Explicit Cost Dynamics: An Alternative to Activity-Based Costing

✍ Scribed by Reginald Tomas Yu-Lee

• Publisher: Wiley
• Year: 2001
• Tongue: English
• Leaves: 239
• Edition: 1
• Category: Library

✦ Synopsis

GETTING TO THE BOTTOM OF THE BOTTOM LINETraditional cost management systems typically defeat their own purpose by leading corporations to make decisions that ultimately do not optimize performance. These systems are the foundation for decisions that are made throughout the corporation. In order for organizations to increase performance beyond current capabilities, a new approach is needed that addresses issues such as understanding the true impact of various actions on the bottom line-and eliminating methods that distort numbers and narrow options. Explicit Cost Dynamics (ECD) offers such an alternative, and this expertly written, revolutionary book provides an indispensable introduction to the subject.Informative and easy-to-read, Explicit Cost Dynamics:Provides an alternative view and understanding of the impact of costs, actions, and time on the bottom line of a corporationExplains how this new theory can lead to an overall profit maximizationShows that costs can be considered as either a function of activities performed, as a function of resources expended, or of timeShows that the difference between explicit dollars flowing into and out of a company is equal to the rate of change of cash. . . and much more to help CEOs, CFOs, controllers, cost managers, financial managers, and others involved in the decision-making process improve their organizations' overall bottom lines.

✦ Table of Contents

EXPLICIT COST DYNAMICS......Page 1
Contents......Page 16
CHAPTER 1 LIMITATIONS OF COST ACCOUNTING......Page 20
Improving Profitability......Page 21
Need to Account for Costs......Page 25
Impact of Standard Costing on Operations......Page 32
Activity-Based Costing......Page 38
Need for Nonallocation Cost Management......Page 40
What Does the Name Explicit Cost Dynamics Mean?......Page 42
Nonallocation Cost Management......Page 46
Explicit Costs and Implicit Costs......Page 55
Explicit Cost Dynamics Cost Definitions......Page 60
Why is ECD Necessary?......Page 62
Cost Dynamics......Page 64
Cost Types......Page 68
Total Cost......Page 75
Total Cost as a Multidimensional Function......Page 76
Objective of Cost Management......Page 83
Costs Must Still Be Reduced......Page 84
CHAPTER 4 PROFIT DYNAMICS......Page 88
System Dynamics and Time......Page 89
Explicit Profit Dynamics......Page 95
CHAPTER 5 BASIC EXPLICIT COST DYNAMICS MEASURES......Page 110
Traditional Approach......Page 111
Progressive Approach......Page 112
Who Is Right?......Page 113
Allocation......Page 114
Can the Unit Price Be Determined?......Page 115
Objective of Cost Management......Page 116
Explicit Cost Dynamics Measures......Page 117
Cost Recovery Ratio......Page 120
Program Margin......Page 121
Answer to the Example Using the ECD Approach......Page 123
CHAPTER 6 DEGREE OF FREEDOM MANAGEMENT......Page 126
Related Activities and Causal Relationships......Page 127
Degree of Freedom Management......Page 128
What Is a Degree of Freedom?......Page 129
Creating and Destroying Degrees of Freedom......Page 134
Coupled and Decoupled Decisions and Program Justification......Page 138
Learning and Experience Curve......Page 142
Economies of Scale......Page 145
Optimum Order Quantities......Page 150
Machine Utilization and Efficiency......Page 154
Operation Balancing......Page 158
Resource Costs......Page 162
Resource Cost Dynamics......Page 166
Program Types......Page 168
Time......Page 188
Time and Operations Improvements......Page 194
Addressing the Potential Danger of Transfer Costing......Page 197
Product and Service Rationalization......Page 200
Outsourcing and Make Versus Buy......Page 201
Product Pricing Considerations Using CRR......Page 204
Organization......Page 210
Programs......Page 214
Cost Management......Page 219
Systems and Technologies......Page 224
Ensuring a Successful Implementation......Page 231
INDEX......Page 234