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Matrix Costing enables companies to allocate
costs to items produced. It allows an organisation to be in close
touch with costs. This enables then to determine how to fix prices
and economize costs.
In an organisation costs may be incurred
in two ways: -
- Direct Cost relating to Cost of Manufacture of a particular
product
- Indirect Cost relating Overheads
These are of two kinds :
- Those which can be allocated to products as cost centers
- Those which can be allocated as percentage to various products
Direct Costs are calculated by defining a Bill
of Material for every product that is being manufactured. Indirect
Costs are calculated by allocating the overhead expenses to the
various products.
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Matrix Costing is integrated with the following
Matrix modules
- Matrix Financials
- Matrix Materials Management
- Matrix production Planning and Control
Since Matrix Costing is closely integrated with
other modules in the matrix ERP system, it can generate accurate
costings by drawing upon the resources of the other modules.
The cost centers in the Matrix Financials module
are linked to products or group of products which are created
through Matrix Materials Management. As a result expenses incurred
can be allocated to the product.
This results in a cost sheet being prepared for
every product as the expenses being incurred are being allocated.
To enable this, proper creation of cost centers and accounting
methods have to be adhered to. Indirect costs can be allocated
by giving the cost in terms of percentages amongst the various
products which the company produces.
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