Decision Making: Customer Management
THE USES OF COST INFORMATION
HOW INDIRECT COSTS ARE GENERATED
AN 8 STAGE APPROACH TO CUSTOMER COSTING
- Identify all income and costs for the organisation
- Identify the customer groups
- Identify all income sources and cost headings directly identified with the customer
- Identify the major indirect costs and consider appropriate cost drivers
- Establish those costs which are not customer related. reduce them or safeguard
them as an investment in the future.
- Calculate the "true" contribution from each group.
- Review the results and consider if any areas warrant further investigation.
- Take appropriate action.