Manage Value-added through Result-performance Costing
There has never been a workable cost-accounting method
Knowing and managing costs has been a major management concern, since the beginning of business. We have faced two major problems in managing costs:
- We do not have one entity that generates costs, and includes all costs incurred
- We do not have one entity that meaningfully absorbs costs for good management
One entity must generate all costs
Many methods have been contrived for costing and cost accounting. The methods try to gather “known” costs for separate entities like employees, fixed assets, cash, and supplies. The other capital utilized has never been defined and produces “unknown costs” or is labeled “intangible assets”. All costs come from consumption of tangible and intangible capital. This is performance and all capital utilized must be organized and defined as one entity “performance solution”.
One entity must absorb all costs
Costing methods charge costs against entities like center, station, activity, and product. Product is the only entity actually produced by the cost. However, many other outputs also are produced by costs. Products and other outputs produced by costs are part of one entity “result”. The result is the entity that contains the value created by the costs and is the only entity that can absorb costs to show the value added by performance.
Performance Solutions generate costs and Results absorb costs against Result value to manage value-added
The only way to know all of our costs and to charge costs properly to manage value added is Result-performance Costing. By establishing result value-quality chains, we can know the cost and value of each result in the chain leading to the final product or service result that leaves the enterprise to produce our revenue and profit results. This is explained in the article “Know Unknown Costs through Result-performance Costing” in the 21st Century Management magazine. Result-performance Management (R-pM) organizes the business for 21st century management and to employ Result-performance Costing.
21st Century Management eliminates 20th century problems
Result-performance Management (R-pM) eliminates the costing problem and other costly 20th century problems. Slash costs, simplify business management, and boost your competitive advantage through R-pM, the conventional method for 21st century management.
Download your 21st Century Management Manual today
Your 21st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21st Century Management. Get your R-pM Toolkit, and future updates, at result-performance-management.com.
