Cost Planning, 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.
Three Steps to Effective Cost Allocations Processes
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.
Establish an intelligent allocations process with ImpactECS
- 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 dynamically calculate allocation rates and run simulations testing the impact of rate changes on costs
- Labor scenario planning: 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 dynamically 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
CostTalk Q+A: Using Product Costing to Guide Key Business Decisions
For manufacturing companies, product cost information cannot exist in a silo. To compete, costing must transition from a static activity that occurs on a laptop spreadsheet to a collaborative approach where the right cost data can uncover the best decisions.
Watch this #CostTalk Q+A session and hear experiences from ImpactECS customers from manufacturing finance, commercial, and operations teams who find ways to best leverage cost data for decisions around pricing, new product development, and profitability analysis.
Resources
Cost Allocations: Gaining Actionable Insights
Read the Article >Get Quick Insights and Best Practices
Watch the CostTalk Minute Series >Is Your Product Costing Process Healthy?
Check your Score >Guide to Implementing Cost Systems
Watch the 30-Minute Discussion >Daily News for Finance Leaders
Read The Ledger >Ready to see ImpactECS in action?
Get a glimpse of how we help companiesunderstand their costs and profits