Reality Based Unit Costing™
Reality-Based Unit Costing™ (RBC) is the systematic identification and unit cost determination of key process drivers within any department of your organization. In as little as eight weeks, executive management can have precise information to make fact-based decisions.
Why
is it important?
Determining reality-based costs for each facet involved in a business
process helps you calculate the profitability of your products or
services. Do you know if the fees for your products or services are
correctly priced? Is there room for incremental margin improvement?
How do your processing costs compare with other organizations? Are
you wondering about the true savings to be had from technology automation
or process re-engineering? You may have thought about outsourcing
certain back-office processes, but the truth may be that keeping certain
products or services in-house makes the most economic sense. How do
you firmly decide? You need the proper knowledge to make informed
decisions. By identifying the key lever behind every business process
and accurately determining its activity-based cost, you can confidently
answer all of these questions.
Are you prepared to learn the truth?
Do you know what drives the cost of production in each of your business
units? Activity-based costing can make visible the economics of your
organization. Certain costs of production are fixed, regardless of
volume while variable costs often mirror production volumes. The key
to discovering the true drivers of cost in your organization is the
capture of real time processing data – your "operating reality"
– to generate precise and statistically valid unit times. Insight
Analytics' RBC solution makes it easy.
How Reality Based Unit Costing™ Works
RBC is a key output of Insight Analytics' unique Structured Metrics®
methodology that can rapidly identify and quantify process and cost
drivers. Differing from other consulting firms that typically use
judgment-based allocations or industry-based unit times for process
driver calculations, RBC determines the unit cost of each driver based
on a solid foundation of activity time development and detailed G/L
expense analysis.
Precise, actionable and reality-based process unit costs can be delivered in as little as eight weeks, from start to finish, with no software to buy, learn or maintain.
The Process
The Structured Metrics® team from Insight Analytics assesses the
workload in a department by first documenting the universe of work
performed. This is accomplished through short overview sessions with
department managers or senior employees.
For each documented activity, unit times are developed using Structured
Metrics' automated data collection technology and statistical analysis
module. From a careful examination of this detail-level data, the
key drivers of departmental workload are identified and process unit
times established.
By analyzing the G/L and classifying each expense account as fixed, variable or excluded, CDV analysis can accurately forecast true production expense as business volumes fluctuate. Finally, from the same G/L analysis, resource expense rates are calculated for each process. Combining process unit times and resource expense rates, cost drivers are created and valuated in terms of variable and fixed unit cost.
By knowing the true cost of each workload driver, management
can make strategic decisions with confidence. Should a process be
outsourced or is there more value in keeping it internal? Can accurate
transfer pricing reveal under-achieving business units?
Insight Analytics' rapid development methodology, confidential and
painless data collection, and a rigorous statistical approach makes
RBC the preferred method for developing unit costs.
Are you ready to discover the real cost of doing
business?
Contact Insight Analytics to get started now.
