A sound understanding of the cost structure of the business and its underlying cost drivers is critical for businesses in order to help its managers identify improvement opportunities and adequate responses to changing business conditions.
The Challenge
Traditional accounting costs prove insufficient to provide this insightful view that managers need to assess the true costs of their products, customers, and activities under current as well as changing business conditions. Secondly, traditional Activity Based Management solutions do not provide an integrated framework and capabilities for operational and financial data integration and analysis on the same.
The Solution
SCA solutions apply Activity Based Costing principles to understand and associate costs with the activities that are responsible for the generation of those costs. This helps businesses minimize distortions in their understanding of the source of profitability that would result from arbitrary allocations of indirect costs. It also provides a clear metric for improvement, thereby encouraging management to evaluate the efficiency and cost-effectiveness of planned activities. The objective of SCA’s Activity Based Cost Management is to provide managers with a clear picture of the cost structure and the underlying cost drivers of the business.
