Activity-based Costing (ABC) Solutions
Activity-based Costing has become increasingly important to large organizations as overhead and indirect costs become a larger percentage of their cost base and competitive pressures make cost reduction imperative. However, in traditional cost accounting, the sheer number of permutations between products, customers and channels obscure true costs, margin contribution and profitability.
ABC has been instrumental in improving corporate profitability by providing executives with reliable, actionable cost information. Renowned management and finance leaders Drucker, Kaplan and Norton advocate ABC, and Profisee agrees that it can be a very important strategic direction for your business. Several members of the Profisee team led the consulting practice for a leading ABC software vendor, and know how to leverage ABC to improve financial and managerial reporting, especially when determining contribution margin.
If ABC is the right management tool for your business, Profisee will help keep you strongly focused on the application's business objectives and return on investment goals, and with a clear understanding of the cost objects, activities, and volume drivers. It is our experience that many ABC initiatives have failed because they lacked a results-oriented business focus, or because the business focus was lost in a desire to achieve "perfect" accuracy.
Profisee will guide you around these common mistakes. We will help you successfully deploy an ABC application that determines where to focus your cost improvement goals and how to maximize ROI. A very effective strategy is to initially limit the scope of your ABC initiative to one or two areas of your business, for example, Information Services or other shared services, or assembly lines within your manufacturing operation.