ABC Costing System for Manufacturing

  • The Activity-Based Costing methodology for medium to large companies where it is required to have an integral model of the organization, requires the implementation of an ABC Costing System. The ABC Costing Software allows companies to configure all the activities and processes, as well as all the “dimensions” of Cost Objects such as: products, customers, distribution channels and sales regions, to obtain accurate costs and therefore real profitability for each business segment, both at a total and “granular” level.
  • The ABC Costing Software for Production and Manufacturing will allow you to obtain the detailed cost, including: raw materials, cost of production machines and manufacturing processes, indirect manufacturing costs and expenses, cost of reworking, cost of non-quality, costs of inefficiencies, distribution expenses, sales expenses, administrative expenses, financial expenses, among others.
  • With this information you will be able to generate a manufacturing costs statement per item, and a Profit and Loses Statement of results by SKU, customer, distribution channel, sales region, with which you will be able to carry out analyzes to capture opportunities and obtain important benefits:

Benefits of Implementing an Activity-Based Costing System in Manufacturing

Implementing Activity-Based Costing System in Production will allow you to obtain accurate costs by business segment. With this information you will be able to:

  • Determine the cost of the activities, identifying the most expensive and the least expensive, as well as those activities that do not add value and generate inefficiencies that translate into losses for the company.
  • Identify the real cost of each product, and identify which products generate profits and which generate losses. With this information you will be able to find opportunities to reduce costs or carry out profitable pricing strategies for the articles or families of articles.
  • Determine which customers or distribution channels add value to the organization and which destroy it.
  • Based on sales expenses per customer or per Distribution Channel, you can carry out differentiated pricing strategies or Service Level Agreements in order to ensure that the operation generates profits.
  • Activity-Based Costing in production allows establishing breakeven points by production line, based on volume and fixed and variable costs of production lines.
  • ABC Costing in production allows establishing Target Costs or “Target Costing” and Sales Prices based on expected profitability.
  • An ABC Costing System will allow you to have information for fact-based Decision-Making.

 

We have more than 20 years of experience implementing ABC Costing Systems in all types of industry. We carry out from the survey of activities and processes, mapping of resources, activities, cost objects and drivers, development of a conceptual costing model, identifying sources of information, automation and systematization, loading of information into the model and generate results. We also rely on Business Intelligence software to facilitate executive reporting, analysis and detection of opportunities for costs reduction or processes improvement in order to Add Value to all type of organization.

Pilot ABC Costing Model Template & Toolkit

If you want to carry out a Pilot Model of Activity-Based Costing or a Sample with ABC Costing methodology, we can support you with training and workshop to solve a business case of your industry, either face-to-face or virtual through Teams or Zoom. You can also purchase the Toolkit Template of ABC Costing for Production and Manufacturing, by clicking on the following link: