The strategic cost management (SCM) is a fundamentally new way of managing an organization. It comprises: (a) A strategic analysis of the business to identify unprofitable products, customers, marketing and distribution channels, etc. (b) An evaluation of the business from a value chain perspective. Linkages, both internally and externally, are taken into consideration. (c) The optimization of business processes and [...]
The following points highlight the top twelve techniques involved in strategic cost management. The techniques are: 1. Activity Based Costing (ABC) 2. Target Costing (TC) 3. Total Quality Management (TQM) 4. Benchmarking 5. Business Process Reengineering (BPR) 6. JIT Inventory Control System 7. Balanced Score Card 8. Kaizan Costing 9. Six Sigma 10. Life Cycle Costing (LCC) 11. Theory of [...]
The following points highlight the seven major problems of cost system in Indian companies. The problems are: 1. Inadequate Capturing of Direct Material Costs 2. Excessive Emphasis on Labour Costs 3. Functional Classification of Overhead Costs 4. Simplistic Allocation Bases 5. Inadequate Attention to Service Departments and Service Organizations and Others. Problems of Cost System: Inadequate Capturing of Direct Material [...]