How to control the cost?

Cost control is a series of preventive and adjustment measures taken by cost control according to various factors and conditions that affect the cost before the production cost occurs and during the cost control process, so as to ensure the realization of the cost management goal.

One,

Cost control method

(A) target cost management

Target cost method is a cost management method, which is market-oriented and customer-oriented. It works hard in the product planning and design stage and uses value engineering to analyze functional costs, thus continuously reducing costs and enhancing competitiveness.

Target cost is the product cost control target issued to technical and production functional departments before product production preparation, that is, the maximum allowable cost after deducting reasonable profits and taxes from the possible sales price of products in the market. The idea of target cost calculation method is to establish a target cost obtained by estimating the competitive market price, so that people can return to the profit target from the expected competitive state.

Achieve operating costs and production efficiency. Target costing usually determines the cost calculation method of products or services according to the price that customers are willing to pay. Target cost calculation should be customer-oriented, starting from factors such as price, function and demand recognized by customers. It is for this reason that target costing is also called "price-driven costing", which corresponds to the traditional "cost plus calculated price".

Target cost calculation begins with the calculation of product price. The product price comprehensively considers the influence of many factors such as the function, nature and market competitiveness of the product. The key to target cost management is to determine the target cost, and the following methods can be used for cost prediction:

1 deductive method. First determine the profit target of the enterprise, and then deduct the product sales tax and unit profit target from the product sales price, and the balance is the target cost that needs to be achieved.

② Empirical estimation method, also called investigation and research method. It is to analyze and study the same product, take the historical advanced level of advanced enterprises in the same industry and this enterprise or the actual cost of the previous year, combine various changing factors during the planning period, and estimate the target cost of the product according to the possibility of predicted cost reduction and its guarantee degree.

③ High and low point method. According to the cost habit, the enterprise cost is divided into fixed cost and variable cost, and the difference between the total cost of the highest business volume and the lowest business volume in a certain period of time is compared with the difference between the two business volumes, so the unit variable cost can be obtained first, and then the total fixed cost can be obtained. ④ Regression analysis. According to the cost data of the past few periods, the regression line is calculated by least square method, the fixed cost and variable cost are determined, and then the cost is predicted.

The implementation of target cost method is closely related to the product life cycle, especially in the product planning, design and production stages. Specifically, it includes the following steps:

First, the product planning stage. The product development committee of the enterprise investigates the product demand and consumption trend of the market.

Second, the product design stage. At this stage, target cost method emphasizes the application of value engineering method. According to the product plan, design the product prototype. Combined with the prototype, the goal of reducing cost is decomposed into various product components.

Third, the trial production stage. In the trial production stage, once it is found that the product cost exceeds the target cost requirement, it is necessary to return to the design stage and use value engineering to improve again. Only by reaching the target cost can we enter the final production.

Finally, the production stage. After entering the production stage, the target cost method turns to cost maintenance to ensure normal production conditions and maintain the established level cost.

(B) Activity-based cost management

Activity-based costing, also known as activity-based costing or activity-based costing, is a cost calculation method that takes activity as the core, confirms and measures all activities that consume enterprise resources, accurately counts the consumed resource costs into activities, and then selects cost drivers to allocate all activity costs to cost calculation objects (products or services). The guiding ideology of activity-based costing is: "The cost object consumes activities, and activities consume resources". Activity-based costing regards direct cost and indirect cost (including period cost) as the cost of product (service) consumption activities equally, which broadens the calculation range of cost and makes the calculated product (service) cost more accurate and true. Activity is the core and basic object of cost calculation. Product cost or service cost is the sum of all activities and the end point of actual consumption of enterprise resources.

(C) Responsibility cost control

Responsibility cost refers to various expenses incurred by a specific responsibility center (such as a department, unit or individual) within its scope of responsibility. In essence, the responsibility cost system is a management system within the enterprise. Specifically, it is necessary to establish a responsibility cost center according to the organizational system of enterprise production and operation, collect, control and assess cost information according to the ownership of cost responsibility, and implement economic responsibility to all departments, units and specific executors. Responsibility cost control mainly includes the following contents:

(1) Establish a responsibility center. The implementation of the responsibility cost system requires enterprises to reasonably divide responsibility centers according to the characteristics of their organizational structure and the principles of clear division of labor, clear rights and responsibilities and easy identification of performance. Responsibility centers can be divided from different angles. The responsibility units in western responsibility accounting are mainly profit center, cost center and investment center. China's responsibility accounting theory also has different forms of division of responsibility units. From the division of responsibility accounting and control content, the responsible units can be divided into cost responsibility units, profit responsibility units, cost capital responsibility units and income capital occupation units.

(2) Establish an internal settlement system. Internal settlement refers to the management mode of simulating bank settlement within an enterprise and exchanging economic matters of each responsible unit in the form of currency. The purpose of establishing this system is to determine a reasonable internal price for the transfer of products or services between the responsibility centers within the enterprise, and to provide a basis for the assessment of the responsibility centers. The key to establishing the internal settlement system is to set the internal settlement price and choose the internal settlement method.

(3) Prepare the responsibility budget. Responsibility budget is a budget that divides the total budget of an enterprise into various responsibility centers reasonably. As an important part of responsibility accounting, responsibility budget plays an important role. It is the standard to control the activities of enterprises and responsible units, the basis to evaluate the performance of responsible units and the means to improve the management level of enterprises.

(4) Responsibility control. Responsibility control is one of the important contents of responsibility accounting, which is based on the responsibility index and responsibility budget of each responsible unit to control the implementation of income, cost, profit and capital budget in the process of production and operation. Each responsibility center should implement top-down control, and each responsibility center should strengthen self-control.

(5) Establish and improve the responsibility cost accounting system. In order to report the implementation of the responsibility budget of the responsibility center in time and analyze the difference between the actual and the budget, enterprises should establish and improve a complete responsibility cost accounting system.

(6) Conduct responsibility assessment. According to the performance report of the responsibility center, we can analyze the difference between the responsibility center and its responsibility budget, find out the reasons and implement rewards and punishments. Through evaluation and inspection, we can sum up the successful experience, find out the existing defects, and provide reference for the next budget preparation. The assessment of responsibility cost should be fair and reasonable, which can not only stimulate the enthusiasm of each responsibility center, but also control improper behavior through appropriate punishment and restraint, so as to realize the unity of rights, responsibilities and interests of responsibility centers.

(D) Standard cost control

Standard cost method, also known as standard cost system and standard cost accounting, refers to a cost control system that organically combines feedforward control, feedback control and accounting functions around the relevant indicators of standard cost [150]. The standard cost system first appeared in the United States in the 1920s. With the continuous development and improvement of its content, it has been widely adopted by western countries and has become the most commonly used and effective control method in fixed cost management of enterprises.

Standard cost has the following characteristics: taking product cost as the object, integrating cost planning, cost accounting and cost control, highlighting the core position of cost control in the system; Timely disclosure of cost differences, calculation, analysis and control of various differences according to management areas, with clear responsibilities; Reflecting the cost difference is not to calculate the actual cost of the product, but to improve management and reduce consumption.

A complete standard cost system mainly consists of three parts: the formulation of standard cost, the calculation and analysis of cost variance and the treatment of cost variance. The implementation of the standard cost system generally has the following steps:

(1) According to the actual situation of the enterprise, combined with the production characteristics of the cost center;

(2) Correctly formulate the standard cost (expense standard) of unit products;

③ Reveal the difference between actual consumption and cost standard;

④ Calculate the standard cost of products according to the actual output and cost standard;

⑤ Accumulate the actual cost data and carefully summarize and calculate the actual cost;

⑥ By comparing the standard cost with the actual cost, calculate the difference of the standard cost and analyze the reasons for the difference;

⑦ Accounting treatment of standard cost and cost difference (only for units included in the accounting system);

⑧ Provide cost control report to the person in charge of cost, and evaluate the performance of all responsible departments and personnel.

Second,

Steps of cost control

Although the control objects are different and the requirements of control work are different, the process of control work is basically the same, which can be roughly divided into four steps:

(1) Determine the control standard, that is, determine the scale for evaluating work performance. Managers should work out the standards needed for control according to the plan.

(2) Measure the effectiveness of the work, that is, collect the actual work data (elements corresponding to the established control standards) through the management information system, so as to understand and master the actual situation of the work. In this process, we should pay special attention to the quality of information to ensure its accuracy, timeliness, reliability and applicability.

(3) Analyze the measurement results, that is, compare the actual work results with the standards, find out the deviation and analyze its reasons, so as to prepare for further management actions. This is the most important link in control that needs rational analysis, and whether to take further management actions depends on it. If the analysis results show no deviation or only "healthy" positive deviation, the controller does not need to proceed to the next step, and the control will stop here.

(4) Take management measures to correct the deviation. There are only two ways to correct the deviation: either to improve work performance or to revise standards.

Third,

Cost control principle

economic principle

The principle of economy refers to the cost incurred due to the implementation of cost control, and should not exceed the income lost due to poor control.

1. practicality: cost control should be practical to reduce costs and correct deviations; -The cost control system should be able to reveal where the error occurred, who should be responsible for it, and ensure that corrective measures are taken.

2. Exception management: normal costs can be simply controlled, with special attention to various exceptions;

3. Importance: We can omit small mantissa, small expense items and matters irrelevant to the overall situation;

4. Flexibility: The cost control system should be flexible. In the face of unforeseen circumstances, the control system can still play a role.

(2) the principle of adjusting measures to local conditions

The cost control system must be designed separately, which should be suitable for the characteristics of specific enterprises, departments, job responsibilities and cost projects.

(3) the principle of full participation

The key to effective cost control is to mobilize the enthusiasm of all employees.

(D) Leadership-driven principle

Cost control involves all employees. It is not a popular thing and must be promoted by the highest authorities.