Use the information you've gathered and analyses you've completed in order to create a target baseline to plan for the future.
- [Man] Let's start the planning process…with the development of your target baseline.…That's the outcome you would see unfold…if you were to manage your business…in exactly the same way as last year,…taking into consideration only those things…that are forced upon you,…such as price increases from your suppliers.…Let's take an example.…Imagine your main supplier increases his prices by 5%.…That means that your production costs…will increase as well.…Well, in the target baseline,…you would just take that increase into consideration.…
You would record the change in your target baseline…and then, at the later stage,…will plan to negotiate those prices back down.…It's important that we do both of those things…but keep them in separate parts of the process.…The reason being that it's very useful for you…to know where your target baseline is…when building your plan.…For example, let's imagine you know…you have to make your business more profitable…than it was in the past in order to self-fund your growth.…So your main goal is to grow profits.…
- Identify the purpose of cost-accounting.
- Define product profitability.
- Determine your baseline.
- Gather revenue and cost information for your analysis.
- Connect targets with profitability.
- Build your target baseline.
- Analyze pricing.
- Calculate probable product profitability.
Skill Level Intermediate
1. Understand Company Costs Related to Products
2. Determine Your Baseline
3. Plan for the Future
Analyzing your pricing3m 1s
Next steps1m 21s
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