Personnel cost to perform the process group "perform planning and management accounting" per process group FTE

This measure calculates personnel cost per process group full time equivalent (FTE) to perform the process group "perform planning and management accounting". Personnel cost refers to employee personnel compensation (salaries and wages, bonuses, overtime and benefits) and fringe benefits (e.g. contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, stock purchase plans), and special allowances such as relocation expenses and car allowances. The Process group "perform planning and management accounting" includes [Comparing revenue targets to reality. Review all transactions and entries passed in final accounts in a year in order to examine profits.]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process group "Perform planning and management accounting".

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure Id:
105143
Total Sample Size:
2,427 All Companies
Performers:
25th
– Median
– 75th
–
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are dollars.

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(Personnel cost to perform the process "evaluate and manage financial performance" + Personnel cost to perform the process "perform planning/budgeting/forecasting" + Personnel cost to perform the processes "perform cost accounting and control" and "perform cost management") / (Number of FTEs who perform the process "perform planning/budgeting/forecasting" + Number of FTEs who perform the processes "perform cost accounting and control" and "perform cost management" + Number of FTEs who perform the process "evaluate and manage financial performance")

Key Terms

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FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (7.3.0)

  • 9.1.1 - Perform planning/budgeting/forecasting (10738) - Allocating funds to meet future and current financial goals. Led by the chief financial officer, have the finance function plan, budget, and forecast in order to determine and describe long and short-term financial goals.
    • 9.1.1.1 - Develop and maintain budget policies and procedures (10771) - Formulating financial budgetary guidelines and strategies. Develop a framework for rules and regulations regarding budgets. Create a step-by-step process to achieve financial goals.
    • 9.1.1.2 - Prepare periodic budgets and plans (10772) - Creating reports on a quarterly or annual basis for fund allocation. Create a financial statement that estimates revenues and expenses over a specific period of time. (Leverage budget methods such as cost-based and zero-based budgeting techniques, in light of the periodic targets outlined during Develop and maintain budget policies and procedures [10771].)
    • 9.1.1.3 - Operationalize and implement plans to achieve budget (20135) - Putting budgeting plans into practical use keeping within designated forecasting parameters.
    • 9.1.1.4 - Prepare periodic financial forecasts (10773) - Creating estimates of the projected income and expenses required over a predetermined time frame. Develop the projections of profit and loss statements, balance sheets, and the cash flow forecast.
    • 9.1.1.5 - Perform variance analysis against forecasts and budgets (20136) - Conducting a quantitative analysis between what was forecasted and budgeted and actual financial behavior.
  • 9.1.2 - Perform cost accounting and control (10739) - Defining costs to be incurred and methods for optimum utilization. Determine the costs of products, processes, projects, etc. to compile in the financial statements, as well as to assist management in making decisions regarding planning and control. Control costs by managing and reducing business expenses.
    • 9.1.2.1 - Perform inventory accounting (10774) - Conducting accounting for assets, and finding reasons for changes (depreciation, obsolescence, deterioration, change in customer taste, increased demand, decreased market supply, etc.).
    • 9.1.2.2 - Perform profit center accounting (14057) - Determining the revenue, profits, and losses incurred by each unit within the organization that produces profit.
    • 9.1.2.3 - Perform cost of sales analysis (10775) - Studying expenses directly associated with product. Analyze the cost of sales, which is the cost of manufacturing products.
    • 9.1.2.4 - Perform product costing (10776) - Studying and finding out the relevant cost center for a product by studying every resource used in its making.
    • 9.1.2.5 - Perform variance analysis (10777) - Discovering the changes between forecasted and actual costing. Analyze actual and planned behavior by reviewing the amount of a variance on a trend line in order to maintain control over a business.
    • 9.1.2.6 - Report on profitability (11175) - Making a report about revenues generated by the organization or business unit concerned. This process requires the organization to create a report which shows how business is generating profits. Profits are the part which is left after paying all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to conducting business activities.
  • 9.1.3 - Perform cost management (10740) - Deciding which expenses can be avoided to reduce some costs and increase revenues. Plan and control the organization's budget to forecast future expenditures.
    • 9.1.3.1 - Determine key cost drivers (10778) - Defining cost drivers for a particular activity.
    • 9.1.3.2 - Measure cost drivers (10779) - Calculating cost drivers.
    • 9.1.3.3 - Determine critical activities (10780) - Determine the activities that hinder the progress of finance activities. This requires the organization to determine those business activities carried out by the financial function of the organization and which are indispensable. This undertaking helps the organization triangulate those activities which are essential and where costs cannot be slashed.
    • 9.1.3.4 - Manage asset resource deployment and utilization (10781) - Distributing or allocating asset resources in different processes for optimal utilization.
  • 9.1.4 - Evaluate and manage financial performance (10741) - Checking and achieving predetermined financial targets and timelines. Assess and manage the profitability, feasibility, and consistency of a business or project. Study the revenues generated.
    • 9.1.4.1 - Assess customer and product profitability (10782) - Studying product demand and targeted customer preferences. Study customers' demands or preferences after deducting the cost of delivering the final product.
    • 9.1.4.2 - Evaluate new products (10783) - Checking demand about a specific product by a customer segment. Conduct a detailed study--or research a customer behavior or preference for a product--in order to determine its production and profitability in a specific market.
    • 9.1.4.3 - Perform life cycle costing (10784) - Determining the cost of delivering an end product at different stages of production. Study the total life cycle of a product/process to determine how much revenue and production cost will be incurred at every stage in order to make strategic decisions.
    • 9.1.4.4 - Optimize customer and product mix (10785) - Creating the best fit between a product and the end user. Maximize the customer base by providing different products in the market.
    • 9.1.4.5 - Track performance of new-customer and product strategies (10786) - Observing the behavior of a new set of customers for different products. Prepare strategies to improve sales and profits.
    • 9.1.4.6 - Prepare activity-based performance measures (10787) - Evaluating performance based on different sets of activities created by management to measure performance.
    • 9.1.4.7 - Manage continuous cost improvement (10788) - Conducting activities to improve cost distribution regularly. Follow or adopt different ways of reducing costs.