Summary
Costs per minute is a tool designed in Access for the analysis of costs by code, lines, departments, source of supplies or suppliers, by comparing two periods of time, held by administrators, accountants, economics, sales and specialists. Commercials facilitate the study and reasoning of cost deviations in each item of the variable consulted.
Made on the statistical basis of the aggregate method. Costs per minute also offers an Excel file for the analysis of the influence by department or areas in the cost increase for the different management levels, based on the fact that their order is fixed in the reports issued by the statistics.
Introduction
Not having a system for cost analysis, and its study requires a lot of effort, concentration, time and dedication.
That is why Costs per minute is born, as a tool that allows in a very short time to answer the questions initially asked, be it at the unit level; either using as primary source of information aided by accounting systems
With Costs per minute you get the possibility to compare two time periods in any of the possible variables to be used and to be able to respond categorically:
The increase (decrease) in the cost of the variable used is due to the increase (decrease) in such magnitude of the cost index and / or the increase (decrease) in the amount for sale to such extent.
We have never had this possibility before. Costs per minute offers it.
Like any statistical, mathematical or accounting model, after obtaining the numerical results, of course, it leads to the interpretation and response to possible causes, which with the experience accumulated by administrators, accountants and commercial specialists, it is easy to state the reasons for the differences, or at least delve into specific cases, which at a certain moment might seem confusing.
Due to the way this tool is conceived, administrators or unit accountants have access to its use; Economic, Commercial or Complex Managers; commercial or economic specialists.
Development
There are many concepts of cost, but when it comes to our reason for being in an activity of sale of products or services, then we can define cost as the monetary unit (cuc or cup) that must be paid to acquire those goods or services.
Due to its weight in the Income Statement, it is one of the most important elements to consider.
Their study is complicated by the fact that sales do not behave the same way in two different periods. To facilitate understanding, the cost index is used, which is the relationship between the cost of what is sold or the service provided, and the income from those sales or services.
3.2 Costs for units, accounting centers and activities. What we know about the cost
It is the first analysis to be carried out to find out the real situation at different levels. In the first two cases, the data is automatically extracted from the accounting systems, you only have to request the units or Complex and immediately provide the following table that has been reduced to be able to present it:
| Statement of income | ||||||
| 03 - Retail Trade - | ||||||
| Unit: | Period: | May / 2008 | ||||
| Analysis of the Month | ||||||
| Previous | Plan | Real | % Comp | % Growth | ||
| ENTRY | ||||||
| COST | ||||||
| SPENDING | ||||||
| EXPENDITURE PER ITEM | ||||||
| NET PROFIT | ||||||
| Costs per CUC of Income (%) | ||||||
| Expenses per Income CUC (%) | ||||||
| Income per CUC of Income (%) |
The cost per activities is also extracted from the accounting system based on income and costs per activities, to which the formulas of the cost index for each one of them are applied, and are presented in the Commercial Report, generally at Branch, but it is the same structure that is applied when valuations are made by Complexes and units. The final information is as follows:
| Opening of costs by Activities | Analysis of Month in cuc | |||||
| Previous | Plan | Current | % Comp | % Growth | Dif. With plan | |
3.3 Costs per minute. Analysis within costs
Up to the previous point, everything is quite easy to obtain, but the current moments require us to get into the understanding of costs and their variations by codes, lines, departments, suppliers; to really give a concrete answer to the behavior of costs inside.
The analysis is complicated, because we generally compare two time periods, or plan against real, or one unit with another, to give exact reasons about the cost behavior situation. To this is added that from one period to another the income varies, a group of products, lines, departments, suppliers, increase their sales, others decrease them and the least maintain them. The study of the cost index collides precisely with this mobility, which makes it more difficult to reach conclusions.
This is how three situations occur with income and with cost indices in the investigation of its variations:
- Grow Decrease Stay
And the combination of them means 9 possible variants to study, as shown in the following table:
| Variable | Description | Difference | |
| Sales Tax | Cost index | ||
| TO | Positive | Positive | |
| B | Positive | Negative | |
| C | Positive | Same | |
| D | Same | Positive | |
| AND | Same | Negative | |
| F | Same | Same | |
| G | Negative | Positive | |
| H | Negative | Negative | |
| I | Negative | Same |
Conclusions
At the Corporation level, there is no cost system that allows its detailed analysis, much less systematically.
Attempts to know its interiors take a lot of time, effort, concentration and dedication. Today they are only made at the Branch level.
With Costs per minute, which is a tool with a strong statistical foundation, the possibility arises of systematizing at different levels of management, the analysis of costs within different variables, thereby facilitating planning, control and decision making at these instances.
In a very short time, very valuable information on costs is obtained in detail. The influence of changes in cost and revenue indices on changes in cost is known.
The extension of Costs per minute up to unit level, Complexes and specialists does not represent additional expense, being very easy to use and fast results.
3.3.1 Cost Conception per minute
Costs per minute is a program in Access that combines the information from two periods, and results in the effect on cost in a final report, in which the variables are ordered from the greatest to the smallest variation in cost.
For the execution of the Cost per minute tool, we start from the information that is indistinctly provided by:
- Units accounting system Commercial statistics.
That is, any of the two, from which the information is extracted for two time periods, so that it allows comparisons to be made:
- Variable (code, line, department, source of supply, supplier, even units, provided they carry out the same activity) Description of the variable Amount of sales cost Amount of sales at sale price.
3.3.2 Statistical basis of Minute Costs
Those of us who study Economics must remember that in Statistics we learned the simple and weighted aggregate method.
The aggregate method seeks to analyze the effect that prices and quantity sold have on income.
The simple method analyzes the products separately and their formulation is quite simple:
Cost formula
Where:
p * q = to product income
p = the price of the product
q = to the quantity sold of the product
0 = base period or earlier
1 = current period
It is a very important method. Because it makes it possible to evaluate each of the products that intervene in the sales process, but individually. However, if the study by products is useful, it is more so as a whole, since the income of a unit or activity is the sum of the income of its products. Hence, the weighted aggregate method defines that:
Cost formula
The question may be asked: what do prices and quantities have to do with cost analysis?
The answer is A LOT, because the formulation of the aggregate method gives the possibility of transposing it to the study of costs, starting from:
Cost formula
Where:
IC = Cost Index
ImpC = Amount of the sale at cost
ImpV = Amount of sale at sale price (Income)
And since in the analysis what we are interested in knowing is the behavior of cost and the influence that the cost index and income have on it, then we clear and obtain that:
ImpC = IC * ImpV
In other words, if we want to know the effect of the cost index and income on the behavior of the amount at cost of each product, we must apply the simple method, in which case:
Cost formula
Example:
| 2007 | 2008 | Cost index | Variation | Relationship | ||||||
| Product | ImpC | ImpV | ImpC | ImpV | Previous | Current | of the cost | Imp. Cost | Cost Index | Sales Tax |
In which it reads:
- The increase in cost is due to the increase in the cost index and in income. Cost increases, that is, growth of the cost index to the decrease in sales.
As in the first case, we must also measure the effect of all the products that make up a line, or the lines that make up a Department or the Departments that make up retail sales, in which the following formula would apply:
Cost formula
As this formula is much more complex, we recommend using it for the analysis of Retail Departments-Sales, of which an Excel file is attached, and its resulting table for its execution, based on the fact that the order of the Departments in Commercial Statistics is always the same. (This template can be adapted to the accounting systems of the units for the Area-Unit study, but it would have to be done PV to PV, to see the configuration of the Areas in each one of them.
3.3.3 Conditioning of cost information to the minute
Once the statistical foundation of Costs per minute is understood, it is that the program is done in Access, to respond, by the simple method and in an orderly manner from highest to lowest, of the variables that most affect cost, but before accessing it, we must condition the information to be used:
- For both accounting systems and commercial statistics, files must be converted from TXT. to Excel, attaching the method of how to do it. The commercial statistics are very similar and are in the general domain of the specialists of the Commercial Management. Once the data in the Amount at cost and Amount for sale columns are converted into Excel, they are converted into numbers. Similar tables are extracted for two periods that are They want to compare. In all cases the tables will have 4 columns: Code, Description, Amount at cost, Amount for sale. If the obtained table has more columns than the referred ones, these should be eliminated. When the variable to be used is different from Code, that is, line, department, supplier, it must be changed by the word Code, so that the program recognizes it.Everything above Code, Description, Amount at cost, Amount for sale must be deleted, so that they remain in cells 1A, 1B, 1C and 1D. The next step is to put the cursor in cell A, the This will take a blue background, and in the toolbar click the Ascending order box, and in the box that appears, select the circle Expand selection and then Sort. With this, all the information of the entered variable is grouped, since both the Silver data and the commercial statistics incorporate those between pages. Everything else is deleted. The information is exported to the Access Costs program at the minute, which will immediately provide us with the Report at cost, ordered from highest to lowest impact.The next step is to put the cursor in cell A, which will take a blue background, and in the toolbar, click on the Ascending order box, and in the box that appears, mark the circle Expand selection and then Sort. With this, all the information of the entered variable is grouped, since both the Silver data and the commercial statistics incorporate those between pages. Everything else is deleted. The information is exported to the Access Costs program at the minute, which will immediately provide us with the Report at cost, ordered from highest to lowest impact.The next step is to put the cursor in cell A, which will take a blue background, and in the toolbar, click on the Ascending order box, and in the box that appears, mark the circle Expand selection and then Sort. With this, all the information of the entered variable is grouped, since both the Silver data and the commercial statistics incorporate those between pages. Everything else is deleted. The information is exported to the Access Costs program at the minute, which will immediately provide us with the Report at cost, ordered from highest to lowest impact.With this it is achieved that all the information of the entered variable is grouped, since both the Silver data and the commercial statistics incorporate those between pages. Everything else is erased. The information is exported to the Access Costs program at the minute, which will immediately provide us with the Report at cost, ordered from highest to lowest impact.With this, all the information of the entered variable is grouped, since both the Silver data and the commercial statistics incorporate those between pages. Everything else is deleted. The information is exported to the Access Costs program at the minute, which will immediately provide us with the Report at cost, ordered from highest to lowest impact.
Once the table is obtained, it is only enough that the administrator, accountant, Economic, Commercial Manager or specialist who executes it, put into practice their experience, knowledge and detail the arguments of the items of greatest affectation. (Namely prices, changes in the cost of the product, modification in the sales structure, etc.).
For printing, you should only define the number of pages, of which it is recommended not to exceed two, since these are the items that most influence the increase in cost according to the variable used.
Bibliography
- Cost accounting: concepts and applications for managerial decision making. Second edition. Polimeri and co-authors. Habana 2005. Cost accounting. Mc Graw-Hill Companies, Inc. Habana 2007. Business reports. Statisztika. Kinizsi Pál. Budapest 1982.
