Top 4 Practical Benefits of Cost Audit Report
This article highlights the four most important practical benefits of a cost review report. The practical benefits are
1. Consumption of materials
2. Use of materials
3. Cost of services
4. Control of expenses.
Cost Review Report: Operational Benefit 1.
Consumption of materials:
In order to comply with the rules, it is necessary to enter receipts of measurements for all major materials to include the following information, ie.
A peek at the above will reveal the following features:
(A) fluctuations in the rate of materials purchased from different suppliers,
(B) The trend in the cost of the material drop,
(C) the trend in material rates, and
(D) There is a defect in any item in any of the shipments received.
This management will help explore the possibilities of:
(A) change the source of supply and/or transmission method,
(B) Sales tax administration,
(C) Development of alternative means of transport if the freight element is essential
(D) change the terms of the insurance policy, if required, etc.
Cost Review Report: Operational Benefit 2.
This analysis can reveal the following features:
(A) The extraordinary difference in the consumption of any raw material or process substance,
(B) An abnormal withdrawal of the material on any given day or month,
(C) Identification of events of excessive consumption of substances on a given day, etc.
Given the interconnection of production and inputs and knowledge of actual consumption, management may infer “regression curves” for its in-depth analytical studies of the future course of work. Again, Proforma A of Table II provides a comparison between raw material consumption and cost between its standards and actual for the current year as well as for the previous year.
It is clear that this analysis will encourage senior management to inquire about areas where individual deviations are observed.
Cost Review Report: Operational Benefit 3.
Cost of services:
The rules specifically require the maintenance of detailed records to ensure the cost of services/utilities such as energy, fuel, water, steam, electricity, etc.
These detailed details of the information may reflect:
(A) The non-natural consumption of materials used for steam / hot oil generation, etc.,
(B) Lack of capacity utilization;
(C) Time lost due to collapse, etc.
Moreover, if the cost is high, the services used throughout the year are consistent with the services generated. Factors, such as leakage, and abnormal losses will appear to light this way.
Cost Review Report: Process Benefit 4.
Control of expenses:
While complying with the requirements of Statutes A and B (Table II) of Proforma E Rules and Regulations (total expenses incurred and share applied to bulk drug activity), the total expenses of the company are analyzed comprehensively and attempted. Allocation of expenses for pharmaceutical activity and other activities.
The preparation of a statement (as described below) is necessary for the specific cost theory will certainly give a clear view, to management, of the volume of spending under different heads of accounts.
The above analysis is associated with the physical determinants of operations that can benefit management to be better:
(A) Manpower planning – to reduce salaries and wages,
(B) Inventory planning. To reduce the cost of interest,
(C) Maintenance schedule – in order to control costs,
(D) Expenditure planning – for quality, research, etc.
Again, Proforma D (Part II), which displays the final stocks of bulk drugs, intermediaries, components and self-manufactured materials, both in terms of quantity and value under open inventory, production, sales and captive consumption, and inventory closure can help management formulate “budgets” for future periods.
Thus, the cost review is neither evil nor heavy. In fact, the cost review report can act as a catalyst for the current MIS.
Latest posts by Mohammad Asthaf (see all)
- What is CMA? - November 1, 2018
- unlink Aadhaar from the bank account and SIM cards? - October 10, 2018
- CMA Coaching in Calicut - October 3, 2018