Cost to Make
Allocations + Rate Building

A true view of profits needs a robust method to allocate all costs that are not directly traceable to a specific product or service – direct and indirect labor costs, overhead spending, shared costs, and more. Finance teams that can shed insights on overhead spending are better positioned to make quick decisions as business conditions change. ImpactECS gives tools to assign drivers and accounts, dynamically calculate work center and overhead rates, and validate results to ensure every penny is assigned properly.

Step 1: Pool Data

Collect both production data from ERP, MES, and shop floor systems, as well as spending from the General Ledger.

Step 2: Determine Drivers and Calculate Rates

Assign drivers and calculate rates using detailed product structure and production data.

Step 3: Allocate Dollars

Allocate overhead costs to specific products using a dynamically calculated rate.

Need a header here!!

  • Define your allocation methods: Maintain user-defined allocation rules, drivers, and hierarchies to allocate spending to production or non-production cost centers.
  • Calculate and simulate rates: Use production plan drivers to calculate allocation rates and run simulations testing the impact of rate changes on costs.
  • Establish labor plans: Calculate detailed costs for direct labor, indirect labor, and overhead personnel based on production plan requirements.
  • Energy and utility cost planning: Compute energy and utility costs using current rates and consumption trends.
  • Cost planning across systems: Connect historical cost trend data from multiple ERP environments, track costs at the most granular cost level, and calculate budgets using accurate and appropriate cost drivers.
  • Systemize tribal knowledge: Create sustainable costing processes by converting spreadsheets, homegrown systems, and employee knowledge into a centralized costing and analysis platform.

Resources

Harvard Business Review: 7 Lessons on Dynamic Pricing (Courtesy of Bruce Springsteen)

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FP&A Trends: Automation in FP&A: If You Want to Go Far, Go Together

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CFO Magazine: 80% of CFOs Expect Cost Pressures to Persist Into Next Year: Weekly Stat

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CFO Dive: Nearly Half of CFOs Ditching Just-in-Time Supply Chains: Study

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CFO Magazine: A CFO’s Guide to Business Transformation

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Harvard Business Review: 3 Stages of a Successful Digital Transformation

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