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How A Cost Accounting System Improved Efficiency And Profit

Today lets talk about cost accounting and the benefits it can have for your business. Here’s a case study:

cost accounting works at Phases Accounting

Client

Marie owns a manufacturing business which makes a high-end product. She varies her design from time to time so there are many versions of her primary design.

Problem

Marie did not have a cost accounting system that would determine the cost of producing each version. So she did not know which ones were cost-effective to produce and earn her more profit and which ones were not.

Solution

She engaged her Accountant to select an appropriate cloud-based cost accounting system to tailor to her needs.

The Accountant analyzed the manufacturing process and determined the basic activities involved. The next step was to create a system which would:

  1. Measure how often each basic step is performed in producing a design.
  2. Determine the cost of each step in the manufacturing process.
  3. Use 1 and 2 above to determine the cost of each design.

Marie enthusiastically uses her new cost accounting system to:

  • Measure profits derived from the sale of each design.
  • Target low-profit designs for discontinuation.
  • Help determine pricing of new designs.

Benefits for the Client

The system allowed Marie to measure production efficiency and thereby grow her profit and business. So would cost accounting benefit your business? Call or email me and let’s talk about it!

At Phases we’re here to serve you. 

DEBBY

 

 



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