Company Cost Management Center

Company cost management center

Over time any organization that carries an economic activity, has always tried to have systems in which its different financial movements are reflected. Formerly, companies only had a basic accounting area, which only managed the company’s finances in a simpler and simplest way, which allowed control of several aspects such as: fixed and variable costs, entry and exit of merchandiseor payroll payment. However, these reports were not very detailed and consistent when making decisions, since they did not have solid arguments to finally reach a decision that benefited an organization. Nowadays there are more structured systems that allow having a more rigid direction in terms of their financial vision, within these systems are the cost centers, a tool that undoubtedly launched and guidance to all operations centers thanThere are within an organization: purchases, production, sales or administration, these being necessary to compete in the market.

In the first place, the following characteristic must be clear: a cost production, that is;"The set of expenses that are necessary to produce a service or a good" is mainly represented by a cost center, "segmentation that generates costs for the organization and adds benefit or utility indirectly". The above determines that financial accounting is based on being a fundamental tool that provides all kinds of information regarding internal analysis within an organization.

For this reason, both cost accounting and financial accounting bind and complement allowing to register, examine, group and relate the precise information to which the performance that an organization has had in a more effectively and substantial way can be determined during a periodcertain.

In this way, it is like organizations have begun to become constantly evolving, in order to meet the different needs of society, using different measurement, management and performance models to meet multiple purposes and take into account fundamental aspects such as theirSpeed and quality in service, innovation capacity or market leadership, aspects that currently constitute the factors on which care is focused on organizations. Therefore, it is worth mentioning the following success case of the Research and Consulting Group in Accounting Sciences of the University of Antioquia -Gicco- and the Group of Accounting Research and Public Management of the University of Medellín.

This case consists of a research project that is mainly based on the “identification of structural improvements of cost information systems for some sectors of the economy with a special emphasis on public TV service companies including SMEs“ Smalland medium -sized companies, which usually have a low number of workers and a moderate business volume and income compared to large corporations ”.."For this project, analysis of business activity, the competitive environment, resources and levels of profitability in the different organizations were developed, mainly focused on the performance they have.

A deep investigation is also made using tools such as direct observation and interview in different functional areas. Surveys based on operational, strategic and tactical factors are conducted, with variables related to the implementation of management models for management, local, regional and international business competitiveness. However, it is important to highlight that various studies show the lack of relative competitiveness of SMEs against large companies in the country and in the world. “The group of researchers have an experience accumulated in consulting in cost and management systems, in more than 100 companies, which undoubtedcompanies, mainly SMEs."   

There are currently numerous management and cost models that support the decision -making process in organizations. Indeed, in management accounting the following management and cost models are exposed which are:

• Costing the product life cycle –LCC
• Accounting of resource consumption –rca
• Quality and non -quality costs
• Sales -based costing –SBC
• Activity -based costing –ABC (Agudelo, 2017)

From the aforementioned and put into practice, with the cost model that the GICCO Research Group designed and implemented, a significant improvement and efficiency could begin to be evidenceDifferent tasks in the different departments of these organizations, these reports corresponded to resources reports, cost reports by area of responsibility or operational segment, reports of corporate and operative costs and expenses, assignments of administrative areas to administrative processes, resources reports by resources byadministrative process, among others.

In addition to these reports, it could be verified that the elaboration of the model implies an investment of very low resources compared to the return that the company obtained by obtaining information about its different cost objects such as the cost of resources by the areas that make up theCompany in its functional structure, the cost of the processes of the value and support chain, the cost of products or services and the cost of customers, customer segments or business units and the profitability with which they contribute, allowing itdetermine more objectively what generates or destroys value in the organization.

Finally, with the aforementioned it can be concluded that there are different cost centers and that, of course they vary, not only in the sector in which they are located within the company, but also in terms of their type of product or service. Thanks to this strategic tool, large companies can present results of their operational performance, with the aim of clearly distinguishing their strengths and weaknesses. However, cost centers make these successful companies, have the conviction and contest of being able to make the best decisions, serving as a tool that plans and controls any accounting movement so that in this way you can establish a point of comparison with thewhich was budgeted from the beginning and also facilitate a more detailed and practical analysis of the different variations that the departments have regarding their performance and objectives established.