Success in Cost Management

organizational development

Most production businesses in Turkey primarily design the product and then give this design to the responsible production engineers, supervisors and financial analysts. The cost of the product is determined by adding the standard cost factors to production processes and materials specified during design.

This usually causes the cost to be higher than the market price. Therefore, either the production is stopped or if the product was already on the market, there is failure in reaching the targeted profit rate. Whether it is a single or a multiple product manufacturing enterprise, in their accounting systems and financial statement, they have to use an accounting system based upon estimated cost. For every product or service, there are two basic acceptable cost systems in cost management. In the first system, reduction and control of the cost functions are included.

In the second system however, only reduction of the cost function is included. Enterprises in Turkey predominantly focus on the second system.

It is insufficient for enterprises in terms of cost planning and management to put emphasis only on reductig the costs or controlling the costs. Especially in countries with inconsistent economic growth, it becomes almost meaningless.