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Functional cost analysis using the example of the financial department of Triovid LLC. Functional cost analysis - Accounting, taxation, management accounting: tutorial

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Introduction

1. Theoretical foundations of functional cost analysis

2. Functional cost analysis finance department TrioVID LLC

Conclusion

Application

List of used literature

Introduction

The relevance of the topic is determined by the economic situation in the country. Currently, the globalization of industrial and commercial relations between enterprises plays an important role in the development of the Russian economy. The relative stabilization of the economic situation in the country (moderate inflation, increased wages) has led to the appearance of a “rational” consumer on the market again, that is, one who is able to compare their consumer costs among a wide range of goods and services and choose those available from them. price for goods or services that satisfy his needs to the greatest extent. Thus, the producer and consumer find themselves in the market, their motivations are based on financial gain and maximizing the consumer effect. At the same time, the consumer has a choice between the best products from different manufacturers. The consumer, being the main figure, determines the direction of development of production, purchasing goods and services at his own request. In this way, the consumer specifies what should be produced.

This state of affairs leads to intensified competition between companies and forces enterprises to make great efforts to find opportunities to improve the quality of their products (goods, services) while minimizing costs.

Since the production and sale of a product/service consists of many stages, it is necessary to increase the efficiency of each of them.

Traditional analysis methods do not allow obtaining objective and reliable information for this type of analysis. In this regard, there is a need for the practical application and development of progressive analysis methods, one of which is functional cost analysis (FCA). It is based on the analysis of indirect (fixed) costs, which are usually distributed to products in proportion to a single, pre-selected criterion.

The purpose of this work is to evaluate the existing management system at a given enterprise and develop recommendations for its improvement using the FSA methodology.

The implementation of this goal determined the need to solve the following tasks:

1. Consider methods for improving organizational structures

2. Consider the types of organizational structures

3. Explore theoretical foundations FSA,

4. Consider the areas of application of FSA

5. Identify the fundamental differences between FSA and other methods

6. Study the main stages of the FSA organizational management structure

7. Explore approaches to classifying functions

8. Study the principles of constructing a functional model (FAST diagrams)

9. Create a FAST diagram of the research object

10. Study and apply in practice the method of paired comparisons to assess the significance of functions

11. Consider the main groups of costs attributable to the management function

12. Evaluate the resulting functional-cost diagram.

The object of the study is the financial department of TrioVID LLC

The subject of the study is external and internal microeconomic management relations with other business entities, as well as within the business itself, that develop in the process of managing the implementation of an intra-company quality system.

The structure of the work is determined by its purpose and tasks that were solved during the research process. It consists of an introduction, three chapters, a conclusion, and a list of references. In the course of writing the work, scientific publications and special literature on a given topic were used.

1. THEORETICAL FOUNDATIONS OF FUNCTIONAL - COST ANALYSIS

1.1 Origins, stages of development of functional cost analysis (FCA)

In the 30s of the last century, Soviet aircraft designer of Italian origin R.L. Bartini developed a method whose basic concepts were a functional model and a contradiction. Bartini's functional approach formed the basis of functional cost analysis. The concept of contradiction formed the basis of the solution algorithm inventive problems, the main tool of the theory of solving inventive problems, developed by Baku engineer G.S. Altshuller.

At the end of the 40s. the principles of FSA are reflected in the works of Yu. M. Sobolev. The method was widely promoted and appreciated by the scientific and technical community. However, the management mechanism that existed in those years did not contribute to its spread in our country.

The method of Yu. M. Sobolev aroused great interest among specialists of the GDR. It was studied and widely used for the purpose of socialist rationalization of production. As noted by H. Ebert and K. Thomas, the main ideas of Yu.M. Sobolev were fully taken into account in the process of creating a method of cost analysis based on consumer value in the GDR.

During World War II, the American company General Electric was forced to look for replacements for scarce materials used in production. After the war, company engineer Lawrence D. Miles, an employee of the supply department who knew about Sobolev's work, analyzed data on the performance of products and became convinced that replacing the material with a cheaper one in some cases led to improved quality.

Based on this analysis, a functional-economic approach was developed in 1947.

In 1952, L. Miles developed a method called cost analysis.

The practice of using cost analysis attracted the attention of specialists working at enterprises - suppliers, competitors and customers of General Electric.

In 1958-1960, Japanese consulting engineer Dr. Genichi Taguchi created a number of methods to improve product quality without increasing costs (Taguchi methods). The purpose of the methods is to improve quality by increasing accuracy. Any deviation from the optimal value is considered as a source of material losses for society (both producer and consumer). Taguchi proved that losses grow proportionally to the square of the deviation from the optimal value and introduced the concept of “quality loss function” and the “signal-to-noise” ratio to denote the ratio of the nominal value and deviations.

In 1959, the Society of American Value Engineering (SAVE) was organized. The first president of the society from 1960 to 1962 was L. Miles. The society's goal was to coordinate work on FSA and exchange experience between companies. Since 1962, the US military department has demanded that its clients, companies, must use FSA when creating ordered military equipment.

In the early 60s, FSA began to be used in other capitalist countries, and primarily in England, Germany, and Japan.

In 1962, Tokyo University professor Kaoru Ishikawa proposed the concept of quality circles, which were based on psychological effects - the effect of social facilitation and the Ringelmann effect.

Since the mid-60s, FSA began to be used by enterprises in socialist countries. In most of these countries, national and international conferences of FSA specialists are held, departments and organizations have been identified that coordinate the application of FSA throughout the state. In a number of countries, the implementation of FSA in business practice is regulated by legislative documents.

In 1965, the Society of Japanese Value Engineering SJVE was founded, which actively promoted this method, holding annual conferences with the participation of representatives of major firms and government organizations.

Systematic and targeted work on FSA in the USSR began in 1973-1974. in the electrical industry (VPE Soyuzelectroapparat, Electroluch PA, etc.)

In 1977, the Ministry of Electrical Industry decided to create FSA units in all associations and organizations in the industry, and work on FSA became a mandatory part of the plan for new technology.

Currently, almost every enterprise or company in economically developed countries uses the methodology of functional cost analysis to solve the problems of increasing the competitiveness of products and reducing production costs.

Classic FSA has three synonymous names in English - Value Engineering, Value Management, Value Analysis.

1.2 Goals and objectives of functional cost analysis (FCA)

Functional cost analysis is a tool for assessing systems, processes and concepts - a method for determining the cost and other characteristics of products, services and consumers, using as a basis the functions and resources involved in production, marketing, sales, delivery, technical support, provision of services, maintenance clients, and quality assurance.

Functional cost analysis is a methodology for continuous improvement of products, production technologies, and organizational structures. The objective of the FSA is to reduce all types of costs while maintaining or improving quality.

The main objective of functional cost analysis is to increase productivity, reduce cost, labor intensity, time and improve quality.

Functional cost analysis allows you to solve the following problems:

· determination and implementation general analysis the cost of business processes at the enterprise (marketing, production of products and provision of services, sales, quality management, technical and warranty service, etc.);

· carrying out a functional analysis related to the establishment and justification of the functions performed by the structural divisions of enterprises in order to ensure the production of high quality products and the provision of services;

· identification and analysis of basic, additional and unnecessary functional costs;

· comparative analysis alternative options for reducing costs in production, sales and management by streamlining the functions of the structural divisions of the enterprise;

· analysis of integrated improvement of enterprise performance.

The goal of functional cost analysis is to develop the useful functions of an object with an optimal ratio between their significance for the consumer and the costs of their implementation, i.e. choosing the most favorable option for the consumer and manufacturer, if we are talking about production, of solving the problem of product quality and its cost. Mathematically, the goal of the FSA can be written as follows:

where PS is the use value of the analyzed object, expressed by the totality of its use properties;

Z - costs to achieve the necessary consumer properties.

FSA has a fundamental difference from conventional methods of reducing production and operating costs, since it provides for a functional approach. The essence of this approach is to consider an object not in its specific form, but as a set of functions that it must perform. Each of them is analyzed from the perspective of possible principles and methods of execution using a set of special techniques. The evaluation of options for constructing an object is carried out according to a criterion that takes into account the degree of implementation and significance of the functions, as well as the amount of costs associated with their implementation at all stages of the life cycle.

The functional approach forces us not only to study the specific needs of customers, but also to deeply analyze the quantitative and qualitative aspects of these needs, and to rebuild production to suit them.

The functions performed by an object can be divided into basic, auxiliary and unnecessary. The main functions determine the purpose of the product. Auxiliary functions are those that contribute to the performance of primary functions or complement them. Unnecessary functions do not contribute to the fulfillment of the main purpose of the structure, but, on the contrary, worsen the technical parameters or economic performance of the object.

1.3 Features of functional cost analysis (FCA) as a method for improving the management system

For a comprehensive presentation, we use a graphical representation of the structure of the FSA, presented in Fig. 1

Functional cost analysis (FCA)

FSA system FSA method

A set of organizational measures, a procedure for achieving

methodological and technical competitiveness

funds providing products through

conducting FSA application methods

ratio optimization

quality and price

Rice. 1 Structure of the FSA

What distinguishes FSA from other methods of increasing production efficiency is a set of principles, which includes the planned nature of carrying out FSA, an integrated approach, a systematic approach, a functional approach, the principles of matching the importance of functions and the costs of their implementation, matching the actual value of a parameter to the required level, activating creative thinking, and collective work , interdisciplinary approach, etc.

The planned nature of the FSA means its use of one of the means of planned targeted support high results activities of the organization. It assumes:

* establishment of tasks by the management of the organization and control of their implementation;

* limiting the FSA process by time and space, as well as by the amount of resources allocated to the study.

An integrated approach involves studying the factors that determine quality and costs in combination:

* all types of objects - structures, technologies, production organization;

* all types of resources - labor, material, technical, energy, financial;

* at all stages of the product life cycle - pre-design, design, preparation and development of production, production itself, sales, and also, if necessary, operation (consumption, use), disposal.

A systems approach requires the study of an object, on the one hand, as a single whole and as a system that includes other constituent elements that are in interaction, and on the other hand, as parts of another system (metasystem) more high level, in which the analyzed object interacts with other subsystems.

It follows from this that in individual components of the system, optimization of the quality-cost ratio cannot be carried out in isolation. This kind of optimization must necessarily take into account the impact that it will have on the state of other components of this system, and ultimately on the state of the higher-level system. Thus, the result of FSA must necessarily be a more effective technical and economic balance of the object under consideration as a system, ensuring its competitiveness and high profitability.

The functional approach, in contrast to the subject approach, which is used in most traditional cost reduction methods, means that the object of rationalization is understood and improved not in its specific material form, but as a set of functions that it performs or should perform. Every product of labor interests the consumer not in itself as such, but for its purpose and ability to satisfy his needs - primarily through actions. The functional approach, despite the importance of other principles of the FSA, is decisive. Almost all research on an object is carried out in relation to its functions, considered from a variety of positions - their significance, place, forms of manifestation, etc.

The following groups of functions are distinguished:

* by area of manifestation - general-object (external), intra-object (internal);

* by role in satisfying needs: among external ones - main (operational) and secondary; among internal ones - main (working) and auxiliary;

* according to the degree of necessity - necessary (useful), i.e. positive, and unnecessary, i.e. negative (useless and harmful);

* by the nature of the manifestation - nominal (required), actual (realizable), potential.

The principle of correspondence between the significance of functions and the costs of their implementation is a development of the functional approach and lies in the fact that each function is studied in a hierarchical structure from the point of view of its significance in relation to other functions of the analyzed object. The resulting significance of the function is compared with the costs of its implementation, or more precisely with the share of these costs in the total amount of costs necessary for the manifestation of the totality of functions of the object in question. With the help of this methodological technique, a specific economic diagnosis of a particular solution is carried out, the feasibility of the existing or proposed structure of the object is analyzed.

The principle of compliance of a real parameter (resource) with the required one is the need to constantly compare the actual quantitative resource provided for in the technical documentation with the actually required resource. Such a comparison makes it possible to identify functions with excess or insufficient resources and determine ways to optimize the designed resources (parameters) of functions on this basis.

The principle of activating creative thinking is used to find new, more optimal solutions. The most common methods for finding new solutions:

* algorithm for solving inventive problems;

* "brainstorming";

* morphological analysis;

* sevenfold search strategy;

* synectics;

* method of control questions;

* Delphi method;

* conference of ideas, etc.

The essence of the characterized principle is that FSA is not “tied” to any one, well-proven method of activating creative thinking, but based on the variety of problems being solved, it uses different combinations of them.

The principle of collective work is due to the fact that FSA requires knowledge of many scientific disciplines, including technology, economics, management, psychology, and marketing. The analysis is carried out by a group of specialists different professions, which allows you to carry out the research in a diversified and more efficient manner.

The principle of an interdisciplinary approach is a development of the principle of collective work. The FSA method arose at the intersection of economic analysis with design, management, mathematical modeling, psychology, marketing, and invention. To solve complex multifaceted problems, it is necessary to participate in the FSA of various specialists working as a single creative team.

FSA differs from other management approaches in that it simultaneously contains methodological techniques that are usually not used together. The various methodologies currently in use are each designed to achieve specific goals, but their combination can be found in the FSA methodology. They include identifying and meeting customer requirements, establishing indicators that describe these requirements, cost modeling, improving business processes, continuous improvement within the framework of the quality management system, organizing and conducting personnel training. The FSA methodology pays great attention to integrated processes and allows the use of various methodological techniques such as unified system depending on the specific purpose of the analysis.

FSA is a management style designed, in particular, to improve employee motivation and develop their skills, allowing for a synergistic effect, leading to the effective use of means to achieve results and promoting innovation in order to ensure maximum impact from the organization's activities.

The concept of value is based on the relationship between the satisfaction of a variety of needs and the opportunities used in doing so. The lower the consumption of resources or the more complete the satisfaction of needs, the higher the cost. Stakeholders in a company, including consumers, may have different views on what value is. The purpose of the FSA is to reconcile these differences and enable the organization to achieve maximum achievement of its goals using minimal resources.

It is important to understand that value can be increased by satisfying a need more fully, even if this increases the consumption of resources, provided that the satisfaction of needs occurs faster than the increase in resources used.

2. FUNCTIONAL - COST ANALYSIS OF THE FINANCIAL DEPARTMENT OF TrioVID LLC

2.1 Characteristics of the research object

As a result of a survey of the state of management of the enterprise TrioVID LLC, the financial department, which is an independent structural unit of the enterprise, was selected as an object for conducting a management FSA. This choice is determined by the importance of the functioning of this service for a modern enterprise, as well as the high level of organization of the management subsystem relative to other divisions of the enterprise. The creation of an integrated financial management system should ensure effective management of financial and material flows, financial stability, profitability and competitive development of the enterprise with minimal costs on organization and management.

TO the most important goals managerial FSA financial department include:

Reducing production costs;

Optimization of current expenses;

Development and implementation of a system of measures that allows for a constant flow of new ideas and options for solving various economic problems.

The financial department is an independent structural unit of the TrioVID LLC enterprise and reports directly to the deputy director. The finance department exists to advise and serve other departments and divisions of the enterprise on issues related to reporting, conducting and evaluating financial transactions. The financial department of the enterprise covers the following tasks:

Finding sources of financing for activities;

Efficient use of resources;

Carrying out the functions of a manager and recipient of funds;

Monitoring the correct establishment and maintenance of accounting, the availability, movement and use of material assets and funds;

Work on improving measures and proposals for the rational and efficient use of funds for the maintenance of the enterprise;

The personnel of the financial department consists of employees of economic specialties and is divided into the following categories taking into account specialization: economist - analyst, cash flow management analyst, forecasting analyst cash flow, payment optimization analyst.

The financial department forecasts financial results and financial condition. The department makes it possible to perform all functions of production and sales of goods, and also advises and services the activities of other departments in the field of financial management.

2.2 Analysis of the organizational management structure

Analyzing the information obtained above, we build a structural element model of the financial department in graphical and tabular (staffing) forms.

Table 1 - Staffing table finance department

Annual payroll = 44,000 * 12 months. = 528,000 rub.

Rent = RUB 98,500/year

Office expenses = RUB 35,080/year

Total: 661,580 rub.

Based on the analysis of the structural element model, we will classify the functions and, for the convenience of assessing and analyzing the main functions, we will summarize the costs of their implementation in a single table (Table 2).

	Function name	Function type	Costs, rub.
		Noun	Addition
	Gather	information	in finance	BASIC
	Receive		by activity	HELP
	Conduct	negotiation	with management	HELP
	Receive	information	additional	HELP
	Specify		by activity	HELP
	Evaluate	information	received	BASIC
	Check	information	for reliability	HELP
	Check	information	for completeness	HELP
	Check	information	on relevance	HELP
	Conduct		with primary sources	HELP
	Analyze		received	BASIC
	Formulate	criteria		HELP
	Request		previous periods	HELP
		dynamics	indicators	HELP
	Formulate	results		HELP
	Plan	financial	activity	BASIC
				HELP
	Plan			HELP
	Coordinate		for the forecast period	HELP
	Ready		by activity	HELP
TOTAL cost main function

Table 2 - Formulation, classification of the functions of the financial department and the costs of their implementation.

Thus, the most costly functions identified as a result of the analysis are the following:

Analyze data;

Plan financial activities.

The high cost of these functions is due to the large number of employees involved in performing these functions, who are highly qualified and, therefore, receive high wages, the use of PCs, and the use of specialized computing programs.

Table 3 - Functional FAST diagram of the financial department of TrioVID LLC

Using the prioritization method, we will determine the degree of significance in points. The results of this comparison are presented in table. 3

Table 3 - Results of pairwise comparison of the functions of the financial department


Table 4 - Results of pairwise comparison of the functions of the financial department

Based on the calculations made, a functional-cost diagram of the main functions of the financial department is constructed (Fig. 1)

Rice. 1 Functional cost diagram of the main functions of the financial department


importance













costs, thousand rubles

The constructed diagram allows you to visually highlight costs that are not balanced with the importance of the corresponding functions. With the same importance of functions 3 and 4 (“Analyze data” and “Plan financial activities”), the cost of function No. 3 is significantly higher than the cost of function No. 4. At the same time, functions 1 and 2 have a significance not much lower than functions 3 and 4, but at the same time their cost is much lower.

The constructed diagram helps to identify costs that are not balanced with the level of quality of functions.

As a result of the analysis of the functional diagram (FAST), the structural model of the financial and economic service and the entire enterprise, it was revealed that some functions performed by the financial department are unnecessary or duplicated. Accordingly, by abandoning them, the enterprise’s activities will not incur losses, but on the contrary, this will reduce costs.

1. “Request data from previous periods” - in the presence of modern software and specialized programs, this function is recognized as unnecessary, because labor costs when maintaining databases are significantly reduced.

2. “Check the relevance of the information” is redundant, because it is necessary to initially set up the process of providing information in such a way as to reduce the possibility of distortion of information.

3. “Check reconciliation with primary information” - duplicates the previous function

4. “Negotiate with management” - at the stage of collecting information, carry out this function there is no point, because no decisions are made in the process of performing this function; accordingly, it is necessary to develop a system of criteria for collecting information, thereby getting rid of an unnecessary function.

In further work, it is necessary to take into account these comments and bring the management structure and functions performed to a highly effective level.

Having calculated the resulting savings from the implementation of FSA measures, by removing redundant, unnecessary, and duplicating functions, we obtain the data presented in Table. 5

Table 5 - Cost savings as a result of using managerial FSA

In general, the savings for the department amount to RUB 175,700. per year or 26.6%.

Savings for the main function “Collect information” amounted to 42,000 rubles. per year by eliminating the auxiliary function “negotiate with management”;

Savings for the main function “Evaluate information” amounted to RUB 66,500. per year due to the exclusion of two auxiliary functions: “check the relevance of information” - 43,500 rubles. per year and “conduct reconciliation with primary sources” - 23,000 rubles. per year;

Savings for the main function “Analyze data” amounted to RUB 35,600. per year by eliminating the auxiliary function “request data from previous periods”;

Savings for the main function “Plan financial activities” amounted to 31,600 due to the elimination of the auxiliary function “coordinate the budget”.

To visualize the benefits obtained after reducing unnecessary functions, we build a functional-cost diagram (Figure 2).

Rice. 2 Functional cost diagram of the main functions of the financial department after reducing unnecessary functions.


	importance












	costs, thousand rubles

At the end of the management FSA, it is necessary to redistribute the costs of performing functions without changing the total cost fund. Redistribution of costs can be accomplished through redistribution of wages, changes in costs for business and office expenses, rental costs and others.

Rice. 3 Functional-cost diagram of the main functions of the financial department after the management FSA


	importance












	costs, thousand rubles

In our case, it is necessary to reconsider the costs between the “Analyze data” and “Plan activities” functions; “gather information” and “evaluate information.” Due to the fact that the importance of function 3 = the importance of function 4, and the importance of function 1 exceeds the importance of function 2, it is advisable to distribute costs between functions. The result of the transformations can be seen in Fig. 3

At this stage, the management FSA can be considered complete.

As a result of transformations and optimization of management functions, costs in the financial department were reduced by 175,700 rubles. per year or 26.6%.

This was achieved by eliminating unnecessary auxiliary functions, namely: “negotiate with management” in the main function “Collect information”; “check the relevance of information” and “verify information with primary sources” in the main function “Evaluate information”; “query data from previous periods” in the main function “Analyze data”; “coordinate the budget” in the main function “Plan activities.”

CONCLUSION

After conducting theoretical and practical research, we can draw conclusions about the following:

The FSA method allows you to present management information in the form of financial indicators;

FSA allows you to develop the useful functions of an object with an optimal balance between their significance for the consumer and the costs of their implementation;

When applying the FSA method, the object is considered not in its specific form, but as a set of functions that it must perform.

All these conclusions were confirmed in the practical part of the work, namely, an analysis was carried out of a separate structural unit - the financial department, during which the costs of performing functions were assessed with their subsequent optimization. As a result of the transformations carried out, departmental costs were reduced by 26.6%, which, of course, is a clear benefit from conducting this type of analysis.

The importance of the FSA method lies in the fact that this method allows for both current (operational) planning and strategic planning. At the level of tactical management, information from the FSA model can be used to formulate recommendations for increasing profits and improving the efficiency of the organization. At the strategic level, this is, first of all, assistance in making decisions regarding the reorganization of the enterprise, optimizing the staffing structure of the enterprise, changing the range of products and services, entering new markets, diversification, etc. FSA - information shows how resources can be redistributed with maximum strategic benefit, helps to identify the capabilities of those factors that have highest value, and also determine best options capital investments.

FSA is new step in economics - analysis of the usefulness of a thing. That is, he studies a thing, as well as new services, ideas, etc., from the point of view of its functionality, where the whole thing is divided into many functions that it carries. These functions can be useful, useless, or even harmful. The art of FSA is to separate these functions from one another, to be able to systematize them and study them as a single function, also in relation to neighboring functions, and how the system as a whole will react to a change in one of them.

APPLICATION

functional cost analysis cost

Job Descriptions:

JOB DESCRIPTION FOR THE HEAD OF FINANCIAL DEPARTMENT

I. General provisions

1. This job description defines the functional duties, rights and responsibilities of the Head of the Financial Department.

2. The head of the financial department is appointed to the position and dismissed from the position in the manner established by the current labor legislation by order of the director of the enterprise.

3. The head of the financial department reports directly to __.

4. A person with a higher professional (economic or engineering-economic) education and work experience in his specialty in the field of organization is appointed to the position of Head of the Financial Department financial activities at least 5 years.

5. The head of the financial department must know:

Legislative and regulatory legal acts regulating production, economic and financial and economic activities;

Regulatory and methodological materials relating to the financial activities of the enterprise;

Prospects for the development of the enterprise;

Status and development prospects financial markets and markets for products (works, services);

Basics of production technology;

Organization of financial work at the enterprise; the procedure for drawing up financial plans, forecast balances and cash budgets, plans for the sale of products (works, services), profit plans;

A system of financial methods and levers that ensure financial flow management; procedure for financing from the state budget, short-term and long-term lending to an enterprise, attracting investments and borrowed funds, use of own funds, issue and acquisition securities, accrual of payments in state budget and state off-budget social funds;

The procedure for distributing financial resources, determining the effectiveness of financial investments;

Rationing working capital;

Procedure and forms of financial settlements;

Tax legislation;

Financial Accounting and Reporting Standards;

Economics, organization of production, labor and management;

Accounting;

Computer technology, telecommunications and communications;

Fundamentals of labor legislation;

Labor protection rules and regulations.

6. During the period of temporary absence of the Head of the Financial Department, his duties are assigned to ___________________________.

II. Functional responsibilities

Head of Financial Department:

1. Organizes the management of the movement of financial resources of the enterprise and the regulation of financial relations that arise between business entities in market conditions, in order to most effectively use all types of resources in the process of production and sale of products (works, services) and obtain maximum profit.

2. Ensures the development of the financial strategy of the enterprise and its financial stability.

3. Manages the development of draft long-term and current financial plans, forecast balances and cash budgets.

4. Ensures that approved financial indicators are communicated to the divisions of the enterprise.

5. Participates in the preparation of draft plans for the sale of products (works, services), capital investments, scientific research and development, planning product costs and profitability of production, leads the work on calculating profits and income taxes.

6. Determines sources of financing for the production and economic activities of the enterprise, including budget financing, short-term and long-term lending, issue and acquisition of securities, leasing financing, borrowing and use of own funds, conducts research and analysis of financial markets, assesses the possible financial risk in relation to each source of funds and develops proposals to reduce it.

7. Implements the investment policy and management of the enterprise’s assets, determines their optimal structure, prepares proposals for the replacement and liquidation of assets, monitors the securities portfolio, analyzes and evaluates the effectiveness of financial investments.

8. Organizes the development of working capital standards and measures to accelerate their turnover.

9. Ensures timely receipt of income, execution of financial, settlement and banking operations, payment of bills to suppliers and contractors, repayment of loans, payment of interest, wages to workers and employees, transfer of taxes and fees to the federal, regional and local budgets, to state extra-budgetary social funds, payments to banking institutions.

10. Analyzes the financial and economic activities of the enterprise, participates in the development of proposals aimed at ensuring solvency, preventing the formation and liquidation of unused inventory, increasing production profitability, increasing profits, reducing costs of production and sales of products, strengthening financial discipline.

11. Monitors the implementation of the financial plan and budget, product sales plan, profit plan and other financial indicators, the cessation of production of unsaleable products, the correct expenditure of funds and the targeted use of own and borrowed working capital.

12. Ensures the keeping of records of the movement of financial resources and the preparation of reports on the results of financial activities in accordance with the standards of financial accounting and reporting, the reliability of financial information, controls the correctness of the preparation and execution of reporting documentation, and the timeliness of its provision to external and internal users.

13. Manages department employees.

The head of the financial department has the right:

1. Give instructions and tasks to his subordinate employees on a range of issues included in his functional responsibilities.

2. Monitor the implementation of planned tasks and work, timely completion of individual instructions and tasks.

3. Request and receive the necessary materials and documents related to the activities of the Head of the Financial Department.

4. Enter into relationships with departments of third-party institutions and organizations to resolve operational issues of production activities within the competence of the Head of the Financial Department.

5. Represent the interests of the enterprise in third-party organizations on issues related to the production activities of the enterprise.

IV. Responsibility

The head of the financial department is responsible for:

1. Results and efficiency of the department’s production activities.

2. Failure to enforce your functional responsibilities, as well as the work of the department on its production activities.

3. Inaccurate information about the state of implementation of department work plans.

4. Failure to comply with orders, instructions and instructions from the director of the enterprise.

5. Failure to take measures to suppress identified violations of safety regulations, fire safety and other rules that pose a threat to the activities of the enterprise and its employees.

6. Failure to ensure compliance with labor and performance discipline by personnel subordinate to the Head of the Financial Department.

V. Working conditions

1. The work schedule of the Head of the Financial Department is determined in accordance with the Internal Labor Regulations established at the enterprise.

2. Due to operational needs, the Head of the Financial Department may go on business trips (including local ones).

3. To resolve operational issues to ensure production activities, the Head of the Financial Department may be allocated official vehicles.

VI. Scope of activity and impact of decisions

1. The exclusive sphere of activity of the Head of the Financial Department is to ensure planning and organization of production activities of the financial department.

2. To ensure his activities, the head of the financial department is given the right to sign organizational and administrative documents on issues included in his functional responsibilities.

JOB DESCRIPTION FOR THE LEADING ECONOMIST OF THE FINANCE DEPARTMENT

I. General provisions

1. The leading economist for financial work belongs to the category of specialists.

2. A person with a higher professional (economic) education or secondary education is appointed to the position of leading economist of the financial department. special education and work experience in the specialty for at least 3 years. Appointment to the position of leading economist for financial work and dismissal from it are made by order of the director of the enterprise upon the recommendation of the head of the financial department.

3. The leading financial economist should know:

Legislative and regulatory legal acts, guidelines and methodological materials on the organization of financial work.

Economics of production.

The procedure for drawing up financial and cash plans, loan applications and estimates.

Rationing of working capital.

Rules for financing from the state budget, long-term and short-term lending.

The procedure for attracting borrowed funds and using own funds, issuing and purchasing securities, accruing and paying payments to the state budget, tax authorities, banking institutions and extra-budgetary funds.

The procedure for distributing financial resources.

A system of financial methods that ensure financial flow management.

The procedure for financing capital construction, repairs and costs for technical re-equipment of the enterprise.

Accounting system.

Procedure and forms of financial settlements.

Established reporting on the financial activities of the enterprise, the procedure and timing for its preparation.

Rules for the operation of computer technology, the possibility of its use for making financial calculations and accounting for the funds of an enterprise.

Organization of production, labor and management.

Labor legislation.

Internal labor regulations.

Labor protection rules and regulations.

4. The leading economist for financial work is guided in his activities by:

Regulations on the financial department.

This job description.

5. The leading economist for financial work reports directly to the head of the financial department.

6. During the absence of an economist for financial work (vacation, illness, business trip, etc.), his duties are performed by a person appointed by order of the director of the enterprise. This person acquires the corresponding rights and is responsible for the high-quality and timely performance of the duties assigned to him.

7. The leading financial economist must have special skills:

Development of business plans, long-term, annual and current plans for the financial, production and economic activities of the enterprise;

Development of standards for material, labor and financial costs;

Organization of operational and statistical accounting;

Work with office equipment and personal computers.

Carrying out technical and economic calculations using modern software.

Responsibilities:

2.1. The main tasks of the leading economist are:

· Prevention of negative results of the enterprise’s economic activity and identification of intra-economic reserves to ensure its financial stability.

· Conducting an analysis of the financial and economic activities of the Enterprise, in order to prepare proposals aimed at increasing the efficiency and profitability of procurement activities and the competitiveness of the Enterprise's products.

· Development of business plans, long-term, annual and current plans for the financial, production and economic activities of the Enterprise;

· Organization of operational and statistical accounting of the Enterprise's activities.

2.2. To solve the main tasks, the leading economist performs the following job responsibilities:

· Participates in the preparation of current production and economic projects and long-term plans structural divisions of the Enterprise for all types of activities in terms of economic justification and calculations for them. Prepares initial data for drawing up draft plans and generating reports on the production, economic, financial and commercial activities of the Enterprise as a whole.

· Constantly analyzes the financial and economic activities of the Enterprise and its structural divisions, identifies production reserves, develops measures to ensure savings, increase production profitability, labor productivity, reduce costs of production and sales of products, eliminate losses and non-production expenses;

· Within the limits of his competence, participates in the development of technical and economic standards and standards of material and labor costs to determine the cost of production, prices and calculations for implementation individual species works, constantly monitors the correctness of their application at the enterprise;

· Keeps records of economic indicators of the results of the production activities of the Enterprise, calculates the material, labor and financial costs necessary for its activities;

· Draws up plans and reports in a timely manner: calculation of production profitability and report on its execution, calculation of production costs and current operational information;

· Maintains statistical records on all production and technical and economic indicators of the Enterprise, prepares periodic reports for third-party consumers and management in a timely manner;

· Together with responsible persons of other structural divisions of the Enterprise, calculates wages in accordance with current provisions on remuneration and bonuses for labor, accepted piece rates and other regulations;

· Checks the correct write-off of material resources;

· Keeps records of the movement of materials and draws up reports in accordance with the Company’s current Procedure for tracking the movement of certified products;

· Communicates planned tasks to the structural divisions of the enterprise. Increases the level of economic literacy of the Enterprise's employees.

· Complies with internal labor regulations adopted at the Enterprise and safety standards, fire protection and industrial sanitation.

· Constantly improves his professional level and knowledge in the field in which he specializes, participates in events that help improve his qualifications (courses, trainings, seminars, round tables, etc.).

· Carry out the instructions of his immediate superior and the General Director of the Enterprise within the framework of his official duties, and also complies with all policies, regulations, instructions, rules and orders that apply to all personnel of the Enterprise, and in particular to the leading economist.

· Performs other labor functions within its competence in accordance with the goals and objectives of the Financial and Economic Department of the Enterprise.

The leading financial economist has the right:

8. Get acquainted with the draft decisions of the enterprise management concerning its activities.

9. Make proposals for improving work related to the responsibilities provided for in these instructions.

10. Within the limits of your competence, inform the head of the financial department about all shortcomings in the activities of the enterprise and its structural divisions identified in the process of carrying out their official duties and make proposals for their elimination.

11. Request personally or on behalf of the head of the financial department from divisions of the enterprise information and documents necessary to fulfill their official duties.

12. Involve specialists from all (individual) structural units in solving the tasks assigned to him (if this is provided for by the regulations on structural units, if not, then with the permission of the manager).

13. Demand that the management of the enterprise provide assistance in the performance of their official duties and rights.

IV. Responsibility

Functional analysis includes:
identification and formulation of functions for certain
rules
their classification,
building functional models,
determination of costs,
establishment
consumer,
values
functions
selection of functions for research.
9
With
taking into account
opinions

Functional analysis

Despite the huge variety of product types,
the number of functions they perform is many times smaller.
For example, a grain harvester has about 30 thousand parts,
and the number of functions they perform is two orders of magnitude less.
Evaluation of functions comes down to two indicators -
usefulness and aesthetics. Functional analysis comes from
from what useful functions in the analyzed object
always accompanied by neutral (auxiliary) and
harmful (useless) functions.
10

The most important rule is the formulation of the function
should be sufficiently general, not limited to
specific subject.
For example, a chair, stool, armchair, bench has one
general useful feature- “maintain weight.”
Functions are formulated taking into account the purpose of the object.
For example, an incandescent electric lamp
table lamp, in addition to the useful function of “emitting
light” also performs the harmful function of “emitting heat”.
When using the same lamp in an incubator, the function
“to emit heat” will be useful, and “to emit light” will be neutral.
11

Principles and rules for formulating functions

To formulate a function, you need to choose a verb,
describing an action.
In the function formulation
characteristics of the object.
Not
should
enter
For example, the function of a bicycle frame is to “hold
details”, and not “to ensure structural rigidity”, because
rigidity is already a characteristic. Better wording
functions to give in a nutshell – verb in the infinitive
form and a noun in the accusative case.
The function of an electric wire is to “carry current”
car - “to move a load.” Should not be consumed
particle "not".
12

Classification of functions and their ranking

The main function is a useful function that reflects
the purpose of the object (the purpose of its creation). For example, a chair
should “support weight”, a screwdriver – “transmit torque
moment". Other functions of these objects may be
classified as minor.
Example. The main function of glasses is to “focus light”.
An additional function is to “protect the eye” from contact with
particles. This function does not affect the main one, but creates
additional consumer properties.
14

Classification of functions and their ranking

The main function ensures the execution of the main one.
There may be several main functions. Basic functions
ensure performance.
The main functions are:
- reception;
- input (matter, energy, information);
- transmissions;
- transformations;
- storage;
- issuance.
15

Classification of functions and their ranking

Helper functions are functions that
support the main one. If the main function could be
implemented without any functionality from the original
list of the main ones, then this function is not the main one, but
auxiliary.
The following auxiliary functions are distinguished:
- connecting;
- insulating;
- fixing;
- guide;
- guaranteeing.
16

Classification of functions and their ranking

By
degrees
usefulness
differentiate
useful,
neutral (useless) and harmful functions.
Neutral
function
Not
influences
on
change
consumer properties.
17

Types of functions

- main function - reflects the action aimed at
implementation
goals
object
(systems),
For
direct satisfaction of specific ends
needs;
- main function - action, without which the object cannot
can provide the required consumer properties,
the existence of a main function;
- auxiliary function - action caused by
character, design features
object caused by a specific embodiment of the main
functions. It helps perform basic functions
or complements them.
18

The company also estimated the cost of implementation
core functions, support and business processes and
carried out redistribution processes
It can be seen that after analysis and
transformations
costs have increased
on core and business processes, and decreased
expenses for auxiliary
processes that increased
efficiency
activities.
40

Application of FSA in an organization

To complete the documents, the visitor had to go through four
office: No. 1 – appointment with a technical specialist, taking 1 5 minutes;
No. 2 – the employee made entries in the journal for 10 minutes; No. 3 – economist
performed calculations within 10 minutes; No. 4 – the employee accepted payment for
transactions in the amount of 100 rubles, made notes and issued a receipt, all this in
for 5 minutes
The process diagram is shown in Fig.
41

Application of FSA in an organization

Total: each stream serves 15 people per day, 30 people in total.
The amount of daily payment for all visitors is 30 x 100 = 3000 rubles.
The daily salary of all specialists was 450x4 = 1800 rubles.
The daily profit from the FSA was 1200 rubles.

I. Functional and cost analysis……………………………….....4

1.1. Concept, essence and objects of the FSA method……………………...… 4

1.2. Principles and forms of functional cost analysis……… 8

1.3. Problems of introducing accounting using the FSA method…………………. 13

II. Calculation part……...……………………………………………..…. 15

CONCLUSION………………………………………………………...20

LIST OF REFERENCES……………………...…..21

INTRODUCTION

Currently, one of the ways to improve product quality and develop industrial enterprise management systems is the use of functional cost analysis (FCA). There are different opinions about the effectiveness of using FSA. Some economists believe that the FSA simple method. To apply it in practical activities, others are complex, both in methodological terms and in the field of technology for using FSA. This may be due to the fact that there is insufficient information about experience with the method.

The purpose of this work is to reveal the essence of functional cost analysis, as well as ways of using it to improve product quality and improve the marketing management system at an enterprise. According to these goals, the following tasks have been set in the work:

– give the concept of a system using the FSA method (ABC-cost);

– determine the scope of application of this method;

– assess the problems of introducing accounting using the FSA method.

1.1. Concept, essence and objects of the FSA method

In the economic literature, the relationship between marketing strategy and FSA strategy is noted. The FSA strategy develops the marketing strategy, as it is effective method research of technical and economic characteristics of goods and their functionality.

Functional cost analysis is understood as a method of comprehensive systemic study of the cost and characteristics of products, including functions and resources involved in production, sales, delivery, technical support, service provision, and quality assurance activities. This method is aimed at optimizing the relationship between the quality, usefulness of an object’s functions and the costs of their implementation at all stages of its life cycle.

The purposes of using functional cost analysis in an enterprise may vary depending on the object of study. If the object of the study is a division of the enterprise, for example the marketing department, then the goal of the study will be to achieve improvements in the work of the department in terms of cost, labor intensity and productivity. If we consider the quality of the enterprise’s products as the object of study, then the goals of the FSA will be: at the stages of research and development work - to prevent the occurrence of unnecessary costs, at the stages of production and operation of the facility - to reduce or eliminate unjustified costs and losses. The ultimate goal FSA is a search for the most economical options for a particular practical solution from the point of view of the consumer and manufacturer.

Accordingly, the tasks of FSA are distinguished according to the objects of study. In the first case, the activities of the marketing department personnel are analyzed and the cost of performing management functions is determined, the efficiency of using the department’s labor resources is examined, sources of increasing labor productivity are identified, eliminating “bottlenecks” in management, etc. In the second case, the main tasks will be the following: reducing material intensity, labor intensity , energy intensity and capital intensity of products, improving product quality, ensuring a reduction in costs for improving product quality by completely or partially eliminating unnecessary costs for ineffective measures.

FSA objects can be:

Organizational and management processes and structures, construction (improvement) of the organizational structure, distribution of tasks, rights and responsibilities in the department’s management system, creation of conditions for the effective work of service employees;

Product quality (identifying reserves for improving product quality, achieving the optimal state of “quality - price”);

Product design (at the stages of design, pre-production, directly during the manufacturing process), all types of technological equipment and tools, special equipment and special materials;

Technological process (at the stages of development of technological documentation, technological preparation of production, organization and management of production), and other processes

production (procurement, processing, assembly, control, warehouse, transport).

Functional cost analysis allows you to perform the following types of work:

1. determine the level (or degree) of implementation of various business processes at the enterprise, including the effectiveness of marketing management and product quality management;

2. justify the choice of a rational technology option for implementing business plans;

3. analyze the functions performed by the structural divisions of the enterprise;

4. provide high quality products;

5. analyze the integrated improvement of the enterprise’s performance, etc.

In order to ensure the greatest return from performing work on FSA, it is necessary to observe a number of basic principles of analysis (Table 1.1).

1) there is no unified FSA methodology suitable for all areas and all objects of research;

2) before deciding to use FSA, it is necessary to analyze the main factors influencing the process and methodology for implementing this method:

Directions for conducting FSA (enterprise management system, management system of a structural unit - marketing department, product quality);

Object of study and its life cycle;

Goals and objectives of the method;

Amount of funding for research using FSA;

Qualification of specialists conducting FSA.

The FSA theory is widely used in the mechanical engineering, electrical and electronic industries. This is due to the systematic nature of the method, which lies in the fact that it requires the study of an object as a single whole and as a system that includes other constituent elements that are in interaction, and also as parts of another system, of a higher level, in which the analyzed object is located with other subsystems in certain relationships. Due to its systematic nature, FSA allows us to identify cause-and-effect relationships between quality, characteristics and costs in each studied object.

Specialists performing FSA must have a high level of development of abstract thinking and creative (scientific and technical) imagination. These individual psychological characteristics contribute to an increase in the variety of alternatives when making management decisions.

Grouping costs by production factors allows us to identify hierarchical structure directions for reducing the cost of products. It is advisable to detail the areas, ranking them according to the degree of importance determined by the method of expert assessment. Comparison of functions with the costs of their implementation allows you to choose ways to reduce the cost of products.

Correlating the share of costs for a function in total costs and the significance of the corresponding function allows you to calculate the cost ratio by function. Considered optimal

. If this coefficient significantly exceeds unity (), it is necessary to look for ways to reduce the cost of this function.

The result of the FSA is alternative solutions that take into account the ratio of total costs for products (being the sum of element-by-element costs) with basic costs. The base can be the minimum possible cost of the product. The economic efficiency of FSA, which shows what share of cost reduction in their minimum possible value can be determined by the formula:

(1) – economic efficiency of FSA (current cost reduction coefficient); – actual total costs; – minimum possible costs corresponding to the designed product.

The result of carrying out FSA as a product quality management tool should be a reduction in costs per unit of beneficial effect, which is achieved:

· reducing costs while increasing the consumer properties of the product;

· reducing costs while maintaining quality levels;

cost reduction with justified reduction technical parameters to their functionally required level.

1.2. Principles and forms of functional cost analysis

Principles of functional cost analysis

Table 1.1

Object of FSA research	FSA principle	Contents of the FSA principle
Enterprise division (marketing department)	Systematic approach	Analysis of a unit as an element of a higher order system and as a system consisting of interrelated elements
	Functional approach	Analysis of a department as a complex of functions performed
	Creative approach	Activation of creative work on problems of the structure and functions of the unit
Product quality	Functionality	Consideration of products as a set of functions performed
	Systematicity	Studying each product function as an independent system
	Economical	Cost analysis of product functions at all stages of the product life cycle
	Creation	Intensifying teamwork to improve product quality

Currently, three main forms of FSA are used in domestic and foreign practice.

One of the methods for improving any object at all stages of the life cycle is functional cost analysis (FCA).

Functional and cost analysis - This is a method of comprehensive technical and economic research of an object with the aim of developing its useful functions with an optimal ratio between their significance for the consumer and the costs of their implementation.

The FSA method is used by industrial companies in the USA, England, France and other countries with developed market economies.

The FSA method was developed in the USA and first used in 1947 by the General Electric company. Engineer Lawrence D. Miles came to the conclusion that reducing production costs must begin with an analysis of the consumer properties of the product and the technical functions of its constituent parts. The focus was on the question of how justified the costs are, taking into account the resulting properties of the product that satisfy certain requests and needs. To obtain the appropriate properties of a product, certain costs are required, so the proportions between the utility of individual properties and the costs incurred are important.

Not all product features are very useful. In this regard, it is necessary to carry out an analysis using the Eisenhower principle according to the ABC scheme (see paragraph 9). It is necessary to highlight the main (A), secondary (B) and unnecessary or redundant functions (C). Funds should be spent on obtaining the main functions, and, to a certain extent, on secondary ones (B). The cost of obtaining unnecessary functions should be avoided.

Eliminating unnecessary functions allows you to reduce costs expenses for production of products while simultaneously reduction or even improvement in quality .

The objects of FSA can be the consumer properties of the product both as a whole and its individual parts (assemblies, groups of parts, individual parts, etc.).

A comprehensive and detailed analysis of the consumer properties of a product, the technical functions of its constituent parts and the associated costs cannot be performed by one specialist. It is recommended to involve specialists from various departments involved in the development, production, marketing and sales of products in conducting FSA. Representatives of design bureaus can offer promising developments taking into account demand. These developments must go through the hands of designers who take into account the aesthetic and ergonomic requirements for the future product. The participation of economists, especially accountants, who know the cost of the product and its components, is necessary. Marketing and sales specialists have information about consumer demand, the whims and fluctuations of fashion, and understand the balance of power of competing firms. Employees of the supply department can provide information about the possibilities of purchasing materials, raw materials, and components for the types of products being developed.

Only a collective, comprehensive consideration of problems of improving quality while reducing cost can guarantee success .

For this purpose, analytical groups of specialists can be formed under the leadership of one of the senior managers. The task of these groups is to study products that are the subject of FSA. Creating an analytical group is the most important part of the preparatory stage. The size of the group depends on the size of the enterprise, the volume of work to be done and its frequency. Groups can meet once a week or every two weeks and make proposals in a relaxed atmosphere, freely discussing the ideas expressed.

The direct work on conducting FSA is carried out by research groups created by order of the head of the organization from the most qualified specialists. The group should include specialists from various fields, which will allow us to consider the problems comprehensively, comprehensively, in harmonious connection with each other. This is important for a complete and correct assessment of the functions and costs of the project under study. However, it must be taken into account that numerous the group is uncontrollable.

In Western countries, the number of participants in a research group is 5-8 people. We must proceed from the fact that FSA for an individual object does not apply to global analytical studies.

The head of the organization must set a clear goal for the whole group and clear tasks for each of them member, and also indicate the start and end dates of the bot .

Members of the research team gather for an initial meeting, where they are introduced to the importance and content of the work to be done. The effectiveness of the meeting depends on the behavior of the leader during the issues discussed. The number of meetings held also matters. Each meeting should be well prepared, conducted in a businesslike manner, with specific proposals discussed and actionable recommendations adopted.

External consultants can also be involved in conducting FSA: scientists, university teachers, etc.

The purpose of FSA is to reduce production costs, about conducting work and providing services while simultaneously increasing solving or maintaining the quality of work performed . The purpose of the FSA can be written mathematically:

where PS - the use value of the analyzed object, representing the totality of its use properties;

3 - costs to achieve the necessary consumer properties.

When conducting FSA, it is assumed that the analyzed products are goods, i.e., use value not for the manufacturer, but for the consumer. At the same time, use value is not always assessed by quantitative indicators. In the case of a qualitative and verbal description (assessment of the taste, aesthetic and ergonomic qualities of the product), scoring is used.

The composition and amount of costs are determined based on the costs that form the full cost of production.

FSA consists of several stages:

Preparatory,

Informational,

Analytical,

Implementation.

At the preparatory stage the object of analysis is specified. For example, a product that is produced in mass quantities or that raises complaints about quality may be chosen as the object of research. In the first case, the mass factor operates: even a slight reduction in the cost per unit of production brings significant amounts of savings and additional profit from the sale of products. In the second case, a product is selected that is of low quality or high cost compared to similar domestic or foreign models. Analysis similar situation important in the context of expanding foreign economic relations, when the competitiveness of products intended for export is of great importance.

FSA is most appropriate for products under development that have not yet been put into production. There is time to make changes to the product design or production technology before equipment is installed and contracts for the supply of raw materials, materials, components and tools are concluded.

The object of research is selected based on a discussion of the proposed options with the involvement of specialists in specific fields. After selecting a research object, a working group from the specialists most competent in conducting FSA for this object. The head of the company issues a corresponding order about this. The order establishes the deadlines for completing analytical work at individual stages and the responsibility of each participant for a specific area of work, and determines the remuneration for completing the work.

Information stage involves collecting information about the object being studied: purpose; technical capabilities; quality; cost price.

All information is entered into special cards or into computer memory: the functions of the individual parts that make up the product, the material from which they are made, and their cost are listed in detail. At the same time, for comparison, the cost of processing the part externally or the cost of exactly the same purchased part is shown.

All services and departments of the enterprise provide the FSA group with the required information about the product, as well as proposals for improving the quality of the product and reducing the costs of its production. Great importance is attached to consumer assessments (quality, reliability, compliance with the requirements of fashion, aesthetics, ergonomics, etc.).

For clarity, it is useful to present the product disassembled to members of the research group and demonstrate it on a special stand. The parts must be arranged in the same order in which they are assembled into the finished product. It is useful to familiarize yourself with similar products from competitors.

Analytical stage involves studying the functions of the product and the costs of providing them. The following range of issues is considered.

What is the product?

What are its functions?

What functions are necessary and useful, and what functions are unnecessary and increase costs?

What is the real cost of the product?

What should the product become?

What would its new value be?

The service (technical and operational, aesthetic, ergonomic) functions of the product as a whole and the technical functions of individual parts (parts, groups of parts, assemblies) are described in detail. Functions are divided into basic (A), secondary (B) and unnecessary (C) (see paragraph 9).

By cutting off unnecessary functions, they simultaneously cut off unnecessary costs. The analysis can be carried out using the scheme shown in table. 10.1.

Table 10.1

Distribution of service functions according to the ABC principle

Such a diagram should not be excessively large so that clarity is not lost.

At the same time, you can build another scheme that links the costs of producing parts according to individual costing items. Then it is advisable to move on to assessing the weight of functions and the costs of providing them. The assessment is carried out to determine the possibility of reducing costs in the following areas.

How does this part affect the cost of the product as a whole?

Are its costs commensurate with its usefulness?

Does this part need all of its characteristics?

Is it possible to produce a similar part in a cheaper way?

5. Can a similar part be purchased externally at a lower price?

6. Can some of its functions be transferred to other parts?

Regarding the fourth point, clarifying questions can be highlighted: is it possible to replace some materials with others, cheaper ones; is it advisable to change supplier in order to have materials at a lower price; Is it possible to use fundamentally new materials?

Questions related to processing involve the following clarifying aspects: the possibility of replacing equipment; changes in operations; refusal of some operations, etc.

At this stage, the share of individual functions in the total set of consumer properties of the product is determined and compared with the share of costs for obtaining each function.

The share of individual functions in the total set of consumer properties of a product is called co factor of importance or significance . The functions are listed in order of decreasing importance and decreasing specific weight in the total set of consumer properties of the product.

When determining importance coefficients, the parameters that are most important to the consumer can be taken into account (Table 10.2).

The ratio of the share of a parameter (function) in costs to the significance or importance of the parameter (function) is called cost ratio for individual functions .

In the example table. 10.2 the most important parameter (function) is the first. Comparing the corresponding costs with the importance coefficient, we obtain a cost coefficient of 1.6 (0.80 / 0.50). This suggests that the cost of obtaining a parameter (function) is not commensurate with its importance.

Table 10.2

Comparison of significance coefficients and cost coefficients

In the theory and practice of FSA, a justified ratio between costs and function should be equal to or close to 1. If the cost ratio is less than 1, the ratio is considered more favorable. If the coefficient exceeds 1, it is recommended to take measures to reduce the cost of obtaining the parameter (function).

According to parameters 2, 3, and 4 we have:

K 2 = 0.33; K 3 = 0.33; K 4 = 1.

To determine the significance of parameters (functions), ranking and the method of expert assessments can be used.

Based on the research, several solution options are proposed, each of which has certain advantages and provides a certain economic effect. These advantages may turn out to be unequal: with a significant increase in the quality of the product according to one of the options, costs increase, and with the other, costs decrease, but the quality remains at the same level. There is a third option, in which the quality improves slightly and the cost decreases, but less than with the second option. Which option should be preferred?

Choosing an option is one of the most important decisions. Therefore, at the stage of analytical work, it is necessary to carry out economic calculations and determine the impact of a particular decision on the cost and profitability of the product.

After selecting the optimal option, it is protected at the level of the company’s management. Moreover, each activity related to the development of new products is characterized by both general and specific implementation work.

Research stage involves evaluating ideas and solution options developed at previous stages in order to eliminate disproportions between functions and costs.

Implementation stage is final, when the results of the recommendation stage are taken into account and the selected option for improving technology is implemented.

Functional cost analysis

This section discusses the issues of functional cost analysis (FCA) and functional management (FM).

A definition of basic terms is given and examples of the application of FSA in various industries are given.

The concept of functional management is introduced, the relationship and differences between FSA and FU are analyzed.

Examples of the application of functional management are presented.

Functional cost analysis (FCA) is a management tool, the emergence of which is associated with changes in the cost structure caused by the use of the latest equipment and technology in production processes. The use of FSA allows you to more accurately distribute costs associated with particular products and activities of the organization, identify opportunities to reduce costs and improve the organization’s functioning processes.

Functional cost analysis (Activity Based Costing, pronounced [activity base costing]) is a methodology for measuring the cost and efficiency of an organization, its resources and cost accounting objects (the final elements of cost absorption).

The FSA concept is based on the premise that in order to produce and deliver products or services, an organization needs to perform certain functions (business processes), which will require certain costs. In the FSA system, all costs that cannot be attributed directly to a product or service (indirect costs) are traced through the business processes that are associated with the occurrence of these costs. The accumulated value of each business process is then traced to other functions, products or services that are associated with that function.

The factor that causes costs is called cost bearer. Through the cost carrier, a cause-and-effect and quantitative relationship is established between the function, the costs incurred and the objects of cost accounting (types of products/services). The cost carrier reflects the absorption of costs by business processes, and business processes by other functions or types of products/services.

For example, at a manufacturing enterprise the following procedure has been established: according to the written requirements for the release of materials, sets of materials are formed in the warehouse, which are then moved to the workshop. Thus, the emergence of requirements for the issue of materials causes costs for the formation of kits. Therefore, in this example, requirements for the issue of materials will be considered as a cost object.

The following table demonstrates several possible cost drivers associated with various functions of the purchasing process.

Examples of cost objects

In some cases, the cost objects for FSA and the basis for allocating indirect costs for traditional costing methods may be the same, for example, for the function “Maintenance of machinery and equipment”, the number of hours spent on maintenance can be used as a cost object; for the “Quality Control” function – the number of checks performed.

Unlike FSA, traditional methods allocate costs to products based on unit attributes. Typical attributes of a unit of production are, for example: the number of direct labor hours spent on producing a unit of product; number of machine hours; volume of products produced; the purchase price of goods intended for subsequent sale; number of days of service. Thus, when distributing costs based on the use of traditional cost calculation methods, there is a direct dependence of the amount of indirect costs on the volume of products produced, the cost of goods sold or the time spent servicing the customer (see more details Shevchuk D.A. How to draw up a business plan: first step towards your own business. - M.: AST: Astrel, 2008).

As an example, consider a manufacturing company that allocates indirect costs among product lines using the time spent by key production workers as the allocation base. Over the past few years, this company has additionally acquired several pieces of equipment, the use of which has made it possible to automate some of the manual labor and a change has occurred in the cost structure of this company - the share of time spent by main production workers began to decrease, and the share of machine hours began to increase. This change shows that the time spent by key production workers (man-hours) can no longer be considered as the correct basis for allocating indirect costs. However, a simple transition to using a different distribution base, that is, machine hours, although it will be a positive change in the costing system, is not the best solution to the issue. In such cases, it may be advisable to use functional cost analysis to more accurately distribute indirect costs between types of products. This manufacturing company needs to identify all activities carried out during the production process (for example, design and development; movement of raw materials, materials and semi-finished products throughout the enterprise; commissioning; product quality control, etc.), and then analyze and calculate the costs associated with carrying out these activities (for example, wages, downtime, rent, energy costs, etc.). These costs then need to be distributed between types of products or between production lines, based on how much activity (scope of work) needs to be performed to produce a particular type of product.

The FSA system can be viewed in two views: in the cost assignment view and in the process view. The cost assignment view provides information about resources, functions, and cost objects (vertical part of the example). Representation in the form of processes provides operational, including non-financial, information about functions (horizontal part of the example).

Two FSA submissions

Approaches to the FSA system, presented in the form of cost assignments, can be divided into two main categories: two-level approach and multi-level.

In the two-tier approach, costs collected by type are allocated to various functions in appropriate proportions using “first-level” cost objects. The costs accumulated by these functions are then distributed to the “second level” cost objects. For example, health insurance and energy costs can be allocated to functions based on number of people and equipment hours as first-level cost drivers. Costs accumulated in various functions, can then be allocated to products based on second-level cost objects, such as orders, equipment operating hours, man-hours, etc.

Two-tier approach

A tiered approach is used to more accurately reflect the actual flow of costs throughout the organization. In this case, the focus is on the relationship between functions, as well as between functions and cost accounting objects. With a multi-level approach, the path of costs from their places of origin to the objects of their accounting is traced not at two, but at several stages, each of which is based on a cause-and-effect relationship.

For example, the Maintenance and Tooling functions accumulate costs that are directly associated with them. In accordance with the two-level approach, cost carriers of the second level are determined to distribute the costs of these functions between cost accounting objects. The tiered approach recognizes that the Maintenance function is not directly linked to cost objects. It supports other functions, including Tooling Making, which is directly linked to costing objects and other functions. The costs accumulated by these functions will be distributed either to cost accounting objects or to other functions based on the need for these functions, services or resources (see for more details Shevchuk D.A. How to write a business plan: the first step to your business. - M.: AST: Astrel, 2008).

Multi-level approach

Both two-level and multi-level approaches can be used to obtain information about an organization's resources, functions and cost accounting objects and to obtain data that constitute the process representation of FSA.

Due to the use of high-tech equipment and production automation at enterprises, the share of direct labor costs was reduced, and the share of indirect costs, including the cost technical means, the labor of non-production workers hired to operate them increased and over time the share of overhead costs in the total cost structure became very significant. However, costing systems were not adapted to the changes that occurred, which resulted in a number of problems.

Many enterprises produce a very wide range of products. Some products are produced in large volumes (mass production), while others are produced in small volumes. The use of traditional costing methods results in those products that are produced in large volumes, especially those products whose production process is quite simple, incurring more costs than were actually incurred ( revaluation of costs). At the same time, those types of products whose production is carried out in small volumes, and especially those types whose production process is quite complex, incur fewer costs than were actually incurred ( underestimation of costs).

As a result, after allocating indirect costs between types of products using traditional costing methods, the enterprise receives distorted data on the cost of these types of products. A traditional costing system distributes indirect costs between types of products using one (sometimes several) distribution coefficient(s), the calculation of which is based on the volume of output in physical terms.

In cases where an enterprise produces many types of products and the share of indirect costs in total costs is significant, and also when factors other than production volume lead to the occurrence of these costs, there is high degree the likelihood that the cost of these types of products will be distorted. This distortion is due to the fact that costing is calculated using the traditional costing method.

The development of functional cost analysis in the mid-80s was the main solution to the problems that arose in connection with the use of the traditional method of cost calculation in industries with a wide range of manufactured (sold) products.

The FCA method was initially used to more accurately allocate indirect manufacturing costs among cost objects (product types/units), but soon after its use it was discovered that there were many other benefits to using this method. For example, one such advantage is that the range of allocated costs can be expanded to include non-production costs, which is very important for developing the company's pricing policy.

In the early 90s, it became obvious to most managers that the management accounting system is not only a mechanism for calculating costs, but also a logical conceptual basis for managing the activities of an enterprise through the analysis of its main characteristics, such as cost factors and performance indicators.

As noted earlier, automation of the production process, as well as the expansion of the range of products leads to the fact that in the structure of production costs of companies there is an increase in the share of indirect costs and a decrease in the share of direct costs.

Under such circumstances, the use of traditional costing methods may lead to a distortion of the cost of goods manufactured.

Managers of those companies in which issues related to the cost of production occupy a significant place in the decision-making, planning and control process may experience great difficulties due to the fact that the information obtained based on the use of the traditional costing method is inadequate to their information needs for making informed economic decisions.

For such companies, switching to the use of FSA would be the optimal solution to this problem. However, a decision regarding the appropriateness of using this method should only be made after a careful assessment of the costs and benefits associated with switching to a new method.

Let the INTERFINANCE company use a costing system in one of its stores with one category of direct costs (goods purchased for sale) and one category of indirect costs (store maintenance). Below is a cost distribution diagram for INTERFINANCE.

Examples of cost objects

Store maintenance costs are allocated to goods at the rate of 30% of the cost of goods. For example, for coffee costing 63 rubles. include indirect costs of 18.9 rubles. (63 x 30%). The table shows the profitability of a product line (group of similar products) using this costing method. The cost of goods purchased for subsequent sale is up to 76.92% of total costs (1,000,000 rubles: 1,300,000 rubles). Based on the ratio of operating profit to revenue, product lines will be lined up in the following order: (1) fresh food(7.17%); (2) packaged foods (3.30%); and (3) soft drinks (1.70%).

Profitability of product lines in the company " I NTERFINANCE" according to the previous costing system is presented in the table.

INTERFINANCE monthly profitability report

The organization decided to expand the store. This requires accurate information about the profitability of individual product lines: existing data on product line profitability is based on averaging store operating costs. Research into store operations shows that individual product lines use organizational resources differently.

To calculate the cost of product lines, it was decided to use the FSA method. After analyzing operations and information systems, the following amendments were made to the costing methodology.

1. Identification of direct costs. Another category of direct costs has been introduced: bottle returns. The category applies only to the soft drink line; previously was the center of indirect costs for maintaining a store.

2. Indirect cost centers and cost distribution bases. Instead of one category of indirect costs of running a store, cost centers were selected to represent four types of activities. Cost carriers have been identified, which will further become the basis for cost distribution.

Ordering goods. The cost object is the number of orders for the supply of goods. In 2003, actual costs amounted to 1,000 rubles. to order.

Delivery includes physical delivery and acceptance of commercial products. The cost object is the quantity of supplies. In 2003, the actual supply costs were 800 rubles.

Display of goods in the sales area includes the movement of goods to trading floor and placing it on shelves, display cases, etc. The cost carrier is the hours of arranging goods. In 2003, actual costs were 200 rubles. per hour

Customer assistance includes working with customers, including cash control and hanging goods. The cost object is the number of units sold. In 2003, actual costs were 2 rubles. for each unit of goods sold.

Scheme of distribution of costs of the company "INTERFINANCE" according to the FSA system

The INTERFINANCE company received the following data for December 20__.

Total number of cost objects

According to the above data, the profitability of product lines was calculated using the FSA system.

INTERFINANCE monthly report on profitability for December 20__ according to the FSA system

Functional cost analysis is more accurate than the previous costing system: here the differences between the types of activities of the organization are more clear and the use of resources by individual product lines is reflected. The ranking of the relative profitability (percentage of operating income to revenue) of the three product lines in the previous costing system and in the FSA system is as follows:

Comparison of relative profitability of INTERFINANCE product lines

The ratio of revenue, cost of goods for sale and costs by type of activity for product lines is shown in the table. Non-alcoholic beverages require the least resources: there are fewer imports and restocking is less frequent than for fresh or packaged products. Most beverage suppliers deliver the product to store shelves and stock it there themselves. In contrast, fresh produce accounts for the most shipments and takes a long time to replenish. The number of units sold is also the highest here. The previous costing system was based on the assumption that all product lines use resources in proportion to the ratio of the individual costs of selling a given product to the total costs of selling. This assumption is incorrect.

Ratio of revenue, cost of goods sold and costs by type of activity for product lines

FSA data can help the management of the INTERFINANCE company make a decision on the distribution of additional retail space. For example, more space will be allocated for drinks. However, FSA data should be only one of the factors when deciding on the distribution of retail space.

INTERFINANCE MV LLC assembles and tests more than 80 electronic printed circuit boards. Various parts (diodes, capacitors, integrated circuits) are mounted on each board. The company uses a custom costing system. Let's consider the previous costing system and the changes caused by the introduction of FSA for a more accurate determination of product costs.

The basis of the previous order-by-order costing system at INTERFINANCE MV LLC is made up of two categories of direct costs and two centers of indirect production costs.

Direct production costs:

Direct material costs

Direct labor costs

Indirect production costs:

Supply (purchase) – applies to goods in the amount of 40% of direct material costs

The current costing system uses actual costs for two categories of direct costs and estimates for two categories of indirect costs. The table shows the calculation of the cost of printed circuit boards X and Y according to the existing cost calculation system. General scheme custom costing is shown in the figure below.

Calculation of the cost of production of goods for 20__.

Order-by-order costing scheme

When using such a costing system, these systems do not reflect differences in the use of resources by different products. For example: when using a “capacitor” part costing 0.20 rubles. indirect costs associated with supply are 0.08 rubles, and in the case of a coprocessor priced at 100 rubles. they are equal to 40 rubles, while the purchase and delivery of a coprocessor does not require 500 times more resources (40 rubles: 0.08 rubles = 500) than for a capacitor.

Costs for different types activities identified various factors, but the costing system does not provide information about these differences. The costing system tends to inflate the cost of popular mass-produced items such as board X. The reason is that mass-produced items incur too many indirect production costs and low-volume items incur too few.

Cost adjustment using FSA

Step 1: The work order is selected as a cost object. At INTERFINANCE MV LLC, an order is considered to be an order of any size for the production of one or more of 80 different printed circuit boards of the production range.

Stage 2: Determination of direct costs for the item. In the revised costing system of INTERFINANCE MV, two existing categories of direct costs are retained: direct material costs and direct labor costs.

Stage 3: Determination of indirect cost centers by item. The adjusted system has five indirect cost centers. These indirect cost centers represent the types of production activities of INTERFINANCE MV LLC.

1. Materials processing. All parts necessary for the production of printed circuit boards are supplied.

2. Automatic installation. Automatic and semi-automatic machines install parts on the board.

3. Manual installation. Skilled workers install parts that cannot be installed by automation (due to shape, weight, position on the board, etc.).

4. Wave soldering. All installed parts are secured simultaneously with a wave of solder.

5. Quality control. The test verifies that all components are installed in the correct locations and that the finished product meets specifications.

Stage 4: Selecting a cost distribution base for allocating all indirect costs to work orders. Guided by the fundamental principle for FSA of a cause-and-effect relationship between the performance of individual functions and the occurrence of costs, cost carriers were identified. The FSA implementation project team interviewed technical workers, studied plant operations, and analyzed data for each area of activity. The selected cost drivers and their rates are presented in step 5.

Step 5: Numerical assessment of all cost objects to allocate indirect costs to the work order. Let's consider the indirect costs of automatic installation of parts. In 2003 total costs for this activity reached 20 million rubles. The number of automatically assembled parts in 2003 amounted to 4 million pieces. Thus, the rate of indirect costs for automatic installation is 5 rubles. per part (RUB 20 million: 4 million parts). A similar procedure is used to calculate each of the following 2003 indirect cost allocation rates for all functions. The actual rates of the final distribution are presented in the table.

Cost carriers and their rates

The following table shows the calculation of the cost of printed circuit boards X and Y according to the FSA system, taking into account actual quantitative data for the enterprise.

Calculation of the cost of production of goods for 20__ according to FSA

New scheme distribution of costs in accordance with the FSA is shown in the figure.

Cost calculation scheme using the FSA method

Increasing the number of indirect cost centers to five resulted in greater accuracy in cost allocation. For example, in the quality control industry, costs are based on test hours, while costs for automated parts installation are measured in a different unit (automatic parts installed), which gives a more appropriate estimate of cost.

FSA gives a cost reduction of 11.9% for board X compared to the cost of 11,280 rubles. in the previous system: (9,940 rubles – 11,280 rubles) / 11,280 rubles = -11.9%. On the contrary, for payment Y in the FSA there is an increase of 24.8% - compare with the cost of 8,950 rubles. in the previous system: (RUB 11,180 – RUB 8,960) / RUB 8,960 = 24.8%.

Functional cost analysis allows us to give the INTERFINANCE MV company a number of recommendations.

1. From the difference in the cost of boards X and Y according to the FSA, it is clear how differently these products absorb resources in all types of activities. Consider the difference in the use of resources in four of the five available activities.

Comparison of resource use in PCB manufacturing

FSA costing is more accurate than the previous system and provides cost figures that more clearly reflect differences in the use of enterprise resources in processing, production, quality control, etc. These differences help to see how much the previous costing system overestimated the cost of board X and board Y underestimated. The marketing department can reduce the price of board X and still make a reasonable profit. Due to inaccurately calculated costs, and therefore incorrectly set prices, the enterprise could lose market share of this mass product.

2. The FSA system indicates opportunities for cost reduction. Management may ask why board X is cheaper? The FSA gives three reasons:

a) board X has fewer parts;

b) in board X, more parts are installed automatically (this is cheaper than manually);

c) it takes less time to control the quality of board X.

Functional cost analysis clearly shows that points a), b) and c) lead to a reduction in the cost of assembling a printed circuit board. Indeed, X is a standard board that INTERFINANCE MV LLC produces en masse.

3. The FSA system better coordinates the efforts of the production department of INTERFINANCE MV LLC aimed at reducing costs. Five activities are measured different indicators. Now you can set cost reduction goals related to reducing unit costs in each activity. For example, the foreman of the materials processing area can be given a target so that processing costs are less than 20 rubles. for detail. Note that each of the indirect cost allocation bases in the FSA system is a non-financial variable (number of parts, inspection hours, etc.). Often, for manufacturing workers, controlling physical units such as watches or parts is a fundamental way to manage costs.

In any costing system with planned rates of indirect costs at the end of the period, the question arises of clarifying under- or over-allocated indirect costs.

INTERFINANCE MV LLC, for example, has a planned cost rate for each of five types of activities: these are indirect costs for the manufacture of printed circuit boards. Under- and over-allocated costs can occur in any type of activity. A number of adjusting entries may be required to correct these costs at the end of the accounting period.

If the purpose of the adjustment at the end of the period is to clarify the cost of a specific product, then for under- and re-allocated costs by type of activity, the adjusted distribution rate method should be used if it is economically justified.

If the purpose of the adjustment at the end of the period comes down to the desire to more accurately take into account inventory and sales costs, then a proportional distribution (based on costs by type of activity allocated to products) is quite sufficient. In the case of INTERFINANCE MV, such apportionment would include the materials component from ending inventory.

The reason for this is that the indirect costs of material processing are shared among all materials. Under- or reallocation of indirect costs for processing these materials requires adjusting postings at the end of the period for all three components of end-of-period inventory (materials, work in process, finished goods), as well as for costs of sales.

The transition from the traditional costing method to the functional cost analysis method will be most beneficial in cases where one or more of the following statements is true:

The share of indirect costs is significant in the total costs, and most of the indirect costs are not directly related to the volume of output;

The company has a wide variety of products, and the amount of costs actually absorbed by each product differs from the amount of costs allocated to them using the allocation factor. This ratio is calculated using cost factors associated with the volume of output;

Different types of products are produced in different volumes. Also, depending on the type of product, the level of complexity of the production process varies;

The decisions made by the company's management are ineffective as a result of the fact that the information provided about the cost of manufactured products is unreliable;

The costs required for the development, implementation and support of a functional cost analysis system will be relatively low due to the fact that the company has modern software and relevant specialists.

The benefits of using this costing method can be as follows:

More accurate calculation of the cost of manufactured products;

The ability to calculate the cost of performing work and providing services by internal divisions of the company (performance of work/provision of services by one division to another);

Ability to estimate costs associated with customer service;

A more accurate assessment of the costs associated with the implementation of a particular project;

The ability to determine which areas of the company's activities require additional efforts in terms of management and development;

The information obtained by using this costing method is very useful for performing a company's economic value added (EVA) analysis;

As a result of the formation of more reliable information on the cost of products, company management has the opportunity to make better decisions, which ultimately leads to increased efficiency of the company.

The problematic issues associated with the use of this costing method include, for example, the following:

cost: The costs of implementing an FSA system can be significant and can be a hindrance for a business that has just made a large investment in modern production equipment. However, experience shows that the costs of transition from a traditional cost calculation system to a functional cost analysis at such enterprises are usually offset by improving the cost control system and obtaining timely and reliable information on the cost of manufactured products, which helps enterprise management in making the most effective economic decisions (in including the loading of this equipment);

indirect costs: for the FSA method, as for other costing methods, the problem remains of determining the appropriate base for the distribution of indirect production costs to cost objects (types/units of production). The problem arises because, by definition, indirect costs can be caused by cost objects that are not separately identified and are not directly related to specific cost objects. Therefore, when choosing cost carriers, a balanced approach is required to determine their adequacy;

level of detail: Using FSA requires a more detailed analysis of costs and their reporting than when using a traditional system. The level of complexity of this system can increase if it is used not only for the purpose of calculating the cost of manufactured products, but also for the purpose of implementing functional management, since in order to implement such management, the company's management needs a more extensive and detailed analysis of both costs and business processes .

FUNCTIONAL MANAGEMENT

Functional management (Activity Based Management, pronounced [activity base management]) is a method of making management decisions based on information received from the FSA system in order to analyze the effectiveness of various areas of activity, reduce costs, optimize business processes, and achieve the strategic goals of the enterprise .

It is necessary to avoid the confusion of concepts that sometimes arises in relation to functional cost analysis and functional management. The relationship between functional cost analysis and functional management, as well as the differences between their goals and objectives, are presented in the table.

Relationship and differences between FSA and FI

Functional management does not replace, but complements existing management methods, creating the possibility of accounting, measuring results and determining priorities for the enterprise.

APPLYING FUNCTIONAL CONTROL

Functional management is concerned with a range of actions that can be taken based on qualitative information obtained from the use of FSA. Reasons for introducing functional management may be the need to optimize the decision-making process, improve performance results, or obtain a higher level of income from the assets used.

Examples of practical applications of FM in an organization include attribute analysis, strategic analysis, performance benchmarking, operational analysis, profitability/pricing analysis, and process improvement.

Attribution analysis is a method of classifying and grouping data into costs and benefits. FSA/FS systems can use different data attributes for individual costs. Data attributes allow an organization to perform analysis in various aspects of management problems based on the creation of a simple data warehouse, for example, using OLAP systems. Forms of attribute analysis include:

cost analysis: This method uses information about business processes and examines process attributes to identify possible ways improving process efficiency;

analysis of temporary changes: this method examines the time required to perform a function and determines ways to minimize these costs;

quality assurance cost analysis: This method is used to prepare and present management information regarding quality costs. Costs are determined and estimated using the following categories: prevention of defects; identifying defects; problems caused internal factors; problems caused by external factors.

Strategic Analysis is a method of identifying different ways for an organization to create competitive advantages in the market. Strategic analysis allows you to determine ways to influence future costs and increase the future profitability of the organization by determining the cost of various cost accounting objects, such as manufactured products, customers, and distribution channels. Combinations of natural and financial indicators are created to explore the impact of alternative strategic positions.

Comparative analysis of indicators is a method of determining control indicators for a function and then comparing them with indicators of functions of the same type. This method is used to identify a process or technology that could improve the efficiency or productivity of a function. Within the framework of functional management, the following types of comparative analysis are supported:

Comparison with internal benchmarks;

Comparison with industry benchmarks and competitors;

Comparison with the best benchmarks of companies in the same industry.

Operational Analysis is a method of identifying, measuring and improving the current results of key processes and operations within an organization. It is useful to use a functional management system to carry out, for example, the following types of operational analysis:

What-if analysis;

Analysis of project management effectiveness;

Analysis of production capacity utilization;

Analysis of restrictions (limiting factors).

Profitability/Pricing Analysis is a key task of any organization. FI assists an organization in conducting cost-benefit analysis of products and processes, both from the perspective of “as is” scenarios and for carrying out improvements in “to be” scenarios. Challenges for adapting an organization to changes in the competitive environment for which FS may be useful include:

Product/service profitability analysis;

Analysis of the profitability of market segments;

Product life cycle costing and target costing.

Process improvement underlies all modern management techniques. Using the results of functional cost analysis, determining the insufficient efficiency of using consumed resources, process improvement is aimed at achieving both quantitative and qualitative changes in the activities of the organization to improve overall efficiency. Below are the areas of application of FU for process improvement:

Business process modeling;

Total Quality Initiatives;

Justified changes in business processes;

Analysis of the capabilities of some production functions beyond production activities and shared services.

BENEFITS OF FUNCTIONAL MANAGEMENT

FU is used to support wide range management tasks that help organizations increase the value they create for their customers while reducing the cost of operations. The main benefits that an organization receives when using FS include:

identification of excess costs;

analysis of useful and wasteful costs;

element-by-element determination of costs for quality assurance;

identification of functions related to servicing customers (company clients);

cost analysis by production complexity level various types products;

analysis of the effectiveness of the company’s activities;

forecasting and assessing the impact of reorganization decisions;

improving understanding of the structure of cost carriers;

functional budgeting.

DISADVANTAGES OF FUNCTIONAL MANAGEMENT

The disadvantage of functional management is the fact that it cannot be applied without introducing a system of functional cost analysis. A restructuring of the thinking of accounting personnel is also required.

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