Экономические
науки/6. Маркетинг и менеджмент
Аспирант
Полещук Н.А.
Белорусский
государственный экономический университет, Минск
Overhead cost identification and
allocation
The basic principle of the
method of cost identification and allocation within the processes consists of
transferring the overhead expenses to the product at the time of their
appearance during the process of appropriate activity realization. Very important
here is an idea of tracing the overhead costs firstly to resources, then from resources
to activities, and finally to the cost objects. Resources stand as subjects that
carry out activities – personnel, equipment, transport, facilities, etc. By-turn
the cost objects consist of products and services, distribution channels and
suppliers, etc. Picture 1 shows how the overhead costs by the use of activities
that pooled in processes trace there value to the products.
Picture 1. Cost allocation
within the processes
The method
of cost identification and allocation within the processes defines by what
means overhead expenses are traced to the subjects (products, services, etc.).
So for each category of costs it is necessary to choose indicators (cost
drivers) that help to define expenses.
The possibility and reasonability of this method usage was shown at one
of Byelorussian varnish-and-paint public corporation “Lakokraska”.
Calculations were maid in successive steps (Picture 2):
Picture 2. The sequence of method
realization at public corporation “Lakokraska”
3. Identification
of cost and resource
drivers for tracing their value to activities 2. Cost
objects (products) detection 1. Resources
and activities identification
At the first step lists of resources and activities
were maid. Thus at the varnish-and-paint public corporation “Lakokraska” were segregated 108 resources. They are
represented by personnel according to company’s organizational structure and
job positions. The identification of activities was accomplished on the bases
of department constitutions, job descriptions and staff interrogation. As a
result the list of 233 activities within nine component cells (administration,
logistics, production management, sales of products, marketing, warehousing,
transportation, security, and maintenance department) was formed.
At the second step three cost objects were chosen:
varnish PFK-01, enamel HV-16 grey and prime coat AP-045 beige – the output of varnish-and-paint
public corporation “Lakokraska”.
The third step consisted in identification of
cost and resource drivers. First are necessary for resource value definition,
the others – for its tracing to activities. As a cost drivers were chosen the
area of workplace, amortization of personal equipment and working clothes,
fuels and lubricants consumption during transport exploitation, etc. Time
driver was chosen as a resource driver. It reflects the duration of time that
resource spends on carrying out activities. For this purpose the staff of the public
corporation “Lakokraska” was questioned. It estimated
the time of activities fulfillment.
At the same step the activities was classified on primary (183),
auxiliary (28) and control (22). This classification is a basis for next step
realization. With the help of system of cyclic correlation equations costs of
auxiliary and control activities were allocated between primary operations.
The fourth step included marking of processes. Thus, all 183 primary activities
were grouped in 46 processes (preparing and making of purchase contracts, organization
of technical preparation for production, output transportation, etc.). Process
drivers were identified at the fifth step. They confront expenses of activities
implementation with cost objects. In proportion to quantitative drivers
(production volume, amount of contracts, flow of traffic, etc.) at the final
step all the processes allocated their cost to chosen objects.
In the issue of research net cost of enamel
HV-16 grey and prime coat AP-045 beige was found to be lower (on 3,3% and 4,8%
pro tanto), and of varnish PFK-01 higher (on 6,7%) in
comparison with prime cost determinated by traditional method. While analyzing
the reserves of cutting costs of those activities that don’t add value to a
product were procured. Besides the identification of activities and their pooling
in processes allowed to reveal the possibilities for further organizational
management framework improvement. It can be reached due to departments’ reorganization
and redistribution of employees’ duties.
The
implementation of the method demands considerable preparatory work by creation
of database and informational securing of cost planning. That is because of
large information massifs which manufacturing enterprises have. The
calculations as well as they were made at varnish-and-paint public enterprise “Lakokraska” can be carried out with the help of Microsoft
Excel.
The method of cost identification and allocation within the processes
can become a powerful administrative tool that allows to overcome the
inefficiency of traditional approaches in cost management. It provides not only
more accurate cost measurement within the products, activities and processes,
but also their effective management that helps to find possibilities for cost
cutting and to increase competitiveness of the enterprise.
Literature
- Атаманов
Д.Ю. Распределение затрат при калькуляции себестоимости традиционным и
операционно-ориентированным методом // Журнал «Маркетинг в России и за
рубежом». –№3, 2003 – 3-18с.
- Робсон М., Уллах Ф. Практическое
руководство по реинжинирингу бизнес-процессов / М. Робсон,
Ф. Уллах. – М.: Аудит, "Юнити",
1997. – 224с.
- Cooper, R., Kaplan, R.S. Measure
Costs Right: Make the Right Decisions // Harvard Business Review, 1996 – pp.
96-103