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Cost & Profit Modeling

Our approach to Cost & Profit modeling begins with a focus on decisions—and the information you need to make them. Task 1 of every project is to develop consensus on what question(s) we are to answer.

A project then proceeds with a business process analysis. Through a series of facilitated discussions with individuals from every discipline, we develop a process-based model of your organization that:

  • Identifies activities at the relevant level of detail;
  • Traces the resources (costs) consumed by each activity; and
  • Identifies the goods and services produced by each activity.

With this model we calculate a “cost per output” for each activity. These values are used to create the focused cost information needed to make the specific decisions you've identified.

Project Gallery

Cost Modeling at Mn/DOT
The firm was engaged by the Minnesota Department of Transportation to develop an process-based model of its Program Support Group. A series of process-based cost models and documentation were developed to support the management needs of Program Support offices. Process output measurements were developed. All of this combined to provide Mn/DOT the capability to compare themselves to inter-governmental and private industry benchmarks. As an agency, Mn/DOT could more accurately assess the level of service provided by engineering to the various Districts in support of both road maintenance and new highway construction.

More About This Project
  •  Introducing Mn/DOT to ABC (ppt)
  •  Linking Mn/DOT ABC Models (ppt)
  •  Review of Mn/DOT ABC Results (ppt)

Modeling Process Cost

What Is Your Real Cost of Doing Business?

What does it really cost to be in the business you’re in? To do all the things you have to do. Not only the direct "make a product" tasks, but those administrative and support tasks that are essential to your success. What does Sales and Marketing really cost? What does it really cost to have a Quality department? A stockroom? An in-house IT wizard? What does it really cost to pay a vendor invoice? Respond to customer questions?

Accounting Insights will sort through your internal business processes and determine the true costs of the work your people do.

Modeling Product Cost

What is the Process Model

What Do Your Products & Services Truly Cost?

Countless strategic decisions and many daily-operating decisions demand a thorough understanding of your true product costs. Whether you manufacture a widget or provide a service, you may not know the true cost of your product because your accounting system obscures or distorts that information. “We just donít understand our costs” often means “We donít understand what our products cost.”

Accounting Insights has the solution. Using the process model and targeted process analysis, we build a spreadsheet model of your company that reveals the true costs of your products and services.

Modeling Profitability

Which One Is More Profitable?

Strategic business decisions are frequently made by drawing distinctions between items or situations originally thought to be equally profitable. The averages provided by traditional cost accounting systems do not provide the distinctions needed. You may need to know:

  •  Which customer is really more profitable?
  •  Which product line has the highest gross margin?
  •  Which distribution channel is most cost-effective?

Accounting Insights can help you answer these and other profitability questions.

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