Accurate Costing is Key to Profitability

To manage pricing and profitability effectively, companies need to use the right costing methodology, have the right information and have the right analytical tools.
 
To maximize profitability, companies must know the true cost of making and delivering their products and services. Activity-Based Costing can accurately determine those true costs.
 
 
Recommendations for managing pricing and costing more effectively:
  • Understand the current state of the art as it applies to ABC or some other advanced costing method and how it fits into a product and customer profitability initiative.
  • Determine where there are issues with your company’s costing methodologies and their root causes. Assign each issue a priority level and compile an action item list based on these assessments.
  • Identify the important information that is not being used in your costing process, either because it is not collected or because it is currently inaccessible.
  • Assess the software tools your company uses to do cost and pricing analysis. Do the tools have the capabilities and characteristics needed to do cost and pricing analysis more effectively?

 

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