The Power of Strategic Costing

by Brethauer, Dale M.

• ISBN13: 9780814404867
• ISBN10: 0814404863
• Format: Hardcover
• Copyright: 1999-12-01
• Publisher: Amacom Books

Summary

Provides an easy-to-follow, detailed methodology that virtually ensures the long-term profitability and viability of any kind of business of any size. DLC: Cost accounting.

Table of Contents

Introduction	ix
BACKGROUND	1	(16)
The Strategic Costing Process	3	(14)
Effect of Reducing Material Costs	8	(2)
Importance of Reducing Material Costs	10	(3)
Estimate Supplier Costs	13	(1)
Estimate Competitor Costs	13	(1)
Set Target Cost and Identify Areas to Improve	14	(1)
Calculate Value to the Company of the Strategic Costing Process	14	(3)
STEP 1: ESTIMATE SUPPLIER COSTS	17	(70)
Product Costs	19	(8)
Supplier Costs	19	(2)
Material Used	21	(1)
Direct Costs	22	(1)
Plant Overheads	23	(1)
General and Administrative Costs	24	(3)
How to Estimate Product Costs	27	(22)
Materials Used	28	(1)
Materials Used at Laser Company	29	(1)
Materials Used at Barnes Chemical	30	(2)
Labor	30	(2)
Labor Used to Produce Scanning Instruments	32	(6)
Utilities	35	(2)
Maintenance	37	(1)
Plant Overheads	37	(1)
Overhead Allocation Dilemma at PDQ Machinery	38	(6)
Depreciation, Property Taxes, and Insurance	39	(3)
General and Administrative Costs	42	(1)
Profit	43	(1)
Widget International	44	(3)
Summary of Equations	47	(2)
A Tour of Your Supplier's Facility	49	(16)
Consensus Estimation	50	(3)
Plant Tour	53	(1)
Powder Metal Inc. 's Facility	53	(12)
Negotiating With Power	65	(10)
Always Try for a Win-Win Situation	65	(1)
Leave Yourself Room to Negotiate and Compromise	66	(4)
Be Prepared	70	(1)
Use Your Power	70	(1)
Negotiations With B&B Molders	71	(4)
How to Estimate Almost Anything	75	(12)
Pepperoni Pizza	75	(4)
Wooden Pallets	79	(3)
Dry Cleaning of a Dress Shirt	82	(5)
STEP 2: ESTIMATE COMPETITOR COSTS	87	(34)
Competitive Assessment	89	(32)
Competitor Costs	91	(7)
Competitive Assessment of Baraq Company versus Mother Board Inc.	98	(3)
Competitor Financial Strength	101	(13)
Resources Needed	114	(2)
Putting Together the Competitor's Picture	116	(1)
Competitive Assessment of Big Mac Inc.	116	(2)
Appendix: Toyobo Patent	118	(3)
STEP 3: SET TARGET COST AND IDENTIFY AREAS TO IMPROVE	121	(8)
Cost Targeting and Process Improvement	123	(6)
STEP 4: CALCULATE THE VALUE TO YOUR COMPANY OF THE STRATEGIC COSTING PROCESS	129	(14)
Adding Value to Your Company	131	(12)
Cash Flow	131	(4)
Net Present Value	135	(1)
IBC Company's Use of Ten-Year Cash Flow to Set Strategic Plans	136	(6)
Appendix: Present Value Table	142	(1)
THE STRATEGIC COSTING PROCESS IN ACTION	143	(26)
Putting It All Together	145	(18)
AMEX Company	145	(10)
Appendix: Calculations	155	(8)
Let's Reiterate!	163	(6)
Frequently Asked Questions	164	(5)
Index	169