Cost analysis mainly includes the following aspects:
1. Cost composition analysis: This is the basis of cost analysis, which involves subdividing costs into different cost elements, such as direct material costs, direct labor costs, manufacturing costs, sales and management costs, etc. This helps managers to clearly understand the specific composition of each cost element, so as to control costs more pertinently.
2. Cost trend analysis: By comparing the cost data in different time periods, we can analyze the cost trend and understand the increasing and decreasing trend of the cost. This is helpful for enterprises to formulate long-term cost control strategies and budgets.
3. Cost driver analysis: cost analysis should also consider the driving factors behind the cost, that is, the reasons leading to cost changes. For example, the cost may be affected by many factors, such as fluctuations in raw material prices, rising labor costs, and changes in production scale. By identifying these factors, enterprises can respond to cost fluctuations more pertinently.
4. Product cost analysis: analyze the costs of different products or services to determine the cost structure of each product or service. This is very important for pricing, product portfolio optimization and product life cycle management.
5. Cost-benefit analysis: In the decision-making process, cost-benefit analysis is used to evaluate the balance between costs and benefits of different schemes. It is helpful for enterprises to choose the most economical and profitable scheme.
6. Cost control analysis: Through cost analysis, managers can determine which costs can be controlled and improved, and then take corresponding measures to control and reduce costs.
7. Variance analysis: compare the difference between actual cost and budgeted cost to determine cost overruns or savings, and trace the reasons. This helps managers to understand the operating conditions of enterprises and take corrective measures.
8. Profit analysis: Cost analysis is also closely related to the profit of the enterprise. By analyzing the relationship between cost and sales revenue, we can evaluate the profit level and look for opportunities to improve profits.
Definition of cost management
Cost management refers to a series of scientific management behaviors such as cost accounting, cost analysis, cost decision-making and cost control in the process of enterprise production and operation. Cost management includes cost planning, cost calculation, cost control and performance evaluation.
Cost planning is formulated according to the competitive strategy and economic environment of enterprises, and it is also a cost management plan, which provides ideas and overall requirements for specific cost management. Cost calculation is the information base of cost management system.
Cost control is a series of activities that use the information provided by cost calculation to reduce or increase costs through economic, technical and organizational means. Performance evaluation is an evaluation of the effect of cost control, aiming at improving the original cost control activities, encouraging and restraining the cost behavior of employees and groups.