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Clearly, the fundamental first step to managing and controlling the costs of any company is to identify and understand them.
- What does the customer require of your company?
- What process and function are performed to satisfy these requirements? Not just direct, but support, indirect and administration activities.
- Which resources are consumed by the Direct, Indirect, Support and Administrative activities?
- What mix of Fixed and Variable cost elements are in the resources consumed by the activities?
- How should the activities themselves be treated - as Fixed or Variable cost rates?
- Are Fixed cost activities erroneously buried in an overhead?
- What is the proper level of detail to establish and evaluate the cost rates?
- What is the proper focus to apply the cost - process, product, customer, or ???
Once the costs have been identified and presented in an accurate, usable and predictable format - there is now the opportunity
to manage and control them.
Do you have confidence in your costing system?
The MMTC offers several approaches to addressing your needs! |
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