Discuss the controlling costs pertaining to ERP-Enterprise Resource Planning

A Management Information System ICT Revision Questions and Answers

The controlling costs related to ERP are as follows:

(1) Overhead Cost Control: This focuses on monitoring and allocation of overheads. This cost cannot be directly assigned to the products manufactured or services given. This needs a transparent method of allocation.
(2) Cost center accounting: This analysis where overhead occurs within an organization. Costs are assigned to the sub areas of the organization where they are originated. Costs are allocated to products based on cost resources.
(3) Overhead orders: This collects and analyses costs based on individual internal measures. It can monitor and check budgets assigned to each measure.

(4) Activity based costing: It is developed as the response to the need for monitoring and controlling cross departmental business processes in addition to functions and products.

(5) Product cost control: This determines the costs arising from the manufacture of a product or providing a service. A control plan and standard values serve in evaluating warehouse stock and for comparing revenues received with costs. The values are crucial for determining the lowered price limit for which a product is profitable.
(6) Cost object controlling: This helps in monitoring manufacturing orders. Calculations determine and analyze the variances between the actual manufacturing costs and plan costs resulting from product cost planning.
(7) Profitability analysis: This examines sources of returns. As part of sales control, this is the last step in cost based settlement.

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