Calculating cost: the basis for a cost-effective decision
A structured method to identify the direct and indirect costs that really influence your margin.
Why cost is essential
The cost of costs includes all the expenses necessary to produce and deliver a good or service.
The three blocks to measure
- Direct costs
- Indirect costs
- Time and capacity used
An effective matrix must be simple to update and accurate enough to support a decision.
Moving data to decision
Review your assumptions each month and compare the expected cost to the actual cost.