Industry News
An Alternative Approach to Costing
Many companies do not know where they are making or losing money. They know their overall costs and profits made, but can’t see their costs at a more granular and actionable level, or their profitability by product. In today’s complex businesses, massive cross-subsidizations mask the true cost and profit of products, customers, market segments, and activities. As a result, business leaders don’t truly believe the standard cost and profit figures that their accounting or finance departments provide. Square root costing is being embraced by CFOs because it is a practical methodology for correcting the cross-subsidizations that have plagued standard costing.