Functional and cost analysis of the services provided...

4.2. Functional and cost analysis of services provided

Function Based Costing , ABC - is a method for determining the cost and other characteristics of products, services and consumers, based on the use of functions and resources involved in production, marketing, sales, delivery, technical support, service delivery, customer service, and quality assurance. The methodology of functional and cost analysis is part of the quality management system and fully meets the principles of ISO 9000 series standards.

Functional-value analysis in a social institution serves as a tool for managing processes that measure the cost of providing social services. The calculation is performed both for functions that increase the value of the service, and for additional functions that do not change this value. FSA investigates all possible production functions (functional relationships) in order to better understand their relative importance (temporary, cost) in the provision of services, as well as finding ways to modernize the processes that arise in the organization and increase their productivity.

Traditional budget approaches operate with the value of resources consumed in the process of activities (materials, wages, rent, etc.). When calculating the cost of production and customer service, the cost of consumed resources is allocated to these accounting objects. Direct costs for materials and labor are calculated easily, difficulties arise when the overhead costs are spread. Under the traditional financial approach, it is based on the use of different distribution bases (volume, marginal profit, area, etc.). The use of a proportional distribution of costs relative to any of the above bases is an approximation and distorts the true cost of accounting objects, but in turn is a simple and convenient method for managing management, financial and accounting.

The most correct schemes for allocating overhead costs can be developed on the basis of a description of the functional activity of the organization (Figure 14). In this case, the costs for performing each function (F1, F2, FZ) are calculated, which is done on the basis of studying the resources consumed by this function and the time of its execution. After that, the contribution of each function to the creation of each product or to the customer's service is determined, on the basis of which the cost of products and services to customers is calculated.

Here are the main differences between the FSA and the traditional cost accounting method:

The traditional method

FSA

Consumption of resources

Consumption of functions

Quantitative cost allocation bases

Sources of costs of different levels

Structured Orientation

Focus on the process.

1. Traditional accounting implies that cost objects consume resources, and in FSA it is generally assumed that cost objects consume functions.

The traditional accounting methods are based on the assumption that prices can be managed, but, as shown by the practice of most managers, it is practically impossible.

The theory of functional-value analysis recognizes that you can manage only by what is produced, and prices change as a consequence. The advantage of this approach is that it provides a wider range of measures to increase business efficiency. In a systematic study of the functions performed, not only factors that affect the increase or decrease in productivity are identified, but also an incorrect distribution of resources is detected. Therefore, it is possible to more rationally distribute the power to reduce costs and achieve higher productivity than the traditional way.

Fig. 14. Distribution of overhead costs using the FSA and the traditional cost accounting method

2. Traditional accounting as a cost allocation base uses quantitative measures , and in FSA, cost sources are used at different levels.

As the overhead increases, new technologies appear, allocating costs based on percentages of all total costs becomes too risky. When using the traditional approach, errors can reach several hundred percent.

In the FSA, expenses are allocated according to the cause-effect relationships between the functions and the cost objects. These relationships are fixed by means of cost sources. In practice, sources of costs are divided into several levels. Here are the most important:

- level of units ( unity level ). At this level, the source of costs for each output unit (service provided) is considered. For example: a social worker per unit of time realizes a social service. The appropriate working time will be considered a source of costs for the unit level. This is a quantitative indicator similar to the cost allocation framework used in traditional accounting methods;

- batch level. These sources are no longer associated with units, but with consignments of products (a set of social services). The quantitative indicator of such sources, as a rule, the number of batches;

- product level. Here we are talking about sources related to the release of a separate type of product (social service), regardless of the number of units and lots produced. As an indicator, for example, the number of hours needed to develop a methodology for the provision of social services is used. The larger this indicator, the higher the costs are allocated to this product;

- the level of the enterprise (facility level). Sources of this level are not directly related to products, they are general functions related to the work of the enterprise (social institution) as a whole. However, the costs they incur are distributed in the future by products.

3. Traditional accounting is oriented to the production structure, and the FSA is oriented to processes (functions).

Traditional costing systems are more focused on the organizational structure, rather than on the existing process. They can not answer the question: "What should I do?", Since they do not know anything about the process. They have only information about the availability of resources necessary to perform the work.

The process-oriented method of the FSA gives managers the ability to most accurately match the resource requirements and available capacities, and thus improve performance.

The FSA assumes that when calculating the value of an item, all functions related to both production support and the delivery of goods and services to the consumer should be taken into account, that is, the full cycle: production, technology development, logistics, product distribution, service , information support, financial administration and general management.

Consider the use of the method of FSA on the example of one of the institutions of social protection of the population. The purpose of his activity is to assist families and individuals (hereinafter referred to as citizens) who have fallen into a difficult life situation, to help them in the realization of their legitimate rights and interests, to help them improve their social and material situation, and their psychological status.

The social institution conducts social, health, preventive and other activities, in connection with which the following activities are carried out: 1) monitoring of the social and demographic situation, the level of social and economic well-being of citizens in the service area; 2) identification and differential registration of citizens in need of social support, determining the forms of assistance that are necessary for them and the frequency of its provision (permanently, temporarily, on a case-by-case basis); 3) provision of social, legal, psychological, medical, domestic, consultative and other services to citizens, subject to the principles of targeting, accessibility, voluntariness, humanity, confidentiality and preventive focus; 4) social rehabilitation of disabled and disabled children; 5) assisting women and children who are victims of domestic violence; 6) participation in the work on the prevention of neglect of minors, the protection of their rights; 7) involvement of state, municipal and non-state bodies, organizations and institutions (health, education, migration service, employment service, etc.), as well as public and religious organizations and associations (veterans, invalids, Red Cross committees, associations of large families , single-parent families, etc.) to the solution of issues of providing social support to the population and coordination of their activities in this direction; 8) introduction of new forms and methods of social services into practice, depending on the nature of the population's need for social support and local socio-economic conditions; 9) carrying out measures to improve the professional level of employees.

The sources of the formation of the property of the institution in question are: 1) the means of the regional budget; 2) property transferred to him by the owner or authorized body; 3) voluntary donations of legal entities and individuals and targeted income; 4) income received from the entrepreneurial activity permitted by the founders, including income from the provision of paid services; 5) other income received from the use of state property; 6) other sources in accordance with the legislation and other normative acts of the United States.

The institution under analysis provides the following types of social services (in brackets, the percentage of all services is indicated): 1) social (60%); 2) social and medical (20%); 3) socio-psychological (5%); 4) social and pedagogical (5%); 5) socio-economic (7%); 6) social and legal (3%).

The composition of the costs of ongoing activities is shown in Table. 9.

Table 9

Composition of costs of a social institution for the reporting year

Line items

Cost Amount, RUB

Percentage of costs,%

of

Budget

Sources

of

extrabudgetary

Sources

of

Budget

Sources

of

extrabudgetary

Sources

Remuneration

3 245 138.7

63,427.86

54.28

5.7

Other Payments

44,840

5508.65

0.75

0.5

Compensation for wages

832,906.37

16,560.65

13.78

1.49

Payment of communication services

25,302.64

3000

0.42

0.27

Transport

Services

2143.96

1322

0.04

0.12

Utilities

Services

770,564.56

86,964.15

12.89

7.81

Property maintenance services

198,5003

53,536.73

3.32

4.81

Durable services

271 348.48

19,257.66

4.54

1.73

Other costs

252.95

56,020.44

0.01

5.03

Increase in the value of property, plant and equipment

346 862.9

177 001.71

5.8

15.9

Increase in the cost of inventories

207 775.86

630 645.23

3.48

56.65

Benefits for social assistance to the population

32 935.7

0

0.55

0

Total cost estimates

5,978,580.95

1 113 245.08

100

100

The basis of the FSA is the methodology of functional process modeling, as well as the methodology for determining, classifying and identifying processes. Functional modeling allows to obtain conceptual models of business processes of the enterprise.

In Table. 10 shows the main functions implemented in the institution of social protection under study.

Table 10

Description of the functional activities of a social institution

Conditional

Designation

Feature

View

Features

Product Feature

1

2

3

4

F1

Office Activity Planning

Basic

Work plan, reporting

F2

Identifying citizens and families in need and social

Maintenance

Basic

Getting meaningful information from the social protection agencies

FZ

Differential accounting of all persons in need of social services and, depending on the types and forms of assistance required

Basic

Documenting activities in the service industry

F4

Identification of specific types and forms of assistance to those in need, depending on their ability to self-service and health

Basic

F5

Provision of social services

Basic

Prevention and provision of basic services

F6

Provision of social and medical services

Basic

F7

Provision of social and psychological services

Basic

F8

Provision of social and pedagogical services

Basic

F9

Provision of social and economic services

Basic

F10

Provision of social and legal services

Basic

FI

Labor rehabilitation of elderly citizens and invalids in medical-labor workshops, home-based industries, subsidiary farms, etc.

Basic

Organization of leisure attended

F12

Study, analysis, synthesis and introduction of best practices in the activities of departments, development of guidelines, manuals

Basic

Quality Improvement

Activities

Institutions

F13

Involvement of various state, municipal and non-state structures to address issues of providing social support to needy citizens and families

Basic

Additional provision of social support to the population

F14

Preparation and conduct of working meetings, training seminars, meetings and gatherings

Auxiliary

Troubleshooting

F15

Organization of the professional training of the employees of the departments

Auxiliary

Growth level

Professional

Training of employees

F16

Making proposals for improving the efficiency of work, improving the professional training of employees of offices

Auxiliary.

Improving the performance of employees and the department as a whole

F17

Making proposals on improving the activities of branches and legal support

Auxiliary

Among the functions can be identified: production (basic); support functions (auxiliary); management functions. Production functions are primarily aimed at the immediate external activity of a social institution. The collateral functions satisfy the needs of internal consumers (offices and employees). Management functions provide the organization of interaction between branches.

Typically, a function is implemented by one or more processes. The technological process is a set of ordered technological operations (isolated actions, works), arranged in the established form, in the established form, resulting in a product (service) representing consumer value for the institution's clients.

Since any operation requires the employee's working time and the use of material and technical resources, the function, consuming these costs, is characterized by a certain value in monetary terms. The cost of production costs, called in the resources methodology, is transferred to the cost of functions in accordance with the structure of the technological process.

As the resources are the costs of wages, the costs of real estate (rent, repairs, property taxes), the cost of buying and operating computer equipment and office equipment and other costs (for protection, means of transport, etc. .). The cost of resources is defined as the sum of three components:

where С п is the planned technological cost of the analyzed process;

PR - direct costs;

KP - indirect costs;

PR - general organizational costs.

The direct costs of a process accounting operation include:

o part of the payroll of all employees, who are recorded as possible executors of this operation;

o accruals attributable to this part of the wage fund (personal income tax, deductions to extra-budgetary funds);

o Amortization of the technical equipment of the executors of the operation (only equipment that is assigned to a particular employee and is a direct tool for the execution of his tasks and operations in the processes: for example, the computer is such a tool and the work chair is not).

The indirect costs of offices are:

o employee compensation fund (administrative and managerial personnel) not recorded as possible executors of accounting technological operations in any process, and part of the remuneration fund of employees participating in technological operations in the processes falling on their unformalized tasks;

o Estimated costs of separation by section of their articles (if these costs are not of an organizational nature).

Corporate expenses include:

o costs associated with the rental of premises; amortization and purchase of furniture; organizational software and technical support;

o the cost of maintaining the canteen, dispensary, general communications and communications, repair and construction works, etc .;

o department costs (estimated costs, including the total fund of material compensation and depreciation of technical equipment of employees) related to the functional area "Management".

The largest share in the costs of the analyzed social institution is the cost of labor and payroll (see Table 9). In this regard, we will conduct the FSA in the context of the costs of fulfilling the function (process) of the corresponding budget item, that is, the cost of resources will be taken equal to the wage fund. Indirect costs and corporate neglect. In the analysis, we will use the functional model (calculations are based on data on the wage fund of one of the departments).

Let's describe the mechanisms for transferring the cost of resources to the cost of functions. As a rule, one product requires for its implementation a number of functions performed by different employees. We accept the following main assumptions: the constant part of the employee's wage fund during the accounting period is divided among tasks in proportion to their labor intensity and complexity factors; and the tasks are ranked by importance in the scope of the functional model of the object.

In Table. 11 shows the calculated labor costs by function and their cost.

Table 11

Cost of functions with conditional and actual load

Function

Average

Relative

Significance

Work time

In fact,

person-year/year

Actual value of the function per year, rubles.

F1

.081

49.0

102713

F2

0.085

131.8

23679.9

FZ

0.060

30.0

5282.9

F4

0.060

14.1

2483.0

F5

.065

41.7

7343.2

F6

0.074

38.7

6814.9

F7

.069

17.9

3157.1

F8

.062

25.1

4812.7

F9

0.060

22.2

3909.4

F10

0.074

20.5

3607.2

F11

.071

41.7

7259.1

F12

0.05 K

41.9

7807.1

F13

0.054

121.0

22709.9

F14

0.044

99.0

18500.2

F15

0.028

18.7

3620.8

F16

0.028

18.9

3648.3

F17

.027

18.1

3517.4

Total

1

750.0

138424.4

In order to identify the functions that account for the largest amount of costs, a Pareto chart is constructed where the functions are arranged in order of decreasing cost (Figure 15).

Fig. 15. Pareto diagram of the cost of functions

In Fig. 15, three groups of functions are distinguished: 1) a continuous pouring designates a group of functions whose total cost is 55% of the total cost of the functions; 2) diagonal hatching - 25% of the total cost; 3) horizontal hatching - 20% of the total cost.

The analysis of the cost reduction of process functions is carried out primarily by functions falling into the first group. Next, we study the functions of the second group. And at the very least, analysis is performed on the functions of the third group.

An interesting picture made it possible to reveal a functional analysis by combining the values ​​of the relative importance of functions and the costs of implementing functions on one diagram (Fig. 16).

In this example, the method of FSA made it possible to determine the imbalance in the degree of significance of the functions and the costs of their implementation. Unreasonably high costs for the implementation of functions F2 - "Identification of citizens and families in need of social services", F13 - "Involvement of various state, municipal and non-state structures to address issues of providing social support to needy citizens and families", F14 - "Preparation and conducting workshops, training seminars, meetings and gatherings. "

Fig. 16. Indicators of the importance of functions and the costs of their implementation

This leads to the fact that insufficient attention is paid to functions that are more important for the effective organization of the main activities of the department: F10 - "Provision of social and legal services"; F7 - Provision of socio-psychological services & quot ;; F4 - "Identification of specific types and forms of assistance to those in need depending on their ability to self-service and health status"; F9 - "Provision of socio-economic services"; F8 - Provision of social pedagogical services & quot ;; F3 - "Differential accounting of all persons in need of social services, depending on the types and forms of assistance required"; F6 - "Provision of social and medical services."

The result of the FSA should be a reduction in costs per unit of useful effect. It is achieved through the implementation of the following possible variations: reducing the costs of implementing secondary functions while increasing the consumer properties of the services provided; improving the quality of service delivery while maintaining the level of costs; Reduce costs while maintaining the quality level; reduction of costs with a justified reduction of organizational parameters to their functionally necessary level.

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