3. Profit & Cost Centers Structure
Source Cost Methodology
A well defined Accounting
Structure is key to manage the
transactions and monitor
expenditures efficiently !!
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4. Account Groups
Source Cost Methodology
By categorizing the accounts in
a Source Cost structure, we can
assign ownership and delegate
responsibility for each category.
This is very useful when
reviewing actuals and defining
forecast plans.
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5. Source Cost Ownership
Source Cost Methodology
Cost Category Owner
Direct Material Hugo
Pay & Benefits Moni
Depreciation Pepe
Spares Ivonne
Supplies Lety
Utilities Armando
Freight Abraham
Others Rocio
Owners are responsible for actuals and forecast figures
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7. Source Cost Reporting
Source Cost Methodology
Actual results can be reviewed periodically
and compared against another period of time.
The monitoring of expenditures is necessary
to aim a proactive decision making.
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8. QUANTITY (KU)
Volume TREND
Volume is forecasted based on:
• Beginning Inventory
• Firm Demand
• Estimated Demand
• Ending Inventory
Source Cost Methodology8
12. Labor & Overhead
Cost Reduction Programs
• Productivity Improvement
• People fficiency
• Equipment efficiency
• Overtime Control
• Tight control on Discretionary Expendings
• Be flexible. Adjust resources to demand levels
• “Think of out of the box to find cost opportunities”
Source Cost Methodology12