本文发表在 rolia.net 枫下论坛I used to work as Costing Analyst for a small business unit of a large company. It was a manufacturing company and using SAP. Here is my 2 cents of working as a costing analyst.
The costing model we used was quite comprehensive in my view. It was developed by a former manager who is said to be able to work 24 hours non-stop. Please allow me to say something not related to this topic. Through my professional life, I have seen and worked with different very analytical, super smart locals. I mean the “white”. This experience is totally against my impression from school and some on-line reading. I am now much more modest. Another explanation may be that I am well below the average Chinese accountants' IQ. LOL
The model heavily relies on ERP system to feed all the inputs. The calculated results will then be uploaded to SAP to calculate inventory value, COGS. Based on the model and its methodology, we perform two type exercises every year. One is to calculate the “inventory burden” and it is of course done twice, one for the hard close, one for next year’s budget.
Another exercise, a more complete version, is to update an internal template which is used to calculate the pricing for quoting purpose.
Bother exercise involve a large quantity of data, including product information, such as number of components, operation statistics such as cycle time, shop floor square footage, and cost center data. Depending on the purpose, YTD actual or plan data are used. We get most of them from SAP and from numerous calls to other departments. Costs are allocated to product/product line per the cost drivers of its category.
The model and knowledge from the exercise will be used for operation perfomance report, costing exercise for new product and various ad hoc projects.
For example, a spike of volume from so and so. Shall we say “NO” since our Mexico line was already on full capacity? If we do it here in Canada, ----.
This particular European customer is so small and it can not afford the new generation of XXX, though it like our product. What shall we do? Take the risk and make the investment and try to sell this to other customers, which is a different business model from the existing one. What’s the risk?
The list can go on. Working as costing analyst for a small business unit of a large company can be challenging and interesting. The experience is also rewarding. When I read the article about the qualities of good Financial Analyst, I can always link the quality to my costing work.
Again, I have to emphasis that my description of costing analyst is from personal experience. I once saw article asking about the future of cost accountant. The girl who posted question found it quite boring. I then realized that her main job duty was to maintain BOM, bill of material. I did that too but only 5 or 10 minutes per month and this type of work totally disappeared after we moved fully to Mexico.
The depressing part of working as costing analyst can be summarized into the following:
You are involved in many analyses but your impact or contribution is very limited.
Take the inventory burden for example. The Finance manager has only one request, the final results should be comparable to that of last year. No swing of our inventory value. Changing of cost structure? We don’t have time to study that.
The spike? We must say “Yes”. It is so and so, our most important customer. (I agree with this decision. And the costing exercise can also help our next round of price negotiation, so my work was not in totally useless.)
The cost of our model shop is keep growing year after year. So what? They are unionized. To ask them to put one more project code on form is a big task.
On other side, in the manufacturing company, cost analyst truly cannot make any changes. You point out that the R&D amortization is so high. OK, we all know that. It is the engineers who can come up with real cost saving “ideas”. Actually, based on my reading, in Japanese companies, target costing is lead by the engineers not the cost accountant, so is the lean manufacturing. Not sure whether the accountants are involved at all. The story of ABC and other tales on text book are, no doubt, real, but in reality, once you are in the situation, you realize that there isn’t much you can do.
Another hidden drawback is that there is no bright future for costing alone. I mean, look around, the finance manager or directors are all climb from reporting, planning positions. In my own company, it is written in paper that to be considered management positions, reporting experience is a must, plus exposure to one of the “other’, such as fixed asset, auditing, taxation, costing. In conclusion, ambitious young people can begin their career in costing and should move on afterwards. For old fellow like me, I miss the old days working closely with nice PMs, engineers, and BDs. I may choose to come back.
Finally, please add the following to every sentence:
Based on limited personal experience. For fun, not for your information.更多精彩文章及讨论，请光临枫下论坛 rolia.net
The costing model we used was quite comprehensive in my view. It was developed by a former manager who is said to be able to work 24 hours non-stop. Please allow me to say something not related to this topic. Through my professional life, I have seen and worked with different very analytical, super smart locals. I mean the “white”. This experience is totally against my impression from school and some on-line reading. I am now much more modest. Another explanation may be that I am well below the average Chinese accountants' IQ. LOL
The model heavily relies on ERP system to feed all the inputs. The calculated results will then be uploaded to SAP to calculate inventory value, COGS. Based on the model and its methodology, we perform two type exercises every year. One is to calculate the “inventory burden” and it is of course done twice, one for the hard close, one for next year’s budget.
Another exercise, a more complete version, is to update an internal template which is used to calculate the pricing for quoting purpose.
Bother exercise involve a large quantity of data, including product information, such as number of components, operation statistics such as cycle time, shop floor square footage, and cost center data. Depending on the purpose, YTD actual or plan data are used. We get most of them from SAP and from numerous calls to other departments. Costs are allocated to product/product line per the cost drivers of its category.
The model and knowledge from the exercise will be used for operation perfomance report, costing exercise for new product and various ad hoc projects.
For example, a spike of volume from so and so. Shall we say “NO” since our Mexico line was already on full capacity? If we do it here in Canada, ----.
This particular European customer is so small and it can not afford the new generation of XXX, though it like our product. What shall we do? Take the risk and make the investment and try to sell this to other customers, which is a different business model from the existing one. What’s the risk?
The list can go on. Working as costing analyst for a small business unit of a large company can be challenging and interesting. The experience is also rewarding. When I read the article about the qualities of good Financial Analyst, I can always link the quality to my costing work.
Again, I have to emphasis that my description of costing analyst is from personal experience. I once saw article asking about the future of cost accountant. The girl who posted question found it quite boring. I then realized that her main job duty was to maintain BOM, bill of material. I did that too but only 5 or 10 minutes per month and this type of work totally disappeared after we moved fully to Mexico.
The depressing part of working as costing analyst can be summarized into the following:
You are involved in many analyses but your impact or contribution is very limited.
Take the inventory burden for example. The Finance manager has only one request, the final results should be comparable to that of last year. No swing of our inventory value. Changing of cost structure? We don’t have time to study that.
The spike? We must say “Yes”. It is so and so, our most important customer. (I agree with this decision. And the costing exercise can also help our next round of price negotiation, so my work was not in totally useless.)
The cost of our model shop is keep growing year after year. So what? They are unionized. To ask them to put one more project code on form is a big task.
On other side, in the manufacturing company, cost analyst truly cannot make any changes. You point out that the R&D amortization is so high. OK, we all know that. It is the engineers who can come up with real cost saving “ideas”. Actually, based on my reading, in Japanese companies, target costing is lead by the engineers not the cost accountant, so is the lean manufacturing. Not sure whether the accountants are involved at all. The story of ABC and other tales on text book are, no doubt, real, but in reality, once you are in the situation, you realize that there isn’t much you can do.
Another hidden drawback is that there is no bright future for costing alone. I mean, look around, the finance manager or directors are all climb from reporting, planning positions. In my own company, it is written in paper that to be considered management positions, reporting experience is a must, plus exposure to one of the “other’, such as fixed asset, auditing, taxation, costing. In conclusion, ambitious young people can begin their career in costing and should move on afterwards. For old fellow like me, I miss the old days working closely with nice PMs, engineers, and BDs. I may choose to come back.
Finally, please add the following to every sentence:
Based on limited personal experience. For fun, not for your information.更多精彩文章及讨论，请光临枫下论坛 rolia.net