Profitability Management System from TCG

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Profitability Management System from TCG

• Managing The Bottom Line

Transportation Costing Group, Inc
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The Challenge

• Determine who are Money Makers and Money losers
• How to increase Profit
• Make Better Decisions

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Case
Customer 8000 is an account with all freight
moving prepaid. They appear on our month-end
report as an unprofitable customer. Is all of
their freight unprofitable?
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Traditional Cost Accounting

• Ineffective Operational management tool
• Missing the Big Picture
• Missing the Detail
• Inadequate profitability calculation
• Arbitrary allocation of overhead

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TCGsProfitability Management System
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Benefits

• Provides total cost visibility
• Better overhead allocations
• Bridge between financial and other operational
  systems
• Highlights cost improvement opportunities

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Total Cost Visibility

• Minimizes distortions in costing
• Determines the true cost of service
• Shows what, where, when and how much
• Identify money makers/money losers
• Compare different options

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Overhead Allocation

• Better account for indirect cost
• Each activity has independently associated
  overhead cost

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Bridge Between Internal Systems

• Reconciliation to the General Ledger
• Provides an audit trail
• Drill-down
• Cost reflects actual operational activities AND
  financials

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Cost is Cost Price is Price !!!
Costing - - Science
Pricing - - Art

• Mathematics- critical observation- costs- 2
  2 4
• - facts

Judgments- competition- beat vs. match-
customers wants company needs
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