Cost analysis is the process of collecting, analyzing, summarizing and evaluating various alternative courses of action. Our cost analysis services can help management intimately understand their cost structure to facilitate the valuation of inventory items, costs of producing a product or the costs of delivering a service.
Uncover Hidden Value
Unlike financial accounting, where the primary objective is to determine the financial performance and position of a company, cost analysis is concerned with facilitating cost control and cost reduction. Although some cost analysis is necessary for financial and tax reporting purposes, in general, the work we are performing is primarily used by the organization’s management for decision making.
Poor margins are often the result of small inefficiencies. Use time-tested analytical procedures our cost analysis service often uncovers inefficiencies responsible for poor profit margins. Cost analysis aims to compute the cost of producing a product or providing a service in scientific manner.
When we are engaged to provide a cost analysis service we will first identify the purpose of the engagement. If it simply to meet a compliance objective (e.g. value inventory under Sec. 263(A)) there may be strict specifications for how we approach the work. On the other hand, if the purpose of the engagement is to help management make better decisions, we may have more flexibility in how we develop our models and assumptions. Although there are still professional standards that apply to this work product, they are far less rigid than work that is being prepared for public consumption. For this reason, our business acumen tends to shine brighter when we are engaged in this capacity because we can focus our attention on the value the client is realizing, rather than meeting the voluminous standards that apply to most services offered by CPA firms.
Our cost analysis services include:
- Standard costing
- Fixed cost / variable cost analysis
- Cost variance analysis
Call us today to find out how our cost analysis service can benefit your business.
Unlike financial accounting, where the primary objective is to determine the financial performance and position of a company, cost analysis is concerned with facilitating cost control and cost reduction.