Posts Tagged ‘financial reporting’


Financial Reporting versus Costing: Which is Right?

When attempting to calculate the cost of products and services, people often cite practices used for external financial reporting. Then they attempt to use these practices for internal decision making. Perhaps in an ideal world, this may be a valid path. However, we live in a world far from this ideal. In our world, external […]

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Standard Costs: Why Do Standard Costs At All?

After the completion of my recent series on standard costs, a colleague complemented the series “except for the fact that it begs the question – Why do standard costs at all?” So, we’re not finished yet. This is actually a very good question. If we go back to the beginning of this series, I observed […]

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Standard Cost: Setting Stretch Performance Targets

When setting performance targets, is it best to stretch the target so that everyone has a lofty, almost unattainable goal. Many would say that this is the best way to drive quantum leaps in performance management.

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Standard Cost: Setting Overhead Cost Standards

When it comes to setting cost standards, overhead is the biggest problem. Why? Today, aside from material costs, overhead is the largest component of product cost and the least understood. Historically, overhead cost averaged 20% to 40% of labor cost. It was a minor consideration to product cost and was not significant in management decisions. […]

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