the right way to control period expense期間費用成本控制相關(guān)外文文獻

1、The Right Way to Control Period ExpenseManagement Accounting; Sep 1990; 72, 3; ABI/INFORM Complete pg. 55-59BY DONALD A. J. BYRUMYear in and year out, the greatest challenge facing industry is cost control. No manager in

2、 his right mind would try to control direct material costs by stopping the purchase of direct material. Such an action obviously soon would bring production to a stop, i which would bring sales to a stop, which would bri

3、ng the business to an end. Managers are smarter than that. They will have their engineering staff design out the most costly components and then have their purchasing staff find the least costly suppliers for the remaini

4、ng components.In the same way, no manager in his right mind would try to control direct labor costs by firing his direct workers. The result would be exactly the same as not buying direct material. Instead, design engine

5、ers would be asked to simplify the construction specifications, and manufacturing engineers would be asked to provide tools and equipment that would maximize worker efficiency.In both these instances management recognize

6、s, perhaps only subconsciously, that the cost is a symptom, not a disease, and that it is the disease that must be attacked. To continue the medical metaphor, the disease is like an active cancer that will grow continuou

7、sly unless it is attacked continuously.But consider how management has handled salaried expense, where the “normal“ method of cost control is decimation, that is, elimination of a percentage of the head count in expectat

8、ion of a equal percentage reduction of salaried expense. It never happens. In fact, such actions have been known to result in an increase in total period cost expense.The question is, “What is the most effective way of c

9、ontrolling period costs?“ The answer is through exactly the same techniques as are used for direct material and direct labor, that is, changing the design specifications of the job description to eliminate inefficient, r

10、edundant, and unnecessary work elements. The difference is that cost analysts and administrators make the design changes rather than engineers and buyers.The design changes must be completed and implemented before you ca

11、n expect to see a cost reduction flow through to the P there can be no sacred cows. For this reason it is usually best for outsiders such Even less conspicuous than computers are office copiers. In fact, the cost of indi

12、vidual copies has become so low that their true cost usually is ignored. The true cost is the labor needed to copy, distribute, glance at (and in some cases read), and file. It probably takes an average time of about fiv

13、e minutes to perform all of these operations. Multiply all of the copies produced on all machines by five and divide by 120,000 to find the equivalent number of people involved with copies.One relatively small operation

14、(300 persons) was producing 180,000 copies per year. The cost was only slightly more than $2,000, so they weren't concerned—that is, until it was pointed out that copies were the exclusive preserve of indirect people

15、 (100 of the 300) and that 180,000 copies were the equivalent of eight persons. There was a subsequent clampdown on copy making, resulting in about a 33% reduction in the number of copies over the following months. While

16、 no jobs actually were eliminated, there was a small reduction in indirect overtime (about 1.5 points).With work elements this small, it's often impossible to make a direct connection between the cause and effect. On

17、e must work almost on faith but with the firm knowledge that there truly is a cause-and-effect relationship and that it ultimately must be reflected in the P&L.TOO MANY BODIESA growing problem in many older organizat

18、ions is the number of levels of local management. New companies tend to have only two or three levels of functional managers, plus one additional level for the company manager. Older organizations often have four or five

19、 levels of functional managers and up to three more levels to tie the organization together.If you've ever played the party game where a message is passed from one person to another, you'll be aware that it usual

20、ly is totally garbled by the time it reaches the fourth individual. This is exactly the same thing that happens in business as information passes up the management pyramid and decisions filter down. The lowest level of m

21、anagement will be fully cognizant of both the form and details of what the workers actually are doing. The second level of management will have a firm idea of what's going on but few details. The third level of manag

22、ement will have only a general idea of what's going on and no details. The fourth-level manager knows only what is supposed to be going on.The second problem with too many layers of management is the delay that each

23、level builds into the whole process. It is axiomatic that the greater the number of layers of managers, the longer it takes for decisions to be made and implemented. Better managers are usually aware of the weaknesses of

24、 the information immediately available to them. Consequently, in effect, they reach down two or more levels in the organization to where they can find information of a quality that they can use comfortably to make a deci

25、sion. Thus the delay. If they didn't do so, the probability of a correct decision would be reduced significantly.To overcome this inertia, overly structured organizations tend to develop an “express“ system. This is

26、an individual or group who, in order to handle day-to-day problems, has direct access to the decision level, bypassing the entire chain of command. While this procedure has the short-term effect of keeping the company go