Garnopolis422 wrote:
She did mention distribution costs. Apparently they have lots of plants spread out throughout the US so that plays a factor as well.
As far as Cost Accounting goes, in your opinion is this facet of the work more suited for a CPA or CFA? I have a good understanding of accounting on a conceptual level and have no problem breaking down and analyzing income and balance sheets but once you get to the GL code level I’m not good at in depth analysis. This is my only concern for the position. We will be digging into the costs at the factories, thier capital requirements, and allocating depreciation to different production lines. The micro-level accounting is what really concerns me, any insight on this would be great, thanks!
So it would seem you may have to differentiate priced based on region if supply is over abundant in one area and in demand in the other. You’ll do some ROI calculations to determine if moving 100/units at X cost is worth the extra markup/unit. None of this is really CFA or CPA. Two of the people in our department were CPAs and ex-auditors, two had worked at financial services companies, but none had CFAs. Don’t worry about digging down to the general ledger you’re not the actual accountant, but it’s good to have an understanding. The role should make you focus not just on selling, but maximizing profit (which requires an understanding of cost [read accounting]). I’m just trying to convey that in this role you may use portions of corporate finance, accounting, economics and marketing (depending how your department is organized).
The cost of capital, capital requires and depreciation is what I’m referring about in cost accounting. EVA and economic profit are a big thing to bring up too.
http://en.wikipedia.org/wiki/Economic_Value_Added. Remember you’re not the accountant or the finance guy. You’re suppose to act as a point of contact for a lot of different groups and make decisions with that information to maximize profit. That’s it. If you really need some information people will help you, but it’s important that you understand the concepts they’re using.
Things to know:
economic profit vs accounting profit (this is where eva comes in, cost of capital vs standard revenue - cost = profit)
balance of market share vs gross margin (one goes up the other goes down [big deal if it’s a public company with analyst targets])
Communication is also very important, because you cannot please everyone. Sometimes it requires thick skin, because I found a lot of the time one group or another were upset. Since you act as a focal point you’re an easy target. They might ask how you would diffuse a situation like that.
Ex) The finance department says that the gross margins are falling very low and they’re concerned about the upcoming quarter’s target. The corporate sales department comes to you and says that they have a big customer lined up but they need to sell the widgets at a very low margin to make the deal work. Your supervisor is concerned about market share.
Ex) The marketing team plans to run a summer sale to launch a new ad campaign and rebrand the company. Your product naturally sells at its highest point in the summer months. The bonus of the employees in your retail distribution channel is dependent on selling through their price and not a marketing campaign.