Product Costing Module in ERP for L&T Kansbahal Works‚ Kansbhal‚ Orissa : A Case Study 1 Seema G. Bhol‚ 2Arun Mishra & 3Srikanta Patnaik Sambalpur University‚ Burla‚ Orissa‚ India‚ 2Head (IT Services)‚ L&T‚ Kansbhal‚ Orissa‚ India‚ 3 Department of Computer Science ITER ‚ SOA University ‚ Bhubaneswar‚ Orissa‚ India E-mail : guptaseema@hotmail.com‚ arun-kbl@kbl.ltindia.com‚ patnaik_srikanta@yahoo.co.in 1 Abstract - One need to be very accurate in what the products and services are costing. Inaccurate
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* Standard Costing Introduction Cost figures‚ in general‚ can be divided into two broad categories. They are Historical Costs and Standard Costs. Historical costs are available‚ after they are incurred. Such cost figures may have some value‚ once they are analysed. By analysis‚ the inefficiencies and deficiencies in production may be detected. However‚ the damage would have occurred‚ by the time the analysis under Historical costs is made. Analysis can be done only after the completion of the
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2.0 KAIZEN COSTING 2.1 What is Kaizen costing? Kaizen is a Japanese term that means continuous improvement. Kaizen events can be defined as making improvements through a process that emphasize small incremental amounts rather than large or radical improvement. Therefore in order to achieve this kaizen costing not include only continuous cost reduction but also continuous improvement of performance by increase the efficiency throughout the process. 2.2 Why we need Kaizen costing? Market prices
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STANDARD COSTING (VARIANCES) 1.1 Material costs variance = (Standard quantity x Standard Price) – (Actual quantity x Actual price) MCV = (SQ × SP) – (AQ × AP) 1.2 Material price variance = Actual quantity × (Standard price – Actual price) MPV = AQ × (SP – AP) 1.3 Material usage variance = Standard price (Standard quantity – Actual quantity) MUV = SP × (SQ –AQ) 1.4 Material cost variance = Material usage variance + Material price variance MCV = MUV + MPV 1. Material Variance Material usage
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IS STANDARD COSTING OBSOLETE? Department of Accountancy University of Kelaniya What is Standard costing? Standard costing is technique which establishes predetermined estimates of the costs of products and services and then compares these predetermined costs with actual costs as they are incurred. Management Accounting 2 What is Variance? The difference between a cost’s actual amount and its budgeted or planned amount Unfavorable cost variance Actual cost > Budgeted Amount Favorable cost
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AACE International Recommended Practice No. 34R-05 BASIS OF ESTIMATE TCM Framework: 7.3 – Cost Estimating and Budgeting Acknowledgments: Todd Pickett‚ CCC (Author) Peter R. Bredehoeft‚ Jr. Ted A. Downen Larry R. Dysert‚ CCC Bruce G. Elliott‚ CCC John K. Hollmann‚ PE CCE Copyright 2010 AACE International‚ Inc. Stephen M. Jacobson CCC Carlton W. Karlik‚ PE Christopher L. Kinney Donald F. McDonald‚ Jr. PE CCE PSP Bernard A. Pietlock CCC Richard A. Selg‚ CCE AACE International Recommended Practices
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2. Establishing a Selling Price for the product Based on the market research of a new product and also the market condition‚ the selling price is established. The desired profit margin is subtracted from the target selling price to determine the target cost. If the target cost is below the company’s current cost‚ the company may decide to introduce the product and functional cost analysis may attempt to reduce cost to an acceptable level. If the target cost is above the current cost‚ functional
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Cost/Benefit Analysis for Implementing ECM‚ BPM Systems Determining the ROI for a significant investment‚ such as adopting an ECM or BPM system‚ is no easy task. Doug Allen‚ CRM‚ CDIA+ T he adoption of enterprise content management (ECM) and business process management (BPM) systems is often spurred by regulatory and compliance concerns. As Thomas Hogan‚Vignette president and chief executive officer‚ told Computerworld‚ the move to adopt ECM technology is driven by “two fundamental business
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1.0 Life cycle costing (LCC) 1.1 Definition Life cycle costing is a cost management approach which includes all costs and ensures that all those costs are managed over the life cycle of the product. Product life cycle begins from conception of the product until its abandonment which can be referred as ‘from cradle to grave‘. Product life cycle has four stages: 1) Product planning and initial concept design It involves process of identifying any underlying conditions‚ assumption‚ limitations and
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AN IDEAL APPROACH TO STANDARD COSTING By Jitesh Chandak INTRODUCTION Before you start your study on standard costing you must be clear in your mind that you are going to study a chapter which wants more practice and hard work to develop a strong and sound concept. Costing can be defined as “The technique and process of ascertaining costs.” Standard costing is a technique‚ which uses standards for cost and revenue for the purpose of control through
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