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Activity Based Costing
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Activity Based Costing

Funds, Time, Personnel - your business operates with limited resources. Every resource you expend must be paid for by your customers. Can you account for the resources consumed by each customer? If you don't have an understanding of your customers resource consumption, then you do not really have an understanding of were your profit comes from.

Odds are, not all of your customers are worth servicing. Would you believe that your organization could save money by refusing to services unprofitable customers? Your organization deserves to be profitable. Let us help you determine the profitability of your customer mix.

The process of measuring your profitability should not stop at your corporate profit and loss statement. By driving your expenses down to the customer level you gain an understanding of which customers genuinely contribute to your business.

What drivers should be used to distribute your expenses across your operations? What percentage of cost should be applied to any given activity?

What are your true operating costs? And how are they affecting your organization?

Are your customers "good" customers or "bad" customers? Do you know how to tell the difference?

That customer that contributes the most revenue to your organization may not be contributing anything to your bottom line. Heavy service costs - order size, mileage, order frequency, excessive returns; all of these can "steal" the customer's contribution from your bottom line.

Utilizing advanced cost/driver distribution algorithms we can shed light on your true operating costs, driving organization level expenses to the Customer, Chain, Salesperson and even the Item levels.

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