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Effective Cost Management and Consistency in the maintenance of Cost Records

Effective Cost Management and Consistency in the maintenance of Cost Records. CMA A.P.Madhu, Mcom, MBA,PGDT,FCMA,CMA(Aus),CMA(USA). What happens to the Business if no proper records are maintained ?. Are we satisfied in running an Organisation without information?.

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Effective Cost Management and Consistency in the maintenance of Cost Records

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  1. Effective Cost Management and Consistency in the maintenance of Cost Records CMA A.P.Madhu, Mcom, MBA,PGDT,FCMA,CMA(Aus),CMA(USA)

  2. What happens to the Business if no proper records are maintained ? • Are we satisfied in running an Organisation without information?

  3. No , not at all

  4. What are the areas to be covered ? • Records for Capturing the 4 Ms • (1) Cost of Materials (2) Cost of Manpower(3) Cost of Machines (4) Cost of Funds ( Money involved in each element of Cost ) . • Records for Capturing Inefficiencies - Wastage of Materials , Time etc

  5. Cost Elements and Effective Management of the same - Records to be maintained • Revenue - Sales or Services • Material Cost • Packing Material Cost • Transportation - Both Inward & Outward • Employee Cost – Idle time – Overtime etc • Utilities • Direct Expenses • Repairs & Maintenence

  6. Cost Elements and Effective Management of the same - Records to be maintained • Overheads - Factory , Admin , Selling & Distribution Oveheads • Research & Development Costs • Quality Control Costs • Pollution Control Expenses • Records on Royalty or Technical Know-how • Interest & Finance Charges

  7. Other Records - Effective Management of the same - Records to be maintained • Capacity Utilisation • Export Expenses / Export Incentives • By-Products • Records on Waste – Scrap – Spoilage – Defective • Inventory Records – Perpectual Inventory system

  8. Some Interesting factors affecting cost • Capacity utilization • Time Management • Waste Management • Employee Turnover • Communication • Emotions • Working environment • Team work

  9. Can we collectively identify and think off reducing costs in some areas which we can ?

  10. Areas ……. • Electricity – TOD Pattern / introducing CFL lamps – Solar Energy • Interest Cost – avoiding delay in submitting stock statements , renewal etc • Petrol , Diesel expenses in Vehicles used • Communication expenses - Postage , Courier etc • Printing & Stationery - Printouts on both sides of A4 paper • Rent paid v/s space utilization • Timely renewal of licenses to avoid unnecessary penalties contd…

  11. Telephone Expenses - Corporate plans , addl payments for ring tones / music etc • Travelling Expenses – TA/DA – eg : Propriety Audit • Insurance • Management of Stock – “stock = cash” • NPAs

  12. Some techniques to become cost competitive • Structured review mechanism • Budgetory control • RCA – Root Cause Analysis • Exit Interview & Training , BSC etc • 5 S ( Seiri-Clearing , Seiton-Organising , Seiso-Cleaning , Seiketsu-Standardising , Shitsuke-Training & Discipline )

  13. YES!!! We should achieve cost competitiveness and thereby improve our profitability through KASH generating employees who will work as a TEAM to achieve SMART goals and objectives of the business

  14. THANKYOU

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