The Cost Management Toolbox

"A lack of procedural or system controls in your key processes could distort financial and operational data."

"Accountants sometimes portray an erroneous notion that costs can be calculated to the nearest penny."

"Are you prepared to cope with the changes brought on by external forces?"

"Managers will prod, probe, and question as they look for inconsistencies or duplication of functions that will result in an inefficient use of company resources."

"Although both methods greatly simplify the cost of sales calculation, they have a distinct disadvantage: They do not tie the cost of sales to specific products, services, or customers."

"Labor often represents 60-70 percent of the total departmental spending."

"When a company makes a capital investment, it expects to recover the initial cash committed plus some additional cash in the future. "

"How you balance these dimensions is a management judgement call and requires a healthy dose of common sense. "

"Costs are only as accurate as the assumptions that underlie their calculation."

"If a manager believes that the calculated cost is not accurate, the assumptions that underlie the cost calculations should be reexamined."

"Sometimes it may be possible to identify a direct cost, but it is not economically viable to trace it to a particular service."

"Are users complaining that their cost allocations are unfair or inaccurate?"

"Labor standards have been used extensively to improve productivity and reduce costs."

"Each organization must determine the right approach given its informational needs, the available resources, and the company culture."

"Any type of cost analysis for decision-making purposes always looks at a minimum of two alternatives: the decision at hand versus the "do-nothing" alternative."