Cost-benefit concept
The traditional cost management is based on whether the enterprise saves, and unilaterally starts with reducing costs or even trying to avoid some expenses. Emphasize economy and economy. The purpose of traditional cost management can be simply summarized as reducing expenditure and cost. This is a narrow concept of cost theory. Under the traditional planned economy, products are purchased and sold in a unified way, and the output of enterprises is equal to the income of enterprises. Therefore, reducing product costs means increasing enterprise profits, and enterprises will inevitably focus on reducing product costs, fall into a backward state of managing costs simply for reducing costs, and cannot provide the correct information needed for decision-making.
With the development of market economy, the seller's market has gradually changed to the buyer's market, and enterprises can no longer simply equate cost management with cost reduction. Because enterprises should not only pay attention to the production cost of products, but also pay attention to the benefits that their products can achieve in the market. In the market economy environment, adapting to the rapidly changing environment, obtaining economic benefits and obtaining sustainable competitive advantages are always the primary issues that modern enterprise management must consider. In enterprise cost management, we should also establish the concept of cost benefit and realize the transformation from the traditional concept of "saving and saving" to the modern concept of benefit. Especially today, with the gradual improvement of China's market economy system, enterprise management should be guided by market demand, and strive to make enterprises get as much profit as possible by providing products and services with as high quality and perfect functions as possible to the market. Consistent with this basic requirement of enterprise management, enterprise cost management should be directly related to the overall economic benefits of enterprises, and a new concept-cost-benefit view should be used to look at the cost and its control. All the cost management activities of an enterprise should be guided by the concept of cost-effectiveness. From the comparative analysis of "input" and "output", we can see the necessity and rationality of "input" (cost), that is, strive to pay as little cost as possible, create as much use value as possible, and obtain more economic benefits for the enterprise. It is worth noting that there is a difference between the concepts of "spending as little as possible" and "reducing expenses and reducing costs". "The less you pay, the better" means saving or reducing costs. It uses the concept of cost-effectiveness to guide the design of new products and the improvement of old products. Based on the investigation and analysis of market demand, it is realized that if a function is added to the original function of the product, the market share of the product will be greatly improved, so, although some costs will be increased accordingly to realize the new function of the product. As long as this part of the cost increase can improve the competitiveness of enterprise products in the market and ultimately bring greater economic benefits to enterprises, this part of the cost increase is in line with the concept of cost-effectiveness. For another example, although the implementation of rationalization proposals by enterprises will increase certain expenses, it will enable enterprises to obtain better benefits, and the introduction of new equipment will increase expenses, but it will save equipment maintenance costs and improve equipment efficiency, thus improving the comprehensive benefits of enterprises; Although the related expenses such as inspection fees and product quality improvement developed to reduce the number of defective products will increase the short-term cost of enterprises, their market competitiveness and production efficiency will gradually improve; The expenses incurred to fully demonstrate the feasibility and advanced rationality of decision alternatives can ensure the correctness of decision-making, so that enterprises can obtain the maximum benefits or avoid possible losses. These expenses are inevitable. This cost view embodies the idea that "spending money is saving money", that is, in order to reduce expenditure for a long time (equivalent to the current opportunity income or the real income in the future), it is necessary to spend some seemingly high expenses, which is the embodiment of the cost-benefit view.
In short, in the daily cost management of enterprises in the modern market economy environment, we should look at "input" rather than "output". Study the relationship between the increase and decrease of cost and the increase and decrease of income, so as to determine the most favorable cost prediction and decision-making scheme for improving efficiency.
Concept of strategic cost
With the development and change of social and economic environment and the continuous innovation of high technology and management science, the scope of modern cost management is expanding day by day. Traditional cost management mainly pays attention to the internal production and operation process of enterprises, but pays little attention to the supply and marketing links of enterprises, and even turns a blind eye to the external value chain of enterprises, which makes enterprises unable to obtain comprehensive development and competitive strategies. However, for China enterprises in the modern market economy environment, cost management needs to pay more attention to the influence of the external environment of the enterprise, comprehensively consider the enterprise cost management in the whole market, and establish the concept of strategic cost.
The formation and development of strategic cost management is the inevitable result of modern market economy and competition. In the past two decades, great changes have taken place in the enterprise environment, and global competition has become increasingly fierce. In order to meet the needs of this competition, strategic cost came into being. It goes without saying that cost is the key factor that determines whether the products or services of an enterprise can get a share in the competition and how much share it occupies, and the core that affects the competitive cost is the strategic cost of the enterprise, not the traditional operating cost.
Implementing strategic cost management is conducive to updating the concept of cost management. In traditional cost management, the purpose of cost management comes down to reducing costs, and saving has become the basic means to reduce costs. Undeniably, in cost management, saving as a means is beyond doubt, but it is not the only means. The purpose of modern cost management "should be to spend as little money as possible to get as much use value as possible, so as to provide the best foundation for profit and improve cost efficiency." From the perspective of strategic cost management, it is not difficult to find that there are conditions and limits for reducing costs. In some cases, controlling costs may lead to the decline of product quality and enterprise efficiency. If the enterprise increases at a lower cost and obtains a higher use value, so as to greatly improve the economic benefits of the enterprise, why not? The competitive advantage of enterprises in the market depends on providing customers with better use value at the same cost or providing the same use value at a lower cost. What kind of cost strategy an enterprise adopts depends on its overall business strategy and competitive strategy, and cost management must serve the overall management of the enterprise.
The research and implementation of strategic cost management is conducive to improving and strengthening enterprise management. In the practice of modern enterprise management, many large companies have set up enterprise strategy research institutions such as "R&D Department" and "Strategic Research Department", but in practice, they pay more attention to strategic management and strategic management, and less attention to strategic cost management. Enterprise management is a perfect system, and strategic cost management is an indispensable part. How to correctly introduce and apply strategic cost management is a problem worthy of consideration in China's accounting management.
Corporate assets reorganization and M&A are hot topics in China business circles. From the perspective of strategic cost management, this paper briefly analyzes the cost and competitive advantage brought by the reorganization of the value chain of Sichuan electrified railway.
Sichuan Investment Group merged Hubei Railway Factory through the combination of electricity and metallurgy, holding Sichuan Hubei Railway (now renamed as "Sichuan Investment Holdings"), and invigorating three state-owned enterprises, namely Jiayang Power Plant, Jiayang Coal Mine and Hubei Railway. This method of reorganizing several inferior enterprises and giving full play to the overall effect is of typical significance in China's asset reorganization. After the reorganization, the electricity price, which accounts for 60% of the production cost, will be greatly reduced, saving tens of millions of yuan every year. At the same time, through adjustment, Eteel's ferroalloy output can be raised to a higher level, achieving economies of scale and greatly reducing the unit fixed cost. Jiayang power plant and coal mine also have a stable sales market, which greatly reduces their sales expenses. At the same time, Sichuan Investment Group also acquired Changgang shares, which also laid a good foundation for the ferroalloy sales of Hubei Railway. It is not difficult to find that the internal value chain of this series of mergers and acquisitions can be simplified as: Jiayang Coal Mine-Meijiayang Power Plant-Daan Iron Works-Ferroalloy Dragon Steel Works, etc. Each operation in the above-mentioned value chain consumes resources, resulting in costs and output benefits.
In modern cost management, strategic cost management occupies a very important position. It breaks through the research field of traditional cost management, which limits the cost to the micro level, and shifts the focus to a broader research field of enterprise's overall strategy, such as cost analysis in production association, procurement association, technology association and competitor association, which is beneficial to enterprise's correct cost prediction and decision-making, thus correctly selecting enterprise's business strategy, correctly handling the relationship between enterprise development and strengthening cost management, and improving enterprise's overall economic benefits.
Modern enterprises are facing the competitive challenges of domestic and foreign markets, especially in the information age and modern management today, the behavior of enterprise managers always involves strategic issues. Strategic cost management is a process in which enterprise managers determine strategic cost objectives, formulate and implement strategies and a series of action plans to achieve the objectives on the basis of comprehensive consideration of internal and external environmental factors of enterprises. Under the condition of market economy, China should make full use of the idea of strategic cost management in the process of implementing modern enterprise system and sustainable economic development.
costing
Cost calculation is not only the center of cost accounting, but also the basis of cost management, and its important position is beyond doubt. The traditional cost calculation includes calculating the cost of manufactured products in the form of summary, distribution and re-summary, and also includes the cost budget with standard cost as the core means. However, in modern cost management, there has been rapid development from form to content. After years of research and practice, western developed countries have put forward some new cost calculation methods, among which Activity-Based Costing (ABC) has been widely used in Europe and America, and ABC has made great contributions in providing more accurate and authentic cost information.
Activity-based costing (ABC) refers to a cost calculation method that takes activities as the accounting object, confirms and measures the workload through cost drivers, and then allocates indirect expenses according to the workload. Activity-based costing is based on the untrue distribution of indirect costs or indirect expenses under the traditional cost system. Under the traditional cost accounting system, when the allocation standard of indirect expenses or indirect expenses generally adopts direct labor hours or machine meters, this allocation method has played a positive role in the past, that is, it is more suitable when the product variety is small or the amount of indirect expenses is not large, and generally does not have a big shock wave to the product cost level. Under the modern enterprise system, due to the variety of products produced by enterprises, it is difficult to accurately define the working hours or machine hours between products, and it is difficult to allocate them reasonably because of the high indirect cost or overhead. Under the activity-based costing system, cost attribution starts from causality, and indirect costs or indirect costs are not directly distributed among products, but among activity projects, thus reflecting the causality of cost distribution, thus making the calculation of activity costs and even product costs more accurate.
Under activity-based costing, activity-based costing can be divided into four levels: (1) product unit cost. That is, the direct costs related to the production of unit products, including raw materials, direct labor, etc. The activity cost at this level is directly proportional to the output. (2) Production batch cost. That is, the resource consumption related to production batches and packaging batches, including production preparation costs, cleaning costs, quality costs, etc. The activity cost at this level depends on the number of production batches. (3) Product maintenance cost. That is, the resource consumption related to the product type, including the cost of obtaining the production license and packaging design of a certain product. The activity cost at this level depends on the scope and complexity of the product. (4) Factory-level cost. That is, the resource consumption related to maintaining the production capacity of the operation, including depreciation, safety inspection fees, insurance, etc. Activity-based cost at this level depends on the size and structure of the organization.
The concept of activity-based costing has deepened people's understanding of cost. According to the traditional cost theory, cost is an objective expense, which is the sum of the funds spent by enterprises in the process of production and operation. The concept of cost in traditional cost theory reveals the economic essence (value consumption) and economic form (monetary fund) of cost, but it does not reflect the dynamic process of cost formation. ABC method effectively makes up for this deficiency. It describes the production and operation process of an enterprise as a set of operations aimed at meeting the needs of customers. Among them, the process of activity transfer is also a process in which value is gradually accumulated and transferred within the enterprise until the total value transferred to customers (that is, the final product cost) is finally formed. ABC method links the occurrence of cost with the formation of product cost through the intermediary of activity, vividly reveals the dynamic process of cost formation, and makes the concept of cost more complete and concrete.
Compared with the traditional cost system, activity-based costing adopts a more reasonable method to allocate indirect expenses. This method first collects all kinds of resources consumed by each operation center, and then allocates the cost of each operation center to each product according to its own operation motivation. In the final analysis, it adopts various standards to allocate indirect expenses, and it adopts different operation motives to allocate indirect expenses to different operation centers. However, the traditional cost calculation only adopts a single standard to allocate manufacturing expenses, which can not correctly reflect the different effects of different technical factors on expenses in different product production. Activity-based costing takes both direct expenses and indirect expenses as the cost of product consumption. There is no difference between the confirmation and allocation of direct costs and traditional cost calculation methods; The allocation of indirect costs is based on activity-based costing and adopts diversified allocation standards, thus greatly improving the attribution of costs. Therefore, as far as the accuracy of manufacturing cost allocation is concerned, the cost information calculated by ABC is objective, true and accurate. From the perspective of cost management, activity-based cost management focuses on the causal relationship of costs. By tracking and dynamically reflecting all activities, we can better play the role of decision-making, planning and control, and promote the continuous improvement of modern cost management.
In addition, "target cost calculation" has become a new force in cost calculation and plays an increasingly important role. The so-called "target cost calculation" is not limited to setting product cost targets, but can be implemented in various fields such as development preparation, determination of design and manufacturing policies, production preparation, logistics, pricing and so on. Its computing object has expanded from physical objects such as products or parts to abstract functional objects; Its calculation basis is changed from financial accounting basis to management accounting basis, and the calculation content is not all full cost or average cost, and partial cost or incremental cost can be used; In the calculation method, we can either add the cost elements item by item, or divide the cost elements, and make theoretical or statistical analysis and calculation one by one on the basis of physical characteristics, and at the same time estimate or estimate as needed. This cost calculation method runs through all stages from development to sales and service, and is an indispensable element of modern cost management.
In short, in order to adapt to the market economy environment, enterprises must improve the cost calculation method and provide more accurate cost information, so that enterprises can obtain more benefits and improve their market competitiveness.
The concept of cost driver
Generally speaking, cost drivers refer to the factors that lead to the occurrence of costs. Only by truly understanding the causes and consequences of costs can enterprises really control costs. Traditional cost management only pays attention to tangible cost drivers, but ignores intangible cost drivers. In the traditional concept of cost management, raw materials, labor, manufacturing costs and other items are the main factors that constitute the cost, while product research and development, market development, enterprise internal structure adjustment and so on have little connection with cost management. But in fact, some tangible cost items are often not the most important factors that affect the cost. Some factors that traditional cost management fails to consider, such as enterprise scale, geographical location, product complexity, and even factory planning and layout, internal inventory transfer, enterprise management system and other factors, will have a great impact on product cost. These driving factors need long-term accumulation to form, and once formed, it is difficult to change, so it is more important to emphasize strategic comprehensive consideration. According to foreign research, 85% of the product cost has become a constraint cost before the start of production, that is, some structural cost drivers and executive cost drivers are actually the key factors affecting the enterprise cost, while the part that traditional cost management can affect only accounts for 15% of the total cost.
The traditional cost calculation object is all kinds of products produced by enterprises, which are generally the final products. Therefore, people often attribute the cost driver to the production quantity. In an enterprise that produces a single product, the production quantity can be measured by the unit quantity of the product; In enterprises that produce a variety of products, direct labor hours or direct labor wages are usually used to replace the production quantity. Of course, in the highly labor-intensive production process, this assumption of cost drivers will not seriously distort the cost of products. Because the main cost involved in the production process is that the consumption of direct materials and direct labor is directly related to the quantity of products; Manufacturing expenses are mostly indirect expenses related to production time (mainly including depreciation expenses of machinery and equipment, power expenses and other machinery and equipment-related expenses), so it is reasonable to allocate them according to direct labor hours or direct labor wages. As for the period cost, it is often considered that it is only related to the occurrence period, and it does not allocate the product cost, but only directly offsets the current profit.
However, in the highly automated modern manufacturing process, the proportion of direct labor costs is decreasing day by day, accounting for only 5%~ 10% of production costs, while indirect costs such as machine depreciation expenses and power expenses closely related to automation are greatly increased. In this case, if the proportion of direct labor hours or direct labor wages is still declining, the increase in the proportion of indirect expenses will seriously distort the product cost. Obviously, with the increase of science and technology content in modern enterprise products, the manufacturing cost of products is not directly related to the number of products produced, or at least not only directly related to the number of products. If we still calculate the product cost according to the traditional method, we will overestimate the cost of low-tech products and underestimate the cost of high-tech products. The error of cost calculation leads to the error of production decision, which is fatal to the enterprise. Therefore, with the rapid development of high-tech represented by computer technology, it is necessary to expand the traditional single quantity driver into a series of cost drivers according to the viewpoint of strategic cost management. Through the analysis of various cost drivers and related costs, the single standard allocation is changed to multi-standard allocation according to cost drivers, so as to correctly allocate indirect costs and calculate product costs. Only in this way can we clearly reveal which products have effective profitability. In particular, some intangible cost drivers that are not considered under the traditional cost management, such as enterprise scale, product development, market development, enterprise internal structure adjustment, and even factory layout rules, will have a great impact on product costs and should be considered strategically.
In addition, through further analysis, it can be found that in addition to the objective factors that drive the cost, the enterprise cost will also be driven by subjective factors, that is, the cost function can be expressed as: cost = f (objective motivation, subjective motivation). Just because people's initiative is the greatest, people's subjective motivation should also be an important factor driving the cost of enterprises. For example, employees' awareness of cost management, comprehensive quality, collective consciousness, sense of ownership of enterprises, work attitude and sense of responsibility, interpersonal relationships among workers and between workers and leaders, etc., are all subjective factors that affect the cost of enterprises, so they can also be regarded as the driving factors of costs. From the perspective of cost control, human subjective motivation has great potential. Practice shows that the research and analysis of cost center, controllable cost and responsibility cost in responsibility accounting has positive practical significance for improving enterprise cost management.
Through the research and analysis of the subjective motivation of cost, we can further enlighten some new ideas and concepts of cost management in modern enterprises. For example:
(1) Take the awareness of cost control as a part of corporate culture. To eliminate the misconception that the cost can't be reduced any more, and to train and educate all employees of the enterprise, managers at all levels and all employees of the enterprise need to fully realize that the potential of enterprise cost reduction is endless, and everyone should pay enough attention to cost control.
(2) form employees' democratic and self-management consciousness within the enterprise. In the daily cost management, we actively use the research results of psychology, sociology, social psychology and organizational behavior, and strive to introduce an internal restraint and incentive mechanism into the employee behavior norms. According to the hierarchy theory of human basic needs put forward by western psychologist A Maslow, human needs can be divided into five levels from low to high: physiological needs, security needs, social needs, respect needs and self-realization needs. The introduction of internal restraint and incentive mechanism is to pay attention to the highest-level needs of people, that is, the needs of self-development and self-realization. This mechanism emphasizes the self-motivation of human nature and does not need any external factors. It is not only the lowest cost management method, but also the most effective management method to reduce the cost by changing the external constraints and incentive mechanisms commonly used by enterprises through rewards and punishments.
In a word, in the cost management of modern enterprises, we should establish the cost management concept based on the theory of multiple incentives. We should not only attach importance to tangible incentives, but also attach importance to intangible incentives. We should not only pay attention to the objective factors of driving cost, but also pay attention to the subjective factors of driving cost. This concept of cost management based on cost driver analysis can often induce new ideas and effective measures for enterprise cost management.
Systematic management concept of cost
Influenced by the concept of long-term planned economy, enterprises often only pay attention to the management of production cost in cost management, ignoring other aspects of cost analysis and research. This concept of cost management is far from meeting the requirements of the market economy environment. In the market economy environment, enterprises should establish the concept of systematic cost management, regard enterprise cost management as a systematic project, emphasize the whole and the overall situation, and conduct all-round analysis and research on the object, content and method of enterprise cost management.
On the one hand, in order to make enterprise products have strong competitiveness in the market, cost management can no longer be limited to the production (manufacturing) process of products, but should expand its vision to the market demand analysis of products, the development trend analysis of related technologies and product design; Extend backward to the use, maintenance and disposal of customers. According to the requirements of total cost management, it will involve information source cost, technology cost, logistics cost, production cost, inventory cost, sales cost, customer maintenance cost, disposal cost and other cost categories. All these cost contents should be managed by strict and meticulous scientific means to enhance the competitiveness of products in the market and make enterprises invincible in the fierce market competition. If value analysis is carried out in the product design stage, it is a cost management method combining technology with economy.
On the other hand, with the development of market economy, intangible products are becoming more and more commercialized. Accordingly, the connotation of cost management should also be extended from material product cost to intangible product cost, such as human resource cost, capital cost, service cost, property right cost, environmental cost and so on.
Furthermore, under the condition of market economy, the focus of enterprise management has shifted from internal to external, from production management to business decision management. Studying and analyzing various decision-making costs has become an important part of enterprise cost management, such as related costs, differential costs, opportunity costs, marginal costs, cash costs, replacement costs, avoidable costs, deferrable costs and future costs. In modern enterprise cost management, paying attention to and strengthening the research and analysis of these management decision-making costs can avoid the huge losses caused by decision-making mistakes and provide a basis for ensuring enterprises to make the best decisions and obtain the best economic benefits.