Cost Management and Control Seminar The Holcim Group and Its Costing System suppliers of cement aggregates (crushed stone, sand and gravel) ready-mix concrete and asphalt Related services. 70 countries on all continents, 90,000 employees 2006 Revenues: $ 21,825 M Group B31 Aldo Gallo Cáceres - Félix Morán Subía - Thiago Macitelli

Holcim Group Figures and Value Chain + 1050% Established Markets Emergent Markets + 480% 1980 Employees 18734 2006 Employees 90000 1980 Revenues $ 2,209 M 2006 Revenues: $ 21,825 M

Cement Production Process Main Cost Center Classification Main Cost Accounts Corporate Manufacturing Corporate Logistics Marketing & Sales Administration Code: 100 RM Extraction Code: 200 RM Preparation 1 Code: 400 Clinker Production Code: 500 Cement Grinding Code: 600 Dispatching (no main) Code: 300 RM Preparation 2 Pre-process Cost Centers: Correctives. Gypsum and additives. Mineral Components. Power Generation. Auxiliary Cost Centers: Alternative Raw Materials. Alternative Fuels.

Right Assignation of accounts and cost centers. Costing System Process Costing Major Guides of the Costing System: Employee`s input: Cost Centers. Accounts codification. General required description of the movement. The accounting software (SAP): It has an internal assignation process, accounts are already internally tagged as: variable cash cost, Fixed cash cost, and others related. Key Issue: (Employee's Main Role for the success of the Costing System) Right Assignation of accounts and cost centers.

Cost Drivers Main Information Behind Cost center’s impacts on total cost Relevant costs Main opportunities for cost reductions.

How to Choose a Costing System An accounting system established to monitor a company's costs, providing management with information on operations and performance. Process costing High volume Are identical identical amount of direct labor Repetitive operations Job Order costing typically low volume Tend to be unique (custom order) different amount of direct material different amount of direct labor

Decision making planning and control process Cost drivers e.g. Process improvement, change raw materials, etc. Performance indicators Adjust the plans From: Drury (2004). Management and cost accounting. 6th edition. ISBN 978-1-84480-703-1

Decisions Making Process Using Costing System

Decisions Making Process Using Costing System

Possible decisions Process improvement (e.g. reduce the number of stops by increasing preventive maintenance) Change fuel supplier to reduce costs After selecting and implementing the decisions they performance has to be monitored in the same way The new performance indicators could be compared with the previous period If necessary, corrective action plans could be taken