Profitability Costing is the concept of assigning all costs incurred by a company to the various products or relationships the organization maintains in an effort to determine which products or relationships are the most profitable. This information can be utilized to help better position the company in the future by recognizing which types of activities are beneficial to the organization and which are not.
There are many ways to assign the costs incurred by the company to different products, relationships or services, and many of them are based on some type of driver. While many companies consider Activities a good basis for drivers, there are many possibilities. Any statistics kept about the product or relationship can be used as drivers to allocate the expenses across the product or relationship. Once the costs are allocated they can be matched to revenues derived from product sales, services revenue or any type of customer relationship.
Oracle's Hyperion Profitability and Cost Management is a very easy to use tool that can help companies create a Profitability Costing Model to help themselves understand the most profitable product or relationships they have. Oracle's software is built on top of Hyperion Essbase which is a multidimensional database that can easily perform all the necessary calculations for a
MindStream Analytics is well versed in Profitability Costing and can help your company figure out what can best help your company create a Profitability Costing module. Our consultants hold various leadership positions within the Hyperion community including the Oracle Application User Groups (OAUG) Hyperion Special Interest Group (SIG) Domain Lead for Essbase.
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