Spring 2008 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

in material cost. Progress toward the goal can be monitored by evaluating the purchase price variance. Likewise, the production management could be incented to achieve efficiency improvements and progress would be monitored by the efficiency variance. In both cases, the cost of attaining these goals could be monitored by looking at the material burden variance and manufacturing rate variances (both labor and overhead variances), which would compare the standard unit cost for these departments to the actual costs incurred. For goals to be effective, they must be specific, measurable, attainable, results-oriented and time- based. A monthly reporting from your standard costing system provides you with the feedback and monitoring system to judge performance. When the strategic objectives are tied to compensation plans and monitored with a timely reporting system using standard cost, they create a powerful system for achieving your company’s goals.

Questions? Contact:

Mike Lewis, CPA Partner-in-Charge Manufacturing & Distribution Services Group 314-290-3391 mike.lewis@rubinbrown.com

or

Rick Feldt, CPA Partner Manufacturing & Distribution Services Group 314-290-3220 rick.feldt@rubinbrown.com

28 u spring 2008 issue