The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Greg Millar
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Alliott NZ Case Study


retail shop store-572Ann Marie owns a manufacturing business which makes a high-end product. She varies her design from time to time so there are many versions of her primary design.


Ann Marie did not have a cost accounting system that would determine the cost of producing each version. So she did not know which ones were cost-effective to produce and earn her more profit and which ones were not.


Her Accountant helped select an appropriate cloud-based cost accounting system to tailor to her needs and then analysed the manufacturing process to determine the basic activities involved. The next step was to create a system which would:

  1. Measure how often each basic step is performed in producing a design
  2. Determine the cost of each step in the manufacturing process
  3. Use 1 and 2 above to determine the cost of each design

Ann Marie enthusiastically uses her new cost accounting system to:

  • Measure profits derived from the sale of each design
  • Target low-profit designs for discontinuation
  • Help determine pricing for new designs

Benefits to the Business

The system allowed Ann Marie to measure production efficiency and thereby grow her profit and business.