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Resource Consumption Accounting 

Resource Consumption Accounting is a manufacturing accounting method that incorporates the concepts of GPK Accounting and Activity Based Costing. GPK Accounting has been used by the 'gestion' and 'controlling' functions in Manufacturing Companies in Germany and other EU countries for many years. By blending GKP's focus on tracing the consumption of resources back to cost centres, with Activity Based Costing's focus on assigning resource costs to activities, it provides a method of cost management that can deliver significant benefits, especially to manufacturing companies.

  • RCA Uses a Quantity Based Approach to Costing and 'Cost Pull' Techniques.  ..... Like SBM's Activity Based Process Model, Resource Consumption Accounting uses a quantity based approach to costing and 'cost-pull' techniques. Unlike traditional cost accounting and Activity Based Costing it does not 'push' or assign costs to products. Instead it traces how resources are used in time and quantity units of consumption and then applies unit prices to calculate costs. As a consequence costs are allocated to products only after the quantity relationships that describe how the resources are consumed have been defined.

  • Cost Accurately Reflect How Resources are Consumed.  ...... .......... .....  .............. Resource Consumption Accounting methods, when combined with the data available in ERP and other company systems, offers the promise of clear and reliable product costs that accurately reflect how resources are consumed. They also relieve the burden that the  on-going maintenance of standalone Activity Based Costing systems often imposes. 

  • See how product costs change when unused capacity costs are fully absorbed.  Like Activity Based Costing, Resource Consumption Accounting uses cost drivers to trace resource costs through activities and processes to products. RCA uses a concept of 'available capacity' in this cost allocation method in much the same way as Time Driven ABC and SBM's Activity Based Process Model. Resource capacity is consumed by products in line with the time or quantity needed to complete an activity or process. As capacity is priced at a rate per minute or rate per hour, cost follows the consumption of capacity. As a consequence unused capacity is not automatically attributed to a product or process. The attribution of unused capacity becomes a separate costing and analysis procedure that enables you to see precisely how your product costs change when costs are fully absorbed.

  • RCA Delivers a Sustainable Long term Cost Management Solution. ........ .......  ........  The implementation of Resource Consumption Accounting requires a recognition that for the Manufacturing Company there are two objectives to financial management; one for manufacturing cost accounting and one for financial reporting. It also requires the use of disciplined methodologies in terms of the company's management, measurement and control systems. Once implement however, RCA will deliver a sustainable long term Cost Management solution.

  • RCA is an integral part of a company's management systems.  .........  ............  Resource Consumption Accounting is a business management and decision support tool that impacts many areas of a business. Budget, Variance Analysis and Planning are all standard elements of an RCA system. It is an integral part of a company's management systems as it satisfies the commercial need to comprehensively manage and measure the performance of the organisation.

  • SBM: Solutions Enable you to use Resource Consumption Accounting Methods.  SBM:  is the only Product Costing and Cost Management system that enables you to define your costing methods and costing structure and use a 'cost-pull' consumption based RCA approach to costing. You can find out more about SBM's Cost Management Solutions and RCA by using the following link: info@productcosting.com

 

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Last updated July 2006