Digital costing Flashcards
What is a digital costing system?
A digital costing system links a business’s own digital system (such as production, inventory management, purchasing and sales ordering systems) with the digital systems of its suppliers, customers, and the market. In a digital costing system, data is gathered from each of these sources and from the internet, in real time, to give up-to-date information which reflects current information.
What sort of information could a digital costing system supply?
*Where costs are being incurred.
*Time taken in production
*Current purchase prices for materials and components
*Wastage levels
What are the benefits of using a digital costing system?
*Better lead times and prices from suppliers can be found quickly and easily.
*Standards can be updated regularly as information is obtained, meaning that standards reflect current operating conditions.
*Variance reporting is improved because standards reflect current conditions and market prices, therefore variances will only occur due to deviations from this.
*Real time standards should mean there are no planning variances.
*Improved understanding of cost drivers allows better cost management.
*Pricing decisions can be improved because management have a better idea of how profitable different products are and prices can be amended as soon as costing changes.
