Will by means of fca save money, Cost Accounting

Q. WILL BY MEANS OF FCA SAVE MONEY?

Ans.

It depends. in the end, the more departments know about what it obtain to deliver a unit of service, the more efficiently they can supervise that unit cost. FCA points out where departments are incompetent, where they can gaze for cost cutback, and where they might necessitate changing service delivery.

In Columbia, Missouri, the Public Works Department has been capable to take the breakdown of its unit cost and evaluate it to other communities. If a similar community is provided that the same recycling service as Columbia, but at a lower rate, that characterise a chance for Columbia to change and become more resourceful. Columbia has improved its effectiveness due to comparisons like this, which in turn, has resulted in cost savings. Communities must be confident to make comparisons with communities that have similar services and similar populations, though.

FCA also offers communities the skill to more consistently match the rate they are charging for different services (e.g., residential versus commercial) to the actual costs of those services. Through FCA, Columbia establishes that the rate charged for one element of its say no service carried the cost for some of the others. During rate adjustments, Columbia was capable to even out the rates for every service.

FCA can help communities save or reserve funds, but that can show the way to differing views about what to do with the funds. A community might keep reserves that it needs to allocate for future uses, excluding others might want to give that money back to residents in the form of a fee reduction in its place. FCA does not automatically save funds, however, and it cannot assurance that savings are returned to the customer.

Posted Date: 5/24/2013 8:29:16 AM | Location : United States







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