What are the challenges you face in accurately calculating profitability?
3C Software recently posted an article on their website discussing the challenges process manufacturers face with calculating profitability. It starts with the premise that calculating costs is the most unpredictable part of the traditional profit calculation:
“One of the first lessons of accounting is the equation Profit = Revenue â€“ Cost. Since aggressive revenue growth is not in the cards for many manufacturers, they are refocused on managing costs as the best option to improve profitability. For process manufacturers, applying that equation to determine profitable products or customers is not as simple as it seems.”
Is calculating costs the most challenging part of the profitability equation? How does your company handle costing?