This document provides an overview of German Cost Management (GPK), including its history, key principles, and how it differs from traditional American cost accounting systems. GPK focuses on direct resource consumption and capacity management to provide managers detailed cost information for decision making. It traces costs from initial resource investments and considers both fixed and variable cost behavior. The document also discusses how GPK has been successfully implemented at companies like automotive supplier Magna Steyr to improve cost management.
- Project cost management is important because IT projects often exceed their original cost estimates by significant amounts. Processes like resource planning, cost estimating, budgeting, and earned value management can help control costs.
- There are different types of cost estimates used at various project stages, from rough order of magnitude to definitive estimates. Tools like analogous estimating, bottom-up estimating, and parametric models can aid in creating estimates.
- Cost budgeting allocates the total estimated costs to individual work items. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan.
The document discusses key aspects of project cost management including cost estimating, budgeting, and control. It defines important terms like cost baseline, contingency reserve, estimate at completion (EAC), and performance indices. Formulas are provided for calculating things like cost variance, schedule variance, cost performance index, and estimate to completion. The cost management plan is highlighted as establishing guidelines for precision, units of measure, control thresholds, and reporting formats for cost activities.
The CorPeuM mission is to improve the execution of strategy!
The basis of all performance management is in administering an organization’s business activities (sales, marketing, production, product development, etc.) in an environment that is increasingly uncertain. As outlined in ‘What is Strategy Execution?’, a strategy execution system should support the way in which these business processes are planned and monitored. This will require a number of integrated application capabilities, including:
Business Modelling: The system should be able to model an organization’s current and proposed business processes that show how they are connected to achieve the organization’s purpose.
Metric Categories: It should be possible to view that business model in terms of a number of metric categories such as the resources it consumes, the risks being run, the workload being performed, and the outcomes that are generated. Measures from these different categories will need to be displayed in combinations. For example, to show whether an activity is worthwhile requires its costs to be shown, along with the work performed and any outcomes. In addition, these metric views should be tailored to those people responsible for particular areas of the business.
Methodology support: It should adapt to an organisation’s chosen management methodology. i.e. it should conform with the terminology used and the way in which planning activities are prescribed.
Initiative management: It should allow the creation, selection, approval and monitoring of projects/strategic initiatives that improve organizational performance and how they link to corporate goals.
Scenario planning: It should allow combinations of initiatives to be assessed and the side-by-side analysis of alternate business models, through which senior management can set future plans.
Dynamic reports and analyses: It should communicate plans and results through personalised reports, analyses, dashboards, scorecards and strategy maps but in the context of how well the plan is being executed, so that the future can be better managed.
Dynamic workflow management: The system should be able to cope with continuous planning and monitoring of execution, which intelligently involves the right people at the right time, from across the enterprise.
Most people would agree that these capabilities are essential for managing strategy and its execution. Similarly, most CPM software vendors would claim to have these, but as they say, the devil is in the detail.
The document discusses cost control, monitoring, and accounting procedures for construction projects. It emphasizes interpreting accounting information for project management purposes. Project control aims to identify deviations from plans, not find cost savings. Cost accounts track expenses against the original budget to monitor financial performance. The budget converts the detailed cost estimate into a standardized set of cost categories for tracking and reporting progress.
The document discusses cost control, monitoring, and accounting procedures for construction projects. It emphasizes that project control systems aim to identify deviations from the project plan, not necessarily find cost savings. Cost accounts are used to track expenses against the original budget and estimate. A typical construction project may have hundreds of cost accounts covering different cost categories like materials, equipment, payroll, and overhead. The project budget converts the detailed cost estimate into a format compatible with the organization's cost accounting system to facilitate monitoring project finances.
Cost management is an important part of project management that involves estimating costs, creating budgets, and controlling costs so the project is completed within budget. It is analogous to time management since resources' time is the main cost. Every project has constraints of scope, time, and cost, known as the triple constraint. Cost management processes include cost estimating, cost budgeting, tracking costs against the baseline, and handling any cost overruns. Questions from participants are addressed at the end.
The document discusses key factors that affect project cost management in construction. It identifies the main cost management processes as cost estimation, developing a cost management plan, cost budgeting, and controlling costs. Additionally, it states that crucial factors include proper procurement processes, managing project risks, and accounting for market conditions that can impact project costs. Effective cost management processes involve planning, estimating, budgeting, and cost control.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
- Project cost management is important because IT projects often exceed their original cost estimates by significant amounts. Processes like resource planning, cost estimating, budgeting, and earned value management can help control costs.
- There are different types of cost estimates used at various project stages, from rough order of magnitude to definitive estimates. Tools like analogous estimating, bottom-up estimating, and parametric models can aid in creating estimates.
- Cost budgeting allocates the total estimated costs to individual work items. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan.
The document discusses key aspects of project cost management including cost estimating, budgeting, and control. It defines important terms like cost baseline, contingency reserve, estimate at completion (EAC), and performance indices. Formulas are provided for calculating things like cost variance, schedule variance, cost performance index, and estimate to completion. The cost management plan is highlighted as establishing guidelines for precision, units of measure, control thresholds, and reporting formats for cost activities.
The CorPeuM mission is to improve the execution of strategy!
The basis of all performance management is in administering an organization’s business activities (sales, marketing, production, product development, etc.) in an environment that is increasingly uncertain. As outlined in ‘What is Strategy Execution?’, a strategy execution system should support the way in which these business processes are planned and monitored. This will require a number of integrated application capabilities, including:
Business Modelling: The system should be able to model an organization’s current and proposed business processes that show how they are connected to achieve the organization’s purpose.
Metric Categories: It should be possible to view that business model in terms of a number of metric categories such as the resources it consumes, the risks being run, the workload being performed, and the outcomes that are generated. Measures from these different categories will need to be displayed in combinations. For example, to show whether an activity is worthwhile requires its costs to be shown, along with the work performed and any outcomes. In addition, these metric views should be tailored to those people responsible for particular areas of the business.
Methodology support: It should adapt to an organisation’s chosen management methodology. i.e. it should conform with the terminology used and the way in which planning activities are prescribed.
Initiative management: It should allow the creation, selection, approval and monitoring of projects/strategic initiatives that improve organizational performance and how they link to corporate goals.
Scenario planning: It should allow combinations of initiatives to be assessed and the side-by-side analysis of alternate business models, through which senior management can set future plans.
Dynamic reports and analyses: It should communicate plans and results through personalised reports, analyses, dashboards, scorecards and strategy maps but in the context of how well the plan is being executed, so that the future can be better managed.
Dynamic workflow management: The system should be able to cope with continuous planning and monitoring of execution, which intelligently involves the right people at the right time, from across the enterprise.
Most people would agree that these capabilities are essential for managing strategy and its execution. Similarly, most CPM software vendors would claim to have these, but as they say, the devil is in the detail.
The document discusses cost control, monitoring, and accounting procedures for construction projects. It emphasizes interpreting accounting information for project management purposes. Project control aims to identify deviations from plans, not find cost savings. Cost accounts track expenses against the original budget to monitor financial performance. The budget converts the detailed cost estimate into a standardized set of cost categories for tracking and reporting progress.
The document discusses cost control, monitoring, and accounting procedures for construction projects. It emphasizes that project control systems aim to identify deviations from the project plan, not necessarily find cost savings. Cost accounts are used to track expenses against the original budget and estimate. A typical construction project may have hundreds of cost accounts covering different cost categories like materials, equipment, payroll, and overhead. The project budget converts the detailed cost estimate into a format compatible with the organization's cost accounting system to facilitate monitoring project finances.
Cost management is an important part of project management that involves estimating costs, creating budgets, and controlling costs so the project is completed within budget. It is analogous to time management since resources' time is the main cost. Every project has constraints of scope, time, and cost, known as the triple constraint. Cost management processes include cost estimating, cost budgeting, tracking costs against the baseline, and handling any cost overruns. Questions from participants are addressed at the end.
The document discusses key factors that affect project cost management in construction. It identifies the main cost management processes as cost estimation, developing a cost management plan, cost budgeting, and controlling costs. Additionally, it states that crucial factors include proper procurement processes, managing project risks, and accounting for market conditions that can impact project costs. Effective cost management processes involve planning, estimating, budgeting, and cost control.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
Project cost management ,cost estimation cost control and evm for large epc projects and is essential for knowing the cost parameters for all construction engineers.
This document discusses best practices for construction cost estimating and project management. It emphasizes the importance of collaboration among all stakeholders in developing detailed, line-item cost estimates. It also outlines various types of cost estimates, cost categories, and techniques for ongoing cost control such as earned value management. Key principles include transparency, independent cost research, and updating estimates over time based on changes to requirements or conditions.
This document discusses various tools of management accounting. It identifies 16 main tools: 1) financial statement analysis, 2) cost accounting, 3) standard costing, 4) marginal costing, 5) budgetary control, 6) ratio analysis, 7) fund flow analysis, 8) cash flow analysis, 9) return on capital employed techniques, 10) operations research, 11) linear programming, 12) network analysis, 13) queuing theory, 14) simulation theory, 15) decision making accounting, and 16) revaluation accounting. For each tool, the document provides a brief explanation of what the tool is and how it is used to help management with functions like planning, decision making, and performance evaluation.
Industrial Engineering & Operation Research Lecture NotesFellowBuddy.com
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Cost management is the process of planning, estimating, budgeting, and controlling costs to help ensure a project is completed within its estimated budget. It involves setting budgets for costs, monitoring actual costs, ensuring costs remain aligned with forecasts, and taking action if actual costs exceed budgets. Effective cost management techniques include cost estimating, budgeting, and cost controlling processes like variance analysis and earned value management.
Cost accounting is the process of measuring and recording the financial value of resources used in the production of goods and services. It begins with recording costs incurred and ends with controlling costs. An effective cost accounting system has several essential characteristics including suitability, comparability, simplicity, flexibility, accuracy, and clearly defined cost centers. Cost accounting provides management with detailed cost information to control current operations, plan for the future, evaluate product profitability, set prices, and make other important business decisions.
Tools & Techniques of Management Accountingbasiljoe010
Management accounting provides techniques for financial planning, analysis of financial statements, and decision making to help management. Some key techniques include historical cost accounting, budgetary control, standard costing, marginal costing, and revaluation accounting. Management accounting also helps with control accounting and producing management information systems to provide regular reports to various levels of management.
Examples of KPIs for Sales Manager: List of Key Performance Idicators, Sales ...The-KPI-Examples-Review
In this report we define the key performance indicators for sales manager based on web search data in 2015. For some of the key performance indicators were defined their formulas and calculation examples. In our calculations we used the official statements of Siemens AG and others.
The document discusses three key processes for managing project costs: cost estimating, cost budgeting, and cost control. It provides details on cost estimation methods like analogous estimating and three-point estimating. Cost budgeting involves setting a cost baseline budget. Cost control tools like earned value management measure planned vs. actual costs and schedules to identify variances enabling corrective actions. Earned value charts and calculations like CPI and SPI are used to forecast final costs and identify if projects will finish over or under budget.
This document discusses several key aspects of construction project management including project funding, scheduling, procurement, cost control, and cash flow analysis. It describes the basic resources needed for construction including money, materials, manpower, and machines. It then focuses on construction financing, explaining the types of loans, lenders, and requirements. Procurement and cost control methods like productivity tracking and cash flow analysis are also outlined.
This document discusses techniques for cost estimation. It describes the top-down and bottom-up approaches to cost estimation, with the top-down approach using historical data from similar projects and the bottom-up approach breaking a project down into smaller units. An integrated approach is presented that uses a work breakdown structure, cost/revenue structure, and estimating techniques/models. Common sources of cost estimation data are also outlined such as accounting records, sources within and outside a company, research and development, and the internet.
A cost management plan establishes policies and procedures for planning, managing, spending, and controlling project costs. It determines the unit of measure, level of precision and accuracy for cost estimates, and defines organizational procedures, control thresholds, and rules for performance monitoring. The plan also describes techniques for estimating costs such as analogous estimates, parametric estimates, bottom-up estimates and cost of quality assessments. Finally, it is used to establish an authorized cost baseline and budget and to control costs by monitoring the project's status and managing changes to the cost baseline.
This document discusses key aspects of project cost management including creating a cost management plan, estimating costs, determining the budget, establishing a cost baseline, controlling costs using earned value management, and forecasting. It describes estimating direct and indirect costs, developing a cost baseline by aggregating activity estimates plus reserves, calculating variances and performance indices to measure cost and schedule performance, and forecasting the estimated cost at completion using different methods.
Activity-based costing (ABC) assigns overhead costs to products and services based on their use of resources such as machine hours or labor hours. It was developed to more accurately assign indirect costs than traditional costing methods. ABC identifies activities performed in an organization and assigns costs to these activities using cost drivers. The costs of activities are then assigned to products or services based on their use of each activity. This provides managers with more accurate product costs to make better-informed decisions.
This document discusses key concepts in cost accounting, including the meaning and objectives of cost accounting, the relationship between cost accounting and other types of accounting, elements of cost like direct and indirect costs, and cost classification. It defines important cost accounting terms and concepts, explains the general principles and advantages/limitations of cost accounting, and describes how a cost sheet is used to analyze costs.
Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs.
ProGoAlign - Creating heat maps to realize strategic alignment - Ben Roelens ...Nesma
This document describes a method called ProGoAlign for creating heat maps to analyze strategic alignment. ProGoAlign models an organization across three layers - strategy, structure, and operations. It uses heat maps to visualize dependencies and priorities between elements in the different layers, determined through top-down prioritization and bottom-up performance measurement. The heat maps can then be analyzed both ex ante for decisions and ex post for process improvement, outsourcing, and performance evaluation.
Costing is the process of determining the cost of manufacturing a product or providing a service. Cost accounting is the formal process of recording costs and preparing financial statements to ascertain and control costs. Cost accountancy applies costing and cost accounting principles to control costs and determine profitability. The main objectives of cost accounting are determining selling prices, controlling costs, providing information for decision making, ascertaining costs and profits, and preparing financial statements. Cost accounting provides useful information to management, employees, consumers, creditors, and benefits the national economy. It helps classify and analyze costs, formulate business policies, enable budgeting, and ensure best use of limited resources.
The document provides guidance on self-study topics for cost management. It outlines prerequisites like statistics and economics. It details core competencies and proficiencies needed for basic competence and advancement. These include topics like cost accounting history, operations cost management, CVP analysis, inventory management, and ABC. It provides free resources for learning each topic, such as textbooks, videos, and websites. The goal is to help professionals improve skills and take their career to the next level.
Management accounting provides accounting information to managers within organizations to help them make informed business decisions. It focuses on forward-looking information for decision-making, rather than historical financial reporting. Management accounting involves identifying, measuring, analyzing, and communicating financial and non-financial information about resources, risks, and performance. The goal is to help managers strategically plan, evaluate, and control operations to make efficient use of resources.
Project cost management ,cost estimation cost control and evm for large epc projects and is essential for knowing the cost parameters for all construction engineers.
This document discusses best practices for construction cost estimating and project management. It emphasizes the importance of collaboration among all stakeholders in developing detailed, line-item cost estimates. It also outlines various types of cost estimates, cost categories, and techniques for ongoing cost control such as earned value management. Key principles include transparency, independent cost research, and updating estimates over time based on changes to requirements or conditions.
This document discusses various tools of management accounting. It identifies 16 main tools: 1) financial statement analysis, 2) cost accounting, 3) standard costing, 4) marginal costing, 5) budgetary control, 6) ratio analysis, 7) fund flow analysis, 8) cash flow analysis, 9) return on capital employed techniques, 10) operations research, 11) linear programming, 12) network analysis, 13) queuing theory, 14) simulation theory, 15) decision making accounting, and 16) revaluation accounting. For each tool, the document provides a brief explanation of what the tool is and how it is used to help management with functions like planning, decision making, and performance evaluation.
Industrial Engineering & Operation Research Lecture NotesFellowBuddy.com
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
Cost management is the process of planning, estimating, budgeting, and controlling costs to help ensure a project is completed within its estimated budget. It involves setting budgets for costs, monitoring actual costs, ensuring costs remain aligned with forecasts, and taking action if actual costs exceed budgets. Effective cost management techniques include cost estimating, budgeting, and cost controlling processes like variance analysis and earned value management.
Cost accounting is the process of measuring and recording the financial value of resources used in the production of goods and services. It begins with recording costs incurred and ends with controlling costs. An effective cost accounting system has several essential characteristics including suitability, comparability, simplicity, flexibility, accuracy, and clearly defined cost centers. Cost accounting provides management with detailed cost information to control current operations, plan for the future, evaluate product profitability, set prices, and make other important business decisions.
Tools & Techniques of Management Accountingbasiljoe010
Management accounting provides techniques for financial planning, analysis of financial statements, and decision making to help management. Some key techniques include historical cost accounting, budgetary control, standard costing, marginal costing, and revaluation accounting. Management accounting also helps with control accounting and producing management information systems to provide regular reports to various levels of management.
Examples of KPIs for Sales Manager: List of Key Performance Idicators, Sales ...The-KPI-Examples-Review
In this report we define the key performance indicators for sales manager based on web search data in 2015. For some of the key performance indicators were defined their formulas and calculation examples. In our calculations we used the official statements of Siemens AG and others.
The document discusses three key processes for managing project costs: cost estimating, cost budgeting, and cost control. It provides details on cost estimation methods like analogous estimating and three-point estimating. Cost budgeting involves setting a cost baseline budget. Cost control tools like earned value management measure planned vs. actual costs and schedules to identify variances enabling corrective actions. Earned value charts and calculations like CPI and SPI are used to forecast final costs and identify if projects will finish over or under budget.
This document discusses several key aspects of construction project management including project funding, scheduling, procurement, cost control, and cash flow analysis. It describes the basic resources needed for construction including money, materials, manpower, and machines. It then focuses on construction financing, explaining the types of loans, lenders, and requirements. Procurement and cost control methods like productivity tracking and cash flow analysis are also outlined.
This document discusses techniques for cost estimation. It describes the top-down and bottom-up approaches to cost estimation, with the top-down approach using historical data from similar projects and the bottom-up approach breaking a project down into smaller units. An integrated approach is presented that uses a work breakdown structure, cost/revenue structure, and estimating techniques/models. Common sources of cost estimation data are also outlined such as accounting records, sources within and outside a company, research and development, and the internet.
A cost management plan establishes policies and procedures for planning, managing, spending, and controlling project costs. It determines the unit of measure, level of precision and accuracy for cost estimates, and defines organizational procedures, control thresholds, and rules for performance monitoring. The plan also describes techniques for estimating costs such as analogous estimates, parametric estimates, bottom-up estimates and cost of quality assessments. Finally, it is used to establish an authorized cost baseline and budget and to control costs by monitoring the project's status and managing changes to the cost baseline.
This document discusses key aspects of project cost management including creating a cost management plan, estimating costs, determining the budget, establishing a cost baseline, controlling costs using earned value management, and forecasting. It describes estimating direct and indirect costs, developing a cost baseline by aggregating activity estimates plus reserves, calculating variances and performance indices to measure cost and schedule performance, and forecasting the estimated cost at completion using different methods.
Activity-based costing (ABC) assigns overhead costs to products and services based on their use of resources such as machine hours or labor hours. It was developed to more accurately assign indirect costs than traditional costing methods. ABC identifies activities performed in an organization and assigns costs to these activities using cost drivers. The costs of activities are then assigned to products or services based on their use of each activity. This provides managers with more accurate product costs to make better-informed decisions.
This document discusses key concepts in cost accounting, including the meaning and objectives of cost accounting, the relationship between cost accounting and other types of accounting, elements of cost like direct and indirect costs, and cost classification. It defines important cost accounting terms and concepts, explains the general principles and advantages/limitations of cost accounting, and describes how a cost sheet is used to analyze costs.
Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs.
ProGoAlign - Creating heat maps to realize strategic alignment - Ben Roelens ...Nesma
This document describes a method called ProGoAlign for creating heat maps to analyze strategic alignment. ProGoAlign models an organization across three layers - strategy, structure, and operations. It uses heat maps to visualize dependencies and priorities between elements in the different layers, determined through top-down prioritization and bottom-up performance measurement. The heat maps can then be analyzed both ex ante for decisions and ex post for process improvement, outsourcing, and performance evaluation.
Costing is the process of determining the cost of manufacturing a product or providing a service. Cost accounting is the formal process of recording costs and preparing financial statements to ascertain and control costs. Cost accountancy applies costing and cost accounting principles to control costs and determine profitability. The main objectives of cost accounting are determining selling prices, controlling costs, providing information for decision making, ascertaining costs and profits, and preparing financial statements. Cost accounting provides useful information to management, employees, consumers, creditors, and benefits the national economy. It helps classify and analyze costs, formulate business policies, enable budgeting, and ensure best use of limited resources.
The document provides guidance on self-study topics for cost management. It outlines prerequisites like statistics and economics. It details core competencies and proficiencies needed for basic competence and advancement. These include topics like cost accounting history, operations cost management, CVP analysis, inventory management, and ABC. It provides free resources for learning each topic, such as textbooks, videos, and websites. The goal is to help professionals improve skills and take their career to the next level.
Management accounting provides accounting information to managers within organizations to help them make informed business decisions. It focuses on forward-looking information for decision-making, rather than historical financial reporting. Management accounting involves identifying, measuring, analyzing, and communicating financial and non-financial information about resources, risks, and performance. The goal is to help managers strategically plan, evaluate, and control operations to make efficient use of resources.
The document provides an introduction to strategic cost management (SCM). It discusses the limitations of traditional cost management including its short-term outlook, excessive focus on cost reduction, and reliance on internal factors. SCM is presented as having a long-term dynamic approach focused on achieving sustainable competitive advantages through product differentiation or cost leadership. The value chain concept is introduced as a way to identify value-adding and non-value adding activities within a company's processes. Porter's value chain model is described including primary and support activities.
This document provides an overview of cost accounting basics, including:
1. It defines cost accounting and its objectives such as preparation of cost statements, ascertaining profitability, and formulating business policies.
2. It outlines the functions of cost accounting like ascertaining, estimating, and controlling costs to improve efficiency and reduce costs.
3. It describes a cost sheet, which is a report that accumulates all costs associated with a product or job, and can be used for cost control and setting future prices.
Controlling involves measuring performance against standards and correcting deviations from plans to ensure objectives are met. It is a process that includes establishing standards, measuring performance against those standards, and correcting any variations. Managers at all levels are responsible for controlling. Standards can be physical, cost-based, related to capital, revenue, programs, goals, or intangible. Budgets, statistical reports, analysis, audits, and observation are control techniques used to monitor performance.
Cost accounting and management is important for several reasons:
1) To ascertain accurate product costs for costing, pricing, and decision making. Costs are classified and allocated to products and processes.
2) To estimate costs for bidding on contracts or jobs.
3) To match costs to revenues for determining profits. Profits equal revenues minus cost of goods sold.
4) To identify areas for cost reduction and control costs through variances. This aids management and improves decision making.
The key considerations for installing an effective cost accounting system include understanding the business, organization, production methods, management needs, and ensuring the system is simple, standardized, accurate, flexible, and has benefits exceeding costs. Cost centers
Cost accounting and management is important for several reasons:
1) To ascertain accurate product costs for costing, pricing, and decision making. Costs are classified and allocated to products, processes, and departments.
2) As a basis for estimating costs for quotations, bids, and contracts.
3) To match costs to revenues and calculate profits accurately.
4) For cost reduction, control, and identification of unprofitable activities to aid management decision making.
This document provides information about an accounting course titled "Accounting for Business Decisions". It outlines the course objectives, topics to be covered, and components of a cost sheet. The objectives are to understand financial, cost, and management accounting and how they can facilitate decision making. Key topics to be covered include cost sheets, cost components, and cost accounting principles. The components of a cost sheet are defined as direct material, direct labor, direct expenses, and overhead costs.
For manufacturing companies, controlling product costs is essential for competitiveness. Teamcenter software provides an integrated platform for managing costs throughout the entire product lifecycle. It enables cost analysis and optimization early in development when changes have the greatest impact. Teamcenter offers standardized costing methods, cost models, and transparency into cost drivers to help companies meet cost targets and maximize profits.
Activity Based Profitability ManagementMiguel Garcia
Activity Based Profitability Management (ABPM) and Activity Based Budgeting (ABB) offers organizations a complete tool to gain a competitive advantage and provides crucial information to support the process of making strategic and operational decisions in the current business environment. It might seem that having this type of information for the management of profits, costs and budgets is not necessary to implement Digital Transformation solutions because the implementation of new technologies does not require an evaluation of this type, and it is assumed that it must be implemented independently of what it implies and at any cost, but this is an error because it will always require business processes, products or services, customers or users, service channels, etc. that must be evaluated from the financial and business process point of view, implemented, measured and improved within a competitive and market environment. In this sense, the profitablitiy, cost and budget information provided by the approach of ABPM and ABB will lead to better business decisions that significantly increase the performance and profits of the companies.
This bulletin from Lansdowne Consulting provides insights on strategy-driven spend optimization and trends in the private equity market. It contains two articles. The first discusses how strategy-driven spend optimization approaches can leverage greater savings than traditional category sourcing by addressing a broader set of technical and process levers. It outlines critical success factors and Lansdowne's six-module approach. The second article notes that increasing liquidity and competition in the private equity market are requiring more rigorous commercial due diligence to support riskier deals. It describes Lansdowne's tailored approach that identifies both downside risks and upside opportunities through in-depth analysis and industry expertise. Recent news highlights some of Lansdowne's due diligence
Following Details,
1) Different cost management strategies - Target costing, Kaizen costing, life cycle costing
2. Activity based management
3. Balance scorecard and its significance as a performance measurement techniques
4. Performance measures for decentralized unit
Coca-Cola Hellenic, one of the largest Coca-Cola bottlers worldwide, has started a three year long project to substitute all legacy systems with a SAP implementation called Wave 2, in order to maximize efficiencies in use of resources and apply common best practices and polices accross the group.
1. The chapter discusses key concepts related to overhead costs including the need for overhead controls, distinguishing between fixed and variable costs, and cost allocation methods. Traditional cost allocation systems assign indirect costs to cost objects using overhead rates, but these rates can be inaccurate.
2. A better approach is activity-based costing (ABC), which assigns costs to activities and then traces those costs to products based on consumption of the activities. This provides more accurate product costing than uniform overhead rates.
3. The controller is responsible for developing overhead budgets and standards, ensuring account classifications support cost control and product costing, and working with other departments to implement ABC if used. Proper overhead analysis and reporting helps management make informed decisions
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
New Visa Rules for Tourists and Students in Thailand | Amit Kakkar Easy VisaAmit Kakkar
Discover essential details about Thailand's recent visa policy changes, tailored for tourists and students. Amit Kakkar Easy Visa provides a comprehensive overview of new requirements, application processes, and tips to ensure a smooth transition for all travelers.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
Enhancing Asset Quality: Strategies for Financial Institutionsshruti1menon2
Ensuring robust asset quality is not just a mere aspect but a critical cornerstone for the stability and success of financial institutions worldwide. It serves as the bedrock upon which profitability is built and investor confidence is sustained. Therefore, in this presentation, we delve into a comprehensive exploration of strategies that can aid financial institutions in achieving and maintaining superior asset quality.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
2. Good governance comes from strong processes and
properly trained professionals inside an organization
(Paul Sharman)
3. Why German Cost Management
The explicit objective of supporting management decision
making
Reason 1: GPK is in wide use in German manufacturing
and service companies
Reason 2: It is a part of international economic
environment
Reason 3: Significant steps are made to bring
knowledge of GPK into the English-speaking
management accounting
4. Historic Background
Developed after World War II by H. G. Plaut
First vision was:
◆ To correct errors made by allocation of fixed cost to
products, and
◆ To provide clear and reliable cost information to help
managers make better decisions.
Began in the manufacturing area and later branched out
to service organizations with the focus on direct product
costs only
Integrated in modern cost accounting
5. Definition of GPK 1/2
Grenzplankostenrechnung (GPK) -German cost accounting, flexible
analytic cost planning and accounting (H.G. Plaut)
Developed in Germany 40 years ago
Integrates measurement and management of the business into an
accounting system
Volume sensitive, meaningful information to manage the business –
flexible budgeting / proper treatment of capacity costs
Focus on operational costs and resource consumption, not
financial / regulatory reporting requirements
Einzelkosten- and DBRechnung (Prof. Dr. P. Riebel) integrated in
the modern German cost accounting systems
ABC has recently been incorporated (Prozesskostenrechnung)
6. Definition of GPK 2/2
Resource centric view of cost centres
Most effective in manufacturing and service
organisations that are highly routinized and repetitive
key aspect: how cost centers are defined
7. Definition of cost centers
Costs must be separable
The output produced must be repetitive
The output must be the responsibility of an individual
manager
Cost center size should be manageable
Costs/ technology/resource type/ work performed must
be similar
Cost assignment drivers must be quantifiable and able to
be planned
The center must be either primary or support
8. Foundational principles of GPK
A quantity
based model
The nature of
costs: initial and
changing
The view of
resources and
capacity
3 pillars:
9. GPK-Purpose
GPK and other German cost accounting methods
designed with the explicit objective of:
supporting management decision making over which
products/services to offer
how to price those products and services
how to plan and control operations
→The “Controlling”department is typically separate and
distinct from the Financial Accounting department in
German organizations
10. 1. The view of resources
GPK recognizes resource elements as the smallest element in
the cost model.
Resource elements can be both monetary (i.e. cost elements)
or quantitative (i.e. utilization statistics, output consumed, etc.)
Resource Elements:
Salaries
Fringe Benefits
Uniforms
Square Meters
Payroll Processing
Electricity
Depreciation
11. Resource pools
Related resource elements are group together in a
resource pool. Resources within a resource pool
must satisfy the following criteria:
1.Be interchangeable
2.Be of similar technology
3.Be the responsibility of one manager/team
4.Have homogenous costs
5.Outputs and related costs are able to be planned.
6.Actual information (quantities and costs) can be collected or imputed.
7.Be geographically centralized
Resource:
Driver:
Plant 2:
Maintenance
Labor hours
HR
Labor
hours
Plant 1:
maintenance
Labor hours
Corp IT
CPUMINs
Corp IT
Programmer labor
hours
12. Understanding Capacity
Resources are invested to establish capacity.
The quantified output of a resource pool provides a
measure of capacity.
Excess/Idle capacity represents idle resources, and
is highlighted as a variance in a GPK product P&L.
13. 2. Quantity-based cost model
GPK constructs the cost model using resource
quantity consumption. Broad allocations are
unacceptable.
Dollars follow consumption quantities, not the other
way around.
14. 3. The nature of costs
recognizes two principles on the nature of costs:
(1) The Initial Inherent Nature of Cost Costs are
inherent in resources invested to achieve a stated
strategy, eg. technology, people, materials. GPK
splits costs down to primary cost elements.
(2) The Changing Nature of Cost Costs change as
they flow through consumption relationships: costs
become more fixed as they flow through the cost
model.
15. GPK Cost modeling
Cost pools differentiated by cost driver, within a multi-
pool cost accounting system
Costs segregated by resource-consumption
characteristics, whether proportional to resource output
or fixed
No attempt to “fully recover”all overhead costs
Creates a robust cause-and-effect relationship between
resources consumed and cost drivers
16. German Cost Accounting
-GPK is the best financial tool to monitor internal resource consumption
Activity and Flex Budgeting at the Cost Center Level Yields
Accountability
17. Multiple Margin Reporting
•Admin, sales and marketing
OH added after calculating
product-specific cost
•Dedicated overhead (eg.
Product group marketing
costs) allocated by segment
•Equipment, product R&D
cost applied at the product
group level
18. German vs American system
Features GPK ABC
Comprehensive approach
Levels
Selling& admin
costs
ACPP
Strategical, operational,
tactical
integration
products and services
yes
No
no integration
-
no
Different approach
Fixed costs
Idle capacity
Resource
usage
Long-term period
variance
intensive
1 year or VC
products
extensive
19. German vs American system
Detailed approach
Cost centers
Costs
driver rates
methods
Variance
Meet 5 criteria
primary/secondary
iterative
Product
control over costs
-
step-down
Products
Willingness to make estimates
Cost
estimation
greater less
20. German vs American system
Accurate assignment of costs
Value assets
R&D costs
Replacement costs
Over time:costs expected
to benefit
Historical costs
Period costs
Use of different costs
Costs for
purposes
different -
Clear conseptual separation
State-of-the-art
software
yes no
21. Advantages
More comprehensive approach
Different approach to cost drivers
detailed approach to cost control
greater willingsness to make estimates
accurate assignment of costs to the right year
Better use of different costs for different purposes
Clear conceptual separation beween financial accounting
and management accounting
22. Disadvantages
Computer support and cost management expertise
required
May produce too much information for some managers
and organizations
Expensive (to implement system company-wide)
Some companies might not need such a complex
system
Require managers to go through a detailed conceptual
design phase when GCM is adopted (everyone has to
buy in to this process)
Top management must buy in to the German Cost
Management approach
24. Example of GPK implementation
Magna Steyr
PROFILE:
- A supplier to original equipment manufacturers in the
automobile industry
- does vehicle engineering and assembly
- the company is flexible and changes its structure as
needed
- has long-term clients like Mercedes and DaimlerChrysler
- 80 % of the work is outsourced, but there are still many
cost drivers affecting the other 20%
- company’s controllers use a GPK system with 455 cost
centers and about 900 cost drivers
- with a range of 1/8 cost drivers per cost center
25. Example of GPK implementation
Magna Steyr
One of the biggest benefits of the GPK system for the
company:
It helps management decide where to focus cost
reduction efforts
Example: when the paint shop was identified as a weak
spot, the company changed production to need less
capacity and worked with suppliers to increase
outsourcing of painting.
The company is currently trying to make its GPK system
simpler for senior management to understand.
26. Sustainability of GPK
GPK successfully sustained over the long term in
continental Europe -why?
Disciplined design & methodology
Management accounting clearly separated from
financial accounting; considered to be its own
“science”in Germany
Integration into organizational management systems
for planning & control
Evolution of IT systems to support GPK management
accounting
27. Inplications of GPK for North America
Potential for deeper understanding of cost
Disciplined GPK methodology already developed
Possible combination of GPK with successful
elements of ABC implementations
ERP IT solutions already widely implemented
–SAP is a German company -leverage what is already
owned!
28. GPK Implementation gains
Big buy-in from most operational managers -feeling that
areas are “better understood”
Higher quality of operational/financial information for
decision-making
Integrated ERP system make implementation easier
than it could have been
Good grounding for future expansion of methodology
29. Implementation issues
Some lack of buy-in from others in organization
Data integrity -need for clean-up prior to project
High amount of set-up work
Some lack of trust as to how data would be used by
others
Not a perfect fit for all areas –eg. Information Services
30. Future
Integrate GPK with ABC ( done properly) German term is
Prozesskostenrechnung
Develop the combined logic into a set of standards and
practices which are appropriate for the USA and other
markets
Create public awareness and a name for the new
methodology. Probably Resource Consumption
Accounting (RCA)
Work with Software vendors (Microsoft and SAP) to
deploy the logic
Editor's Notes
US-System focus on fiancial reporting
Was design with the objective of supporting management decision making about which products or services to offer, how to price them and how to plan and control operations In German speaking countries there is a clear organizational distinction between the department responsible for financial accounting and the one responsible for “controlling”
There is a relatively larger number of cost centers in GPK than in the US
3) A cost center may have only one manager, but one manager may manage more than one cost center, in ABC a manager will manage a cost center that produces multiple activities 7) Support for a primary cost center is one that performs work directly contributing to the manufacture of the product or performance of the service for a customer (e.g., packing items for shipments) Subunit of the organization must ... ... have a homogeneous cost structure ...have only one person responsable for it ...not be geographically dispersed ...have only one technology per cost driver The capability of actual data recording and planning must be possible in the subunit -
Initital: are contributed as a distinct and separate component based on the proportion of planned/ budgeted total tests Variable: are variable to the units of output of the cost-center activity, not the total quantity of final products produced, are reassigned to primary departments from support departments based on the units consumed at the budgeted rate of $ per test for each quality test performed
1)because of the levels of organizational planning and control (strategic, tactical and operational-integrated) involved to provide information to the managers from all levels, assignment method of selling and administrative costs, and the planning process (cost rates for drivers are planned each year during the ACPP (Analytical cost planning process)-direct, indirect, fixed and variable, as well as primary (originate in cost centre) and secondary (other cost centre) costs are included in the ACPP. 2)different from the resource and activity cost drivers in the US. They use both separate and in tandem. Resource: for issues as efficiency, outsourcing, resource replacement, investment in new technologie, the marketing of excess capacity, the cost of excess/idle capacity (resource cost drivers are measures of the capacity provided by the fixed resource costs)exp: US set-up as cost driver in Germany st-up hpurs because not all set-ups need the same time. 3) Different criteria for cost centres 4) Because of the matching principle there is a greater willingness to estimate costs 5) Replacement costs instead of historical costs 6) Allows profit to be calculated by market segment or any combination of segments, the profit from selling a single product to a single customer can be calculated as well as overall profitability of a product, a customer or a region., this is a standard feature of german cost management 7) Distinction between information needs as well as demands for external reporting purposes and those for internal use by management (not 2 different szstems), close integration between the managerial and the financial accounting, second> onlz the allowed costs will be realated to inventory and reflected in the balance sheet, but all of the standard product cost will be included for Multiple margin Management
Apart from Germany, widespread adoption also throughout Sweden, Norway, Austria, France, The Netherlands All companies are satisfied with their GPK system and none are planning on changing it.