Diagnostics of management accounting and budgeting

Project aims:

To develop an advanced methodology (concept), capable to overcome the limitations of a traditional cost accounting system and to establish a causal link between the products (services, customers) and the costs necessary for their production (service).

Main tasks:

• Developing business;
• Improving the competitiveness of the company;
• The establishment of satisfactory costs per unit of product, service and, consequently, adequate prices;
• Impact on cost drivers of those or other activities;
• Evaluation of the results of activities, such as the company and the individual activities (operations).

Project stages:

• Introduction to the company:
• Strategy;
• The organizational structure;
• Business processes;
• Accounting records;
• Management reports;
• Development of methodology for activity-based cost management system (ABC management system):
• Classification, grouping of costs;
• The types of activities of the company;
• The establishment of causal links between activities and costs;
• Cost factors characterizing the consumption of costs by types of activities;
• Report on the tracing (allocation) of the types of indirect and support costs to types of activities:
• The format;
• Calculation algorithms;
• The data sources.
• Cost sources (products, services, clients);
• The establishment of cause-effect relationships between cost objects and types of activities;
• Cost factors characterizing the consumption of types of activities by cost objects or other types of activities;

• A report on the calculation of the amount of each factor per cost objects:
• Format;
• Calculation algorithms;
• Data sources.

• A report on the calculation of the rates per unit of activity cost factor:

• Format;
• Calculation algorithms;
• Data sources.

• A report on the calculation of activity costs allocated to cost objects:

• Format;
• Calculation algorithms;
• Data sources.

• The P&L report in the context of cost objects:

• Format;
• Calculation algorithms;
• Data sources;
• The regulation of the processes of the activity-based cost management system (ABC management system);
• Drafting of the document “Methodology for the activity-based cost management system (ABC management system)”.

Methods for:

• Compiling an introductory list of documents requested from the client and the analysis of these documents;
• The list of questions for the respondents of the Customer and analysis of the resulting responses;
• Analysis of the information received;
• Harmonization and adoption of the instruments developed on the methodology of activity-based cost management system (ABC management system).

Project results:

• A formalised methodology (concept) for the activity-based cost management system (ABC management system) relevant to the goals and objectives of the project;
• A structured list of tasks and amounts of investments for the automation of the methods of the activity-based cost management system (ABC management system).

The value for the client:

• The presence of an advanced system for management of costs in terms of types of activities;
• Information recieved from this system, helps to justify management decisions in different areas:
• Strategic direction:
• The adoption of pricing decisions (pricing);
• The formation of the product range (product portfolio);
• Increasing the value for clients;
• The analysis of the competitive situation;
• Search for suppliers;
• An analysis of the product strategy.
• Operations area:
• Improving the re-engineering of business processes, activities;
• Reduced costs;
• Managing the cost of products, services and clients;
• The establishment of new forms of relationships with clients;
• Motivation for the managers.