We work side-by-side with C-Level Executive to help their companies create competitive advantages integrating Dynamics 365 Business Central and the Cost Management System

According to our understanding the accounting information system within an organization has two major subsystems: (i) a financial accounting system and (ii) a cost management accounting system.

Financial accounting is devoted to providing information for external users, including investors, creditors (banks and suppliers), and government agencies. These external users find the information helpful in making decisions to buy or sell shares of stock, buy bonds, issue loans and regulatory acts, and in making other financial decisions. Because the information needs of this group of external users are so diverse and the information must be so highly reliable, the financial accounting system is designed in accordance with clearly defined accounting rules and formats - International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). 

Cost accounting, often referred to as managerial or management accounting, is the branch of accounting that provides economic and financial information to decision makers within a company. The idea of providing information for use within the company (to aid management to plan, direct, and control operations) differentiates cost accounting from other segments of the accountancy profession.

The Integration between ERP System and Cost Management System

 or

"What cost management accounting really means for us" when we will talk to you

In recent years, we produce the strong demands on the integration between Dynamics 365 Business Central as an ERP System and the Cost Management System which is business process-focused. As a result:

1. We are classifying each cost a company makes. Costs are generally classified by cost centers like departments, sales production department and so on.  And they are made for cost objects, which represents the items and services companies are selling.
2. Based on the rule that the Cost Accounting is a method of accounting wherein all the costs involved in performing any process, project or product are noted and analyzed we are applying various techniques to make an organization cost effective.

We are providing all the functions necessary for planning and allocation using the different methods. The Dynamics 365 Business Central functions record fixed and proportional costs related to all levels of activity output separately. Implementing the different methods does not limit you to using one cost accounting method. Instead, you can decide which method to use in each area of your organization, depending on the way you plan and the functions you choose to use, targeted: 

• to identify your most profitable customers, channels, and products
• to run what-if profitability scenarios across multiple dimensions
• to compare the cost of SG&A expenses with shared services, and align resources with business demand
• to get a clear picture of your organization’s cost drivers

We can offer you to use the following, cost accounting methods and concepts within Dynamics 365 Business Central:

Job-Order Costing and Process Costing

Job order costing is a method of assigning costs to a specific unit or product.  Process costing is a method of assigning costs for a mass quantity of a product or service.

Standard Costing and Variance Analysis

On the one hand, the planned unit cost of the product, component or service produced in a period. The standard cost may be determined on several bases. The main use of standard costs is in performance measurement, control, stock valuation and in the establishment of selling prices. And on the other hand, the evaluation of performance by means of variances, whose timely reporting should maximize the opportunity for managerial action.

Activity-Based Costing (ABC) and Time-Driven Activity-Based Costing (TDABC)

Methods concerned with what was done in terms of activities instead of what was spent. The traditional ABC system uses transaction cost drivers (e.g., number of invoices processed), while the Time-Driven Activity-Based Costing system uses duration cost drivers (e.g., minutes or hours).

Markup and profit margin

Profit margin and markup are two different accounting terms that use the same inputs and analyze the same transaction, yet they show different information. Typically, profit margin refers to the gross profit margin for a specific sale, which is revenue minus the cost of goods sold, but the difference is shown as a percentage of revenue.

Cost-Volume-Profit Analysis and Break-Even Point

Cost-volume-profit (CVP) analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on operating profit. The cost-volume-profit analysis, also commonly known as break-even analysis, looks to determine the break-even point for different sales volumes and cost structures, which can be useful for managers making short-term economic decisions.

Read more

Seed Money Consulting for Targeted Business Solutions of doing business in Bulgaria