What Are the Different Ways to Determine Cost Function?

Cost control method refers to the means to complete the task of cost control and achieve the purpose of cost control. Linked-F senior consultant Yu Yue said: The finance department is the company's data center. The professional skills of the cost analysts are to understand whether each cost data is obtained accurately and the allocation is reasonable, so as to submit a true and credible analysis to management result. As for the cost control methods, there are many different methods at different stages and different problems. Even at the same stage, for different control targets or different management requirements, the control methods are also different. not exactly.

Cost control method

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Cost control method refers to the means to complete the task of cost control and achieve the purpose of cost control. Linked-F senior consultant Yu Yue said: The finance department is the company's data center. The professional skills of the cost analysts are to understand whether each cost data is obtained accurately and the allocation is reasonable, so as to submit a true and credible analysis to management result. As for the cost control methods, there are many different methods at different stages and different problems. Even at the same stage, for different control targets or different management requirements, the control methods are also different. not exactly.

When choosing a cost control method, you first need to understand the characteristics and classification of costs. Generally, you can consider the following three aspects:

(1) the variability and fixedness of costs,

The main methods of cost control method:

1. Absolute cost control ^[1]

Case 1: Research and analysis of cost control methods for water supply companies ^[2]

Good or bad corporate cost control. Will have a direct impact on the level of corporate effectiveness and the rise and fall of the enterprise. As the cost of water supply companies continues to rise, in order to effectively control costs and ensure the continued growth of economic benefits, many companies take the approach of maximizing the reduction of internal costs. Such a traditional cost control method is not very effective for the reporting company, because the cost reduction space provided by this method is too small, and it is not conducive to the long-term development of the water supply company. As the cost of water production continues to rise, the Operating conditions are becoming increasingly tense, and in-depth research on cost control methods for water supply companies has very important practical significance for the survival and development of water supply companies.

I. The importance of cost control for water supply companies

(I) Implementing cost control is an important means to ensure that the enterprise achieves the set cost goals. The completion of target costs must be achieved by means of cost control. Through cost control, the differences between cost indicators and predetermined indicators in the production process of enterprises Can be displayed in time. This will make it easier to make corrections in a timely manner to ensure that the set goals are achieved. In addition, through cost control, it is not only to ensure the completion of the set goals, it is more important to enable the cost plan to be exceeded. For better results.

(2) Effective cost control is an important way for enterprises to reduce costs and improve economic benefits. Economic benefits are the central point that an enterprise's production and operation linger under the conditions of a market economy. Effective cost control is a powerful measure that can improve economic benefits. The same is true for water utilities. Excessive cost is a major bottleneck that restricts the profitability of enterprises. Reducing costs has become the focus of many enterprises' production operations. Scientific and effective cost control can not only save the company's materials and reduce costs, thereby increasing the profitability of the company, but also ensure the safety and integrity of the company's property and materials, to avoid waste loss, inaccurate measurement and other phenomena.

2. Cost control methods of water supply enterprises

(I) Implementing the contracted management responsibility system

First of all. It is necessary to formulate reasonable and feasible contracting indicators. For economic indicators such as the amount of water supply, sales, business income, and cost budget to be completed by the enterprise in a year, it shall be allocated to the water supply management office and Various water plants.

Among all the indicators, the measurement cost indicator is the most critical one. Among them, the cost index of the water supply management institution is mainly composed of three costs: network maintenance costs, operating expenses, and other fixed costs. The cost index of the water plant is mainly composed of two indicators: fixed cost and variable cost. Among them, fixed cost indicators mainly include indicators of wages, depreciation costs, overhaul costs, and welfare costs: Variable cost indicators mainly refer to the unit price of raw materials and power and unit consumption indicators. Whether or not the overall efficiency goals of the entire water supply company can be achieved will be directly affected by the reasonableness of the contracting indicators. Therefore, in the process of setting the indicators, special factors must be eliminated, and changes in the production environment and new Predictability as a range to consider, and an in-depth analysis of estimable costs. Secondly, the contracting unit must strictly implement the contracting operation indicators. After the contracting indicators are formulated, they must be implemented to better complete the cost indicators. This requires strengthening the contractor's controllability of liability costs. Namely, to achieve clear separation of powers and responsibilities, a combination of powers and responsibilities, the South Contracting Unit controls the production and operation decision-making power that affects changes in costs. The enterprise management department is responsible for guidance and supervision. Thirdly, year-end contract liquidation is implemented. Summarize the results of contracting operations, that is, make an in-depth analysis of the differences between the actual performance and the contracting indicators and their reasons. In particular, it is necessary to carefully analyze the authenticity and rationality of large amounts and special costs and expenses, and eliminate costs and expenses caused by force majeure or the company's unified distribution to ensure the accuracy and rationality of the liquidation results. Finally, the business performance was evaluated in accordance with the evaluation indicators. Based on the results of the assessment, the total wages of the contracting units are settled. For actual performance and contracting indicators, the relevant departments should compare and analyze the original source of the differences, and provide data basis for the development of the next year's contracting plan and accumulate Experience, improve grass-roots leaders and employees' cost management awareness, and improve corporate cost control.

(II) Control the unit price of water raw materials

Water-making raw materials and power generation are the two main variable costs of tap water production, and the two major factors that affect variable costs are unit price and unit consumption. As for the unit price of power, water supply companies cannot control it. But it can start from the unit price of water raw materials. In terms of purchasing water-making materials, the water supply enterprises are the buyer's market, and the prices they can choose are the same. In order to ensure the quality of materials and facilitate unified management, the traditional method is that the southern affiliated enterprise or the supply and marketing department is responsible for the procurement of water-making materials. This procurement method makes the supply channel relatively simple, and affiliated companies usually calculate the profit rate as the cost of materials. As a result, the unit price of materials is much higher than the market price. For this reason, you can take the form of bidding in the market for procurement, or under the condition that the water plant is contracted, you can give the water plant material procurement rights and let the water plant carry out high-quality and cheap materials according to its own interests. Choice, the water production cost of water supply enterprises will be effectively controlled.

(3) Improve existing technology and adopt new technology to save energy and reduce consumption

It is necessary to improve the existing production technology, that is, to actively improve the existing process for adding water-making materials, improve the amount of materials used, and make scientific and reasonable scheduling of water supply. By optimizing equipment configuration to improve unit operating efficiency. By improving existing technologies and adopting new technologies. Can effectively save energy and reduce consumption. Reduce variable costs. Water supply enterprises should pay attention to the research of new technologies in this aspect. In order to ensure the quality and quantity of water, the cost of materials and power is reduced.

(IV) Implementation of full management and full process control

Full staff management means that all departments and employees of the water supply enterprise must participate in the work of cost control. The effective control of the cost of the Internet must be achieved by the close cooperation of each relevant department and the joint efforts of all employees. The whole process control is to control the cost throughout the entire production and operation process of the water supply company. Ensure that the expenditures at each link and stage are effectively controlled so that the overall cost is reduced. in practice. Activity-based cost management is an effective method to achieve full staff management and full process control. This method requires that the cost control must be penetrated to the operation level, with the purpose of reducing costs, through the completion of each operation. And the analysis of the resources consumed, to identify the value-added operations and non-value-added operations, and to implement cost control for different types of operations, try to eliminate unless value-added operations, so that the time and resources consumed by value-added operations can be some Reduce, thereby increasing the value-added efficiency of the operation. In the end, the purpose of reducing costs can be achieved.