Cost accounting takes time and effort. Learn about how regularly you should do it, and what timeframe is most relevant based on individual situations.
- The first thing you need to do…when defining a product profitability baseline…is to decide on a specific timeframe.…Your timeframe is a relevant period of time…from which to take revenue…and cost information to build your baseline.…For example, you could use last year's or last month's data.…No matter which you choose,…you need to collect the sales data…and all of your company's costs from that timeframe.…You will use that…to calculate your profitability by product.…
The timeline is the start of the analysis.…You will be able to say something like,…"We've generated $100,000 profits…"with the gift shop last year,"…or "We have generated 20% profits…"from our consulting services last month."…Those are the starting point of defining future goals.…This also helps to analyze…why last month was only a 20% profits…when it's usually closer to 25%.…But there's a catch.…If your timeframe is smaller,…you'll have to calculate your baseline more often.…
If you're doing it on a monthly basis,…then you have to do it every month.…
- 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
Excel 2016: Financial Functions in Depthwith Curt Frye2h 38m 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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