Cost Accounting Services - ABC and Functional Costing

In recent years, it has become clear that the factors creating cost in large organizations are not well understood, or well modeled by traditional cost systems. The Stanton Group has done considerable research in this area, and has numerous publications to show for the effort.  Both Activity Based Costing (ABC) and Functional Costing, a less costly tool, are solid complements to all cost management efforts, because they relate the way business is currently conducted to the way costs are generated in the organization. This information is essential for effective cost management.  Traditional systems were designed to provide a mechanism for averaging all cost over products or services. They achieve this purpose, but in doing so they mask the relationships between costs and activities, and between costs and organizational entities. ABC and Functional Costing restore these relationships in a way that simplifies before and after modeling of proposed organizational change (Functional Costing), and allows real-time tracking of costs as they are incurred (ABC).  Organizations that are considering major changes to improve cost management should begin by analyzing cost generation. After all, it is very difficult to reduce cost if you don't understand how it relates to organizational activities. This information can also help managers gain approval for service improvement, quality improvement, and business process reengineering projects.  Stanton Group cost management methodologies are designed to make the cost analysis portion of a project as brief and low-cost as possible. We do not do huge, multi-year cost accounting projects, since these only add to cost problems. We do, usually in a matter of days, provide new insight into the way cost is generated in the organization, and the ways it can be controlled.  Our published articles on cost management are available upon request:  "Functional Costing: Understanding Where the Money Goes," Manufacturing Engineering Magazine" "Cost Accounting, Bringing it into the Real World," Industry Week "Mining for Hidden Working Capital," Industry Week "A Functional Approach to Cost Accounting," CFO Magazine "Functional Costing for Better Teamwork and Decision Support," Journal of Cost Management

See also: Critical Analysis Business Process Reengineering Process and Facility Design

The Stanton Group www.stangroup.com