How Effective is Your Costing?
Many companies are using a costing platform that is more of a “one-size-fits-all” system. What they don’t realize, is that the insights there are getting from these systems are inadequate for important decision making because they aren’t tailored to their specific business needs. Another barrier to effective costing is understanding the difference between the costing done for external financial reporting and managerial costing – costing done purely for an organization’s internal use. The goal of managerial costing is to ensure information for decisions reflects the characteristics of the organization’s resources and operations. Yet most companies have inadequate managerial costing systems, relying on systems designed primarily to meet external financial reporting standards.