costing profit analysis

Costing is the critical factor in any kind of organizational set-up. ICS does the complete costing for make / buy and lease / buy decisions, tender workings, marginal costing and standard costing reporting. This is essential for key decision making at any given circumstance.

As we are all aware, Costing is one of the most essential tools in any organization to control and optimize the costs incurred. Whatever may be the industry – trading, manufacturing or service – Costing is a must thing to have to know the actual profitability on various scenarios. Understanding and computing the correct cost will help an organization in fixing product prices, deciding on margins on orders, initiating / shelving off any new / existing operations, product mix decisions and so on.

Awareness on cost effectiveness and cost optimization

This is key for every organization to improve their bottom line rather than concentrating only on top line. The outcome of every spend by an organization needs to be tracked towards the optimization of such spend.

The steps we undertake to do the costing is:

a) Knowledge on specific costing methods – This is important to understand this as it varies from every organization based on the industry and activity they are in. It can be process costing, job costing, contract costing, service costing or others wherever the organization belongs. Costing methodology can be devised only based on the specific type of activity an organization performs.

b) Knowledge on Supply Chain Management (SCM) – SCM denotes managing the entire chain of operations triggered by customer’s purchase order / work order to an organization. All activities performed from that minute of receipt of an order till it is satisfactorily completed and the payment is collected from the customer. Having a clear flow chart for each activity in SCM, assigning cost to every activity and having a cost tracking mechanism makes it a perfect costing system.

c) Knowledge on various costs during Costing – This consists of Prime Cost (material, labor and direct expenses), Overheads (factory) and other Indirect Overheads. Allocation and apportionment of indirect expenses to various product lines or geographies or any other parameters is a challenging task in any organization. This is decided based on the nature of every cost such as fixed, variable or semi-variable.

We have employed a team of experienced Cost Accountants to get the best Costing done for our clients only with a view to improve the bottom-line using different cost mixes or strategies on costing.