Costing Accounting Involves Communication

Jun 02, 2015

Sometimes just talking about things makes it all better. It’s funny because in work and in life we often want to avoid talking about things. Many people avoid confrontation, but event a conversation can be difficult. My 8-year-old is working on listening and I was having a conversation with her about the consequences of not doing so. Then, a few days ago I was doing something with her and typically in such given circumstance she would have reacted adversely. However, she did not! I commended her. She then said to me, “I think you making me talk about things has changed me.” Of course, I struggled to keep a straight face, but it is true. When we talk about things and work them out it is almost always for the better!

The same is true in business. If you have a question about a given subject or want to get more information, go talk to the right person. For example, if you are analyzing variances and the material variance is dramatically different than you would anticipate, what do you do? Do you say oh well, and do nothing about it? Do you talk to purchasing and find out about the materials purchased? Do you talk to production and discuss any issues regarding materials? Do you talk to engineering about possible design changes or issues?

I certainly hope you do not do anything. Doing nothing is never a viable option. Talking to one person or department may lead you to another person or department. Do not allow one department to push you onto another; if what someone says does not make sense then find out why. Make sure you understand before you accept. If another department tells you something that makes you question a previous department, then go back and ask the previous department more questions.

Your goal is to not interrogate everyone but to get the best information and answers possible. Don’t settle for the status quo. You want to make your operation effective and efficient. To do so, you must investigate variances as needed in a timely manner. This will provide you with valuable information. If you wait 6 months to investigate your material variance, you may have just spent 6 months of overspending due to poor quality in your material. Which, by the way, also means your final product may have been of poor quality. Or maybe your machine was broken and causing the material to fail. There could be a number of reasons, but all of these can be catastrophic if left for a long period of time. If you are doing this analysis, every day, every hour, etc. then you can make real-time decisions and avoid any major issues.

Stop staying in your office go out and ask questions and get answers to your questions!

Categories: Cost Accounting