Question

Management bookkeeper/accountant can contribute in following manners towards cost transformaton of an organisation :

-By causing a cost-conscious culture .

-By dealing with the risks inherent in driving cost competitiveness.

-By associating items with profitability .

-By generating greatest value through new items.

-By incorporating sustainability to streamline or optimise profits.

-By understanding cost drivers, cost bookkeeping frameworks and processes.

Explain how this six ways can contribute towards cost transformation in an organisation.

Answer 1

By causing a cost-conscious culture :

the cost conscious culture in companies achieved and maintained their low cost base by reduced demand and ensuring they identified the simplest solution. If they didnt need to buy a particular product or service, they wouldnt buy it . If they need to buy something , they would buy the lowest cost product or service that met their minimum requirement.Cost conscious reduce costs whenever possible for the organistaion. It controls costs by eliminating superfluous expenses.

By dealing with the risks inherent in driving cost competitiveness :

Competitive risks often declines business revenue / margins due to actions of competitors . Dealing with the risks of cost competitive helps organisation in cost reduction and quality improvement. It helps organisatin to survive in the market . Innovating new ideas , improving quality , reducing cost will help in dealing with competition and will create value for customers.

By associating items with profitability :

By associating items with profitability the performance can be improved as it helps assign the cost and revenues to different products and help identify the profitable and loss making ones . It helps analyse the key revenue and cost drivers resulting in better decision making . Organisation profits are increased , it helps in reducing waste as the production team focus on the production of profitable products.

By generating greatest value through new items :

New items provide new values to customers. the new and increasing value is what keeps organisation growing . It leads to continued existence of the company . It helps in increasing profit margin and reducing cost . The new items created and provided by the organisation provide the mechanism for its growth and improvement.

By incorporating sustainability to streamline or optimise profits :

Incorporating sustainability in an organisation helps in managing and corrdinating environmental , financial and social demands and concerns to ensure responsible , ethical and ongoing success. Incorporating sustainability is necessary as it contributes to the health of the structure within which an organisation operates, thereby helping construct an environment in which the business can thrive.It eventually helping in reducing costs of the orgainsation.

By understanding cost drivers, cost bookkeeping frameworks and processes :

Selecting the cost drivers is critically important for developing costing methodology. Understanding cost drivers, cost bookkeeping frameworks and processes helps organisation in taxation ,analyze business performance , better decision making , financial management . By understanding cost drivers, cost bookkeeping frameworks and processes , organisation wastage of funds gets reduced and leads to cost efficiency