BPCS/LX Tip of the Week: Accurate Job Costing
Standard costing is really a ‘best guess’ at labor costing -- these numbers are often inaccurate, incomplete or out of date.
Accurate job costing requires the capture of all tasks associated with a specific product or job, including direct and indirect labor in setup, production and customer service.
Inaccuracies in the collection of time allocated to machinery and the use of materials can result in the inability to properly pass those charges through to the customer, reducing company profitability.
Basically, you can’t manage what you can’t measure -- and you can’t measure what you can’t track. So the inability to track time-to task ultimately inhibits maximum utilization of the workforce. Unproductive activities remain hidden from sight -- managers don’t have the information needed to understand where wasted time exists, and therefore cannot create an action plan to remove it.
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