

6. Cost Pareto
Circuits
20%
Metals
17%
Plastics
10%
Glue
8%
Packing
5%
Pay & Benefits
15%
Depreciation
7%
Spares
6%
Supplies
5%
Utilities
4%
Freight
2%
Others
1%
Direct Material 60%
Labor & Overhead 40%
Source Cost Methodology6

7. Source Cost Reporting
Source Cost Methodology
Actual results can be reviewed periodically
and compared against another period of time.
The monitoring of expenditures is necessary
to aim a proactive decision making.
7

8. QUANTITY (KU)
Volume TREND
Volume is forecasted based on:
• Beginning Inventory
• Firm Demand
• Estimated Demand
• Ending Inventory
Source Cost Methodology8

9. Direct Materials
UNIDADES 291,080 510,114 749,285 764,503 738,500 26,003 758,687 759,330 767,052 770,019
Act Act Act Act EST AP AP AP AP
$ 1Q10 2Q10 3Q10 4Q10 4Q10 DELTA 1Q11 2Q11 3Q11 4Q11
DIRECT MATERIAL COST
CIRCUITS 1,680,796 2,532,507 3,705,718 4,268,617 4,120,000 -148,617 4,351,490 4,360,070 4,408,690 4,425,850
METALS 65,583 104,566 146,363 150,141 144,000 -6,141 167,310 167,310 168,740 170,170
PLASTICS 1,747,992 3,341,389 4,688,711 5,115,630 5,120,000 4,370 5,263,198 4,856,740 4,912,406 4,933,796
GLUE 419,226 706,873 1,064,684 1,071,945 1,025,000 -46,945 1,106,820 1,108,250 1,121,120 1,125,410
PACKING 321,870 566,187 811,232 822,087 790,000 -32,087 913,770 915,200 925,210 928,070
GAP TO GOAL 0 0 0 0 0 0 -19,865 -39,730 -59,595 -79,459
TOTAL 4,235,466 7,251,523 10,416,707 11,428,419 11,199,000 -229,419 11,782,723 11,367,841 11,476,571 11,503,836
$/UNIT
CIRCUITS 5.77 4.96 4.95 5.58 5.58 -0.1% 5.74 5.74 5.75 5.75
METALS 0.23 0.20 0.20 0.20 0.19 -0.7% 0.22 0.22 0.22 0.22
PLASTICS 6.01 6.55 6.26 6.69 6.93 3.5% 6.94 6.40 6.40 6.41
GLUE 1.44 1.39 1.42 1.40 1.39 -1.0% 1.46 1.46 1.46 1.46
PACKING 1.11 1.11 1.08 1.08 1.07 -0.5% 1.20 1.21 1.21 1.21
GAP TO GOAL 0.00 0.00 0.00 0.00 0.00 -0.03 -0.05 -0.08 -0.10
TOTAL 14.55 14.22 13.90 14.95 15.16 1.4% 15.53 14.97 14.96 14.94
Source Cost Methodology9

10. Direct Materials
Cost Reduction Programs
• Price Negotiations
• Yield & Usage Improvement
• Process Improvement
• Develop low cost supplier sources
• “Think of out of the box to find cost opportunities”
Source Cost Methodology10

11. Labor & Overhead
Source Cost Methodology
UNIDADES 291,080 510,114 749,285 764,503 738,500 26,003 758,687 759,330 767,052 770,019
Act Act Act Act EST AP AP AP AP
$ 1Q10 2Q10 3Q10 4Q10 4Q10 DELTA 1Q11 2Q11 3Q11 4Q11
CLAM Cost
PAY & BENEFITS 3,066,158 3,934,955 4,756,552 4,793,837 4,790,000 -3,837 4,946,034 5,084,395 4,828,810 4,955,321
DEPRECIATION 1,611,994 1,501,790 1,200,887 932,842 932,800 -42 973,115 982,410 994,565 1,009,580
SPARES 530,614 489,226 1,076,126 839,287 750,000 -89,287 1,038,752 1,033,275 946,088 921,349
SUPPLIES 223,570 665,316 899,360 1,248,005 1,205,000 -43,005 752,426 641,463 646,513 648,921
FREIGHT 6,165 6,288 8,373 11,457 12,000 543 8,580 8,580 8,580 8,580
UTILITIES 443,393 599,210 763,912 819,898 790,000 -29,898 802,326 751,515 796,113 808,473
OUTSIDE SERVICES 450,533 457,503 486,857 483,142 450,000 -33,142 478,270 478,270 478,270 478,270
OTHERS 269,328 437,725 491,444 703,986 710,000 6,014 605,968 605,968 605,968 605,968
GAP TO GOAL 0 0 0 0 0 0 -55,000 -75,000 -100,000 -200,000
Total CLAM: 6,601,755 8,092,014 9,683,511 9,832,454 9,639,800 -192,654 9,550,471 9,510,876 9,204,906 9,236,462
$/UNIT
PAY & BENEFITS 10.53 7.71 6.35 6.27 6.49 3.3% 6.52 6.70 6.30 6.44
DEPRECIATION 5.54 2.94 1.60 1.22 1.26 3.4% 1.28 1.29 1.30 1.31
SPARES 1.82 0.96 1.44 1.10 1.02 -8.1% 1.37 1.36 1.23 1.20
SUPPLIES 0.77 1.30 1.20 1.63 1.63 0.0% 0.99 0.84 0.84 0.84
FREIGHT 0.02 0.01 0.01 0.01 0.02 7.8% 0.01 0.01 0.01 0.01
UTILITIES 1.52 1.17 1.02 1.07 1.07 -0.3% 1.06 0.99 1.04 1.05
OUTSIDE SERVICES 1.55 0.90 0.65 0.63 0.61 -3.7% 0.63 0.63 0.62 0.62
OTHERS 0.93 0.86 0.66 0.92 0.96 4.2% 0.80 0.80 0.79 0.79
GAP TO GOAL 0.00 0.00 0.00 0.00 0.00 -0.07 -0.10 -0.13 -0.26
Total CLAM: 22.68 15.86 12.92 12.86 13.05 1.5% 12.59 12.53 12.00 12.00
11

12. Labor & Overhead
Cost Reduction Programs
• Productivity Improvement
• People fficiency
• Equipment efficiency
• Overtime Control
• Tight control on Discretionary Expendings
• Be flexible. Adjust resources to demand levels
• “Think of out of the box to find cost opportunities”
Source Cost Methodology12

13. Act Act Act Act EST AP AP AP AP
1Q10 2Q10 3Q10 4Q10 4Q10 DELTA 1Q11 2Q11 3Q11 4Q11
Loadings:
UNITS 291,080 510,114 749,285 764,503 738,500 26,003 758,687 759,330 767,052 770,019
P&L - Internal
REVENUE 11,098,700 18,872,550 25,125,271 26,788,700 26,500,000 288,700 27,733,152 27,977,480 27,919,995 29,036,418
DIRECT MATERIAL 4,235,466 7,251,523 10,416,707 11,428,419 11,199,000 -229,419 11,782,723 11,367,841 11,476,571 11,503,836
LABOR & OVERHEAD 6,601,755 8,092,014 9,683,511 9,832,454 9,639,800 -192,654 9,550,471 9,510,876 9,204,906 9,236,462
TOTAL COST 10,837,221 15,343,537 20,100,217 21,260,873 20,838,800 -422,073 21,333,194 20,878,716 20,681,477 20,740,299
Internal PFO 261,479 3,529,013 5,025,054 5,527,827 5,661,200 -133,373 6,399,958 7,098,764 7,238,517 8,296,119
REVENUE / UNIT 38.13 37.00 33.53 35.04 35.88 -2.3% 36.55 36.84 36.40 37.71
DIRECT MTL / UNIT 14.55 14.22 13.90 14.95 15.16 1.4% 15.53 14.97 14.96 14.94
L&O / UNIT 22.68 15.86 12.92 12.86 13.05 1.5% 12.59 12.53 12.00 12.00
TOTAL COST / UNIT 37.23 30.08 26.83 27.81 28.22 1.4% 28.12 27.50 26.96 26.93
HEADCOUNT 2,850 3,160 3,220 3,218 3,220 2 3,225 3,225 3,225 3,225
13 Source Cost Methodology
Financial Summary

14. 14
1.400
1.170
0.922
0.868
0.893
0.871
0.911
0.994
0.951
0.988 0.976
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
0
500
1,000
1,500
2,000
2,500
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
EST
2011
AP
PROD A PROD B UNIT COST
Cost TREND
QUANTITY (KU) COST ($/UNIT)
Source Cost Methodology

15. Variable Portion: 52%
Cost Curve View
Theorethical BEST - MODEL
Source Cost Methodology15

16. EXCEL SPREADSHEET
Source Cost Methodology
Finance Template
16

17. Análisis de Costos
Maestría en Administración