LEADING QUESTIONS FOR EXPENSE DESIGN:
- Which expenses should we cut or eliminate to speed up making money?
- Why does Breakeven calculation mislead us?
- Whic company activity brings forth which expense?
- Can we disragard some expenses and still make correct decisons?
- Which expenses continue accruing if we stop production?
- How do we improve our forsight if we also use Quantity componet of Expenses as a simulation parameter?
DESIGN PARAMETRIC EXPENSES TO:
Account for dynamic constraints to balance incompatible targets.
Design resources, processes, variables, parameters and targets completely.
Test performance by simulating targets and constraints.
Use prices, promotions and operating volumes as parametric decision variables.
Adjust customer service level to achieve strategic profitability.
Save time by reducing analysis and decison making time from weeks to hours.
USE PARAMETRIC EXPENSE DESIGN TO MAKE DYANMIC DECISIONS.
Determine the parameters of simulation by:
- Selecting automatically the Expense Codes from the Chart of Accounts
- Setting a different currency, Payment Term, and VAT for each expense
- Ralating a special change coefficient to each expense
- Calculating expenses as a function of sales types, sales quantity or sales value
- Allocating each expense to different products, and different department using different “expense allocation rules”
- By calculating “Monthly Excess Capacity” expenses based on “General Manufacturing Overhead” account
- By reporting different expenses for different groups for different decisions
- By decomposing each expense into “quantity X price” elements
By measuring the impact of monthly expense variations on profitability and cash flow.