Enhancing Operational Efficiency
Enhancing Operational Efficiency
Increasing operation profits through proper pricing and cost reduction.
Work steps
(1) Proper measurement of actual costs.
(2) Calibration of operating costs and budgets.
(3) Help provide information for decision-making alternatives.
(4) Reducing costs.
1- Proper Measurement of Actual Costs
(a) Building a manual of measurement units (outputs).
(b) Building a cost element guide (identifying a cost cause for each element).
(C) Building a cost center directory.
(D) Building a cost distribution methodology guide.
(e) Evidence construction of download rates.
(f) Building a cost measurement approach guide at the unit of measurement level.
2- Calibration of operating costs and budgets
(a) Building a standard at the level of each cost component.
(b) Building the operating budget based on the revenue budget, then the raw material budget, then the wages budget Then balance the rest of the cost elements, depending on the cost factor for each cost element.
(C) Comparing the budget results with the actual results and analyzing the differences
3- Help provide information for decision-making alternatives.
(a) Defining of decisions known to the company.
(b) Defining of decision alternatives (whether only cost alternatives or alternatives with cost and revenue).
(c) Providing cost data for each alternative, whether actual or standard cost.
(d) Comparison of alternatives on a cost or profit basis.
4- Reducing costs
(a) Reducing costs at the level of each cost component by reducing the number of cost drivers (per activity).
(B) Reducing costs at the level of the production process or the operational process by reducing several process activities, whether by re-designing the process to reduce work steps or changing machines to reduce waste and raw material.