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Frequently asked questions ...

Yes this is possible. Per cost account you can define one or more units as well as the capacity unit and the standard capacity per unit. Per ‘account unit’ (e.g. ‘FTE function group A’) you can then enter the number of units available as well as the standard rate per period. A cost driver will then allocate, based upon the number of units per destination, cost and capacity to each destination that is defined in the cost driver. This mechanism can be applied to each cost account. It makes analyzing costs and relating costs to resources easier in those cases where quantifiable units are in fact the basis for costs.

Yes, InsideInsight supports zero-based budgeting. For planned production/sales of products and/or services the costs of the involved activities can be calculated. Subsequently the costs and the capacity demand for resources (personnel and other assets) can be calculated. Prerequisite is that per activity there are standard times available for handling a unit of a product/service as well as standard capacity usage per resource.

Yes. The outcome of as calculated model can be used for budget control. For example, cost per department, process, sub process and/or activity can be assigned to a responsible manager and the budget vs. actual can be monitored on an ongoing basis. Variance analysis can be done on all possible levels and sources of costs and capacity and all details are fully traceable. The reporting periods depend on the financial calendar you define for your model, you can choose for example for periods of four weeks, calendar months or quarters.

No, that is not necessary. Different scenarios can also be added as separate value classes to an existing model, with or without changes in the structure of the existing model. Cost drivers will then, for the separate value classes, (partly) define other relations within the model and will incorporate other quantitative data. You can use up to 10 different value classes (and as many scenarios) per model.

The most easy way of doing this is to define a cost variation index for the involved cost account and subsequently calculate the model again (this can be done in a separate value class if you want to view the original results next to the ‘indexed’ results). Throughout the model, in the complete cost flow, changes in cost amounts are indicated and fully traceable up to the profitability analysis of products/services.

No, this is not necessary. InsideInsight makes a difference between ‘global’ data and ‘model’ data. Initially most data is being stored as ‘global’ data, like for example drivers, resources and processes and activities. During modeling you can then simply copy the required components to your model. Global data can be seen as a repository that can be used for any model you build.

There is no limit to the number of components a model incorporates. It is possible to upload for example an accounting scheme with thousands of accounts. There are also no limits to the number of resources, processes/ activities and products or services. In general, however, it is advisable to never built huge and extremely detailed models. Too much level of detail often suggests an accuracy that is not realistic. It is better to be 80% right with the outcome of a model then 100% wrong. Always keep in mind what your goals are and what you intend to achieve with the outcome.

Yes, you can define as many companies/organizations as you want and for each company/organization you can maintain as many models as necessary.

Yes, you can. In order to allocate activity costs to services you can easily define time-equations. Allocations are then carried out based upon these time-equations as well as the number of transactions performed (Time-Driven Activity Based Costing). For other allocations, where no standard times are available, you can choose from a range of other allocation methods.

Yes this is possible. You can define ‘sustaining levels’ and characterize activities this way. You can think of, for example, ‘product sustaining’, ‘business unit sustaining’ and ‘customer sustaining’. Costs and capacity usage can then always be reported according to these levels. Any level can be broken down into the underlying details. Often this kind of information leads to remarkable insights and cost reduction initiatives.

Costs of unused capacity are not being allocated to activities and subsequently to products/services, unless you explicitly do so by means of an arbitrary allocation key. The latter is indeed usually not very useful because it will conceal the ‘true’ cost of products/services. It is more useful to allocate the cost of unused capacity to a specific cost object on e.g. company level. You will then get a meaningful insight in costs of products/services on the one hand and on the other hand the total cost of unused capacity (and of course the breakdown of those costs). This kind of information can help finding ways to a better capacity planning.

 

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