Goodbye Job Cost Accountancy–Dickeson

Don’t like the term “e-commerce?” Forget it. Use other non-irritating words. How about CyberPrint? Make up your own. Just keep the emotion out of what we must do to accommodate the new communication medium. You can use the central server of an application service provider or you can do all or any part of it yourself. You choose based on the depth of your pocket.

But remember, until you measure, nothing happens. Once you measure, change occurs. It’s going to be frightening at first—distinctly uncomfortable—to give up chargeable hours and job cost as a base for markup pricing after all these years. But you will and you must. It’s been a deceptive perceiver leading us as an industry into overcapacity, poor productivity, inefficiency and low profitability. It is not a valid decision supporter for pricing, marketing, capital equipment investments and determination of core competence of your company. Shocked? Don’t be. Test my statement.

First, add up all estimated costs of jobs performed under your job cost system for the past year or six months. Now add up all the completed job costs under your system for those same jobs. Compare estimate versus actual job cost totals. Now compare them job-by-job.

Next, add up all costs charged under the job cost system for a year or six months. Compare that total with the equivalent cost charges for the same period from your general ledger accounts. Check your blood pressure, temperature and pulse. Feel stupid? Silly? We’re using an obsolete model.

Shifting Models Isn’t Easy
So shift from a job to a process model, suggests Peter Drucker. It’s easy for him to say, but hard for us to do. We’re afraid. We’re printers with inky fingernails—not mathematicians. “Surrender our job cost security blanket? But we can’t, just can’t. We wouldn’t be able to run our business, Mr. Drucker.”

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