Frequently asked questions of cost management

When we evaluate the cost performance of enterprises, we often take cost fluctuation as the only criterion, which is very one-sided. Because the cost only shows all kinds of labor consumption in a certain period, but does not reflect the income of this consumption. For example, in the short term, enterprises often spend a lot of money to produce new differentiated products, but in fact, this new differentiated product can expand market share and obtain higher cost-effectiveness. Therefore, in cost management, for the long-term stable development of enterprises, it is necessary to establish a correct cost-benefit thought, which will be beneficial to the formulation of enterprise competitive strategy.

First, we should combine the immediate interests of enterprises with the long-term development needs.

The choice of cost management methods should first obey the enterprise strategy, because the emphasis of enterprise cost management is different under different strategic conditions. An enterprise that wins by product differentiation strategy is to produce better and more unique products than its competitors without increasing the cost gap, attract customers by showing product differences, cultivate customers' loyalty to the brand, and achieve the strategic objectives of the enterprise with excellent product design and quality service. The enterprise that wins by the cost-leading strategy is to achieve its strategic goal through efforts to reduce costs, expand production and lower selling prices under the condition that the product performance and quality are not different from those of competitors.

One-sided pursuit of cost reduction by enterprises often leads to short-term behavior. Not paying attention to long-term investment affects the technological innovation and product upgrading of enterprises, which is very unfavorable to the development of enterprises that win by product differentiation strategy. Therefore, the cost control of enterprises should consider the continuous innovation of products, improve product quality, and attach importance to the adaptation of cost management measures to the development stage and strategic objectives of enterprises.

From the technical aspect of cost management, in order to balance the long-term interests and short-term interests of the enterprise, the senior management can set a percentage limit on the basis of the net profit of the enterprise in the previous year according to the needs of different development stages of the enterprise, and use it as a special fund for the strategic development of the enterprise this year to pay for research and development expenses and training expenses. , any other purpose shall not occupy the funds. If the enterprise does not use up the money this year, it can carry it over to the next year, but it must control the total cost and not overspend.

The purpose of not letting the special funds for strategic development overspend is to consider the short-term interests of enterprises. For an enterprise, there is only a balance between long-term interests and short-term interests, and there is no more important issue. If enterprises give up long-term interests in order to maximize short-term interests, they are unwilling to plan ahead in the short term and will inevitably fall into the dilemma of digging wells in the long term; However, if enterprises do not consider short-term interests for long-term interests, they will inevitably face immediate crisis. Enterprises' short-term "skin does not exist" and long-term "hair will be attached"? The strategic development management of subordinate investment centers and profit centers can also be controlled by setting up special funds. If the manager of the subordinate company or business department does not attach importance to the investment in strategic development, the subordinate company shall not use this fund for any other reason except the "learning and growth" indicator in the balanced scorecard.

Second, the senior management ignores the basic work of cost management.

The correctness of cost planning and cost decision often depends on the accuracy of the information provided by the basic work of cost management. The financial department should first establish and improve the basis of implementing this management system-scientific and practical methods and expression techniques for operating information accumulation suitable for internal managers, that is, first establish the processes and methods for financial data statistics, calculation and distribution.

If the basic work of cost management such as enterprise quota management, original cost record, activity-based cost allocation, material and material measurement and acceptance management system is not perfect, it will directly lead to the lack of true and reliable basic data for cost planning, cost control, cost assessment and cost decision-making, which will directly mislead management to make improper or wrong decisions. Therefore, the primary task of enterprise cost management is to establish and improve the scientific basic work of cost management.

Three, cost control should not be limited to manufacturing costs, the need for cost control in the whole process.

For a long time, cost control has been focused on the production stage. However, 80% of the product cost has been locked in the design stage, which greatly increases the potential to reduce costs in the development, design and determination of process flow stages. Therefore, enterprises need to establish the idea of "life cycle cost" and realize the target cost by means of value engineering. For example, before designing a new product, we can subtract the profit target and tax from the expected selling price to get the design target cost of the product, and fundamentally control the product cost, thus ensuring that the new product is not only technologically advanced, but also economically reasonable. The financial department predicts and monitors the cost of developing, designing, producing and selling the whole product life cycle, and comprehensively analyzes the cost calculation and product design, so as to realize the fundamental cost reduction.

Four, cost control only attaches importance to the book cost, not to improve production efficiency.

The cost management of most enterprises focuses on book cost analysis, such as raw material prices, administrative office expenses, business entertainment expenses, travel expenses, etc. Few enterprises consider how to reduce costs from improving operational efficiency, such as finding ways to improve equipment utilization and employee labor efficiency. Efficient cost control of enterprises should start with source control and improve production efficiency.

Under the guidance of the thought of cost benefit, the performance evaluation index of cost work is set according to the relationship between input and output (that is, cost benefit). First, the less input and output, the better; Second, the more input and output, the better; Third, it is better that the input growth is slower than the output growth; Fourth, reducing input is faster than reducing output; Fifth, it is best to reduce input and increase output. Setting the cost performance evaluation index with cost benefit as the core will be more conducive to the long-term healthy development of enterprises.

Five, the use of "activity-based costing" for cost accounting.

Traditional cost management allocates manufacturing expenses according to the working hours of products. This allocation method implies an assumption that the occurrence of manufacturing expenses is directly related to the output (working hours) and the material cost, which is in direct proportion. This concept is suitable for enterprises with single variety and large quantity, and the cost is mainly reflected in the manufacturing cost.

For enterprises with high technology content, small batch and complex technology, the unit material cost and working hours of products are almost the same as the former, but the total cost of unit products is quite different. If the product cost is calculated according to the traditional method, it will overestimate the cost of low-tech products or underestimate the cost of high-tech products. The error of cost calculation will lead to the error of enterprise production decision, which is fatal to enterprises.

Activity-based costing is a management method that takes activity as the center, and finally calculates the product cost by confirming and measuring the cost of activity and activity. Its theoretical basis is the cost driver theory, that is, the allocation of expenses should focus on the causes of expenses: product production leads to operation-operation consumes resources-resource consumption leads to cost. This cost accounting method can dynamically reflect the process of cost formation by tracking and recording all the activities of enterprises, and can provide relatively accurate cost information for enterprise decision-making.

Six, the enterprise cost analysis system is not perfect, it is difficult to provide strong support for decision-making.

Cost analysis in enterprises should not only analyze the production process and economic factors of products, but also expand the analysis object to the whole process of production and operation, especially to go deep into the technical field and carry out technical and economic analysis; The function of cost analysis can not only be used to evaluate the implementation of cost plan, but also to analyze cost and benefit, so as to help enterprises realize the optimization of economic benefits. In terms of analysis time, we should strengthen the timeliness of analysis and gradually develop the past after-the-fact analysis into prior analysis.

However, the top management of many enterprises does not attach importance to the establishment and improvement of the cost analysis system. The basic performance of enterprise cost analysis is as follows:

(a) cost analysis is limited to regular analysis after the event, without daily analysis and forecast analysis.

(B) The cost analysis is limited to the production cost analysis, and there is no cost analysis of the whole process of product production and operation.

(c) The cost analysis is limited to the analysis of the implementation of the cost plan, without cost-benefit analysis.

Seven, the cost assessment work has not been put in place, resulting in the cost analysis work can not effectively improve the efficiency of enterprises.

Generally speaking, the primary reason why the enterprise cost assessment can't be put in place is that the enterprise has not carried out cost responsibility management, and has not formed a scientific management system of responsibility control, responsibility accounting, responsibility analysis and responsibility information feedback, so that the economic responsibility of cost management can't be implemented to a clear responsibility subject, and the assessment is impossible.

Secondly, although some enterprises have established a cost responsibility management system, the human resources department has not cooperated with the financial department, organically combining the economic responsibility of cost management with the performance incentive system, which leads to the financial department only assessing the economic responsibility of each department, analyzing and discovering the problems in the operation of the department, but not prompting all departments to actively improve their work in view of the existing problems, which eventually leads to unnecessary waste in the preliminary work of financial management. This situation is also very common in practical work.