Sunday, April 22, 2012

Customer Cost Analysis

Management Accounting
Preparing Cost sheet for the customer or customer category as a cost objective.

New Wine in an Old Bottle

Customer account profitability (CAP) analysis seems to be a new kid on the block of management techniques. It may not be really a new kid. Customer cost analysis is mentioned in 1972 book ‘Profile for Profitability’ by T.S. Dudick.

The costs that are to be included in customer cost analysis are selling costs (order booking costs), distribution costs, order paperwork costs, credit and collection cost.

Customer groups who are more costly than average are to be identified and appropriate actions are to be taken.

Channel profitability analysis is mentioned as a new analysis technique in recent literature.


T.S. Dudick, Profile for Profitability, Wiley, New York, 1972
Original Knol - 64

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