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Einkaufslexikon
Functional Cost Accounting: Definition, Methods and Application in Purchasing
November 20, 2025
Functional cost accounting is a central cost accounting tool that structures costs according to operational functions and activities. In purchasing, it enables a precise allocation of procurement costs to specific functional areas and supports strategic decisions. Find out below what functional costing is, which methods are used and how it contributes to optimising procurement processes.
Key facts
- Structures costs by operational functions instead of by cost centers
- Enables precise allocation of procurement costs to activities
- Supports make-or-buy decisions through transparent cost analysis
- Forms the basis for strategic supplier evaluation and selection
- Improves cost transparency in complex procurement processes
Inhalt
Definition: functional costing
Functional cost accounting systematically allocates costs according to operational functions and activities, instead of traditionally dividing them into cost centers.
Basic principles of functional costing
The system is based on the identification and evaluation of business processes and their cost drivers. Key elements are:
- Function-oriented cost distribution
- Activity-based cost allocation
- Process-oriented cost analysis
- Cause-based cost allocation
Functional costing vs. traditional costing
In contrast to the classic Cost center accounting Functional costing focuses on activities and their resource consumption. It provides a more detailed view of cost generation and distribution.
Importance of functional cost accounting in purchasing
In the procurement sector, it enables a precise analysis of Litigation costs and supports Cost driver analysis for strategic decisions.
Methods and procedures
Functional cost accounting is implemented using structured methods for identifying, evaluating and allocating functional costs.
Activity-Based Costing (ABC)
This method identifies activities as cost drivers and allocates resource consumption according to the cause. In purchasing, procurement activities such as supplier search, negotiation and order processing are assessed separately. Die Activity-based costing forms the methodological basis for this.
Functional analysis and cost allocation
Systematic recording of all purchasing functions and their resource requirements enables precise cost allocation. Key steps include:
- Identification of key functions
- Assessment of resource consumption
- Assignment to cost drivers
Integration into procurement controlling
Functional costing is included in the Procurement controlling integrates and supports the Cost-benefit analysis of procurement strategies.
Key figures for managing functional costing
Specific key figures make it possible to evaluate and manage functional cost accounting in the procurement sector.
Share and distribution of functional costs
The share of individual functions in total costs shows key costs. Key figures such as functional cost rate per activity and cost distribution by functional area enable targeted optimization. Benchmarking with industry standards identifies potential for improvement.
Cost allocation accuracy
Variance analyses between planned and actual functional costs measure system accuracy. ROI figures Evaluate the benefits of functional costing compared to implementation costs.
Process efficiency indicators
Process efficiency indicators such as cost driver productivity and functional costs per transaction support continuous improvement. integration with budgeting processes enables precise planning.
Risks, dependencies and countermeasures
The implementation of functional cost accounting entails specific risks that can be minimized through appropriate measures.
Complexity and implementation effort
High effort during implementation can lead to resistance. Incomplete functional analysis jeopardizes the informative value of the system. Step-by-step implementation and comprehensive training significantly reduce these risks.
Data quality and accuracy
Inadequate data quality leads to incorrect cost allocations. Regular validation of cost drivers and continuous system adjustment are required. Target/actual comparisons uncover deviations at an early stage.
Organizational dependencies
Success depends on the acceptance of all parties involved. Unclear responsibilities can impair functionality. Clear governance structures and regular Controlling processes remedy the situation.
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practical example
An automotive supplier implements functional cost accounting to optimize its procurement strategy. The company identifies five main functions: supplier search, negotiation, order processing, quality control, and supplier support. Detailed cost analysis shows that 40% of procurement costs are attributable to quality testing. This finding leads to a realignment of the supplier strategy with a focus on qualified suppliers and reduced testing costs.
- Cost transparency improved by 60%
- Procurement costs reduced by 15%
- Strategically optimized supplier portfolio
Trends & developments in functional cost accounting
Modern developments in functional costing are characterized by digitization and AI-based analysis methods.
Digital transformation of cost accounting
Automated data collection and analysis are revolutionizing functional cost accounting. ERP systems enable real-time analyses of functional costs and improve the accuracy of cost allocation. integration with Purchasing control systems creates new transparency.
AI-based cost analysis
Artificial intelligence enables more precise cost driver identification and automated functional evaluation. Machine learning algorithms recognize patterns in cost data and continuously optimize function allocation.
Sustainability-oriented functional costing
Integration of sustainability aspects into functional evaluation is becoming increasingly important. Environmental and social costs are considered as additional functional dimensions and included in Total Cost of Ownership included.
conclusion
Functional cost accounting is a valuable tool for modern procurement organizations, which creates precise decision-making bases through activity-oriented cost analysis. Their successful implementation requires a systematic approach and organizational support, but offers significant benefits for cost transparency and strategic procurement management. In times of digital transformation, it is increasingly being expanded with AI-based analysis methods and remains a central component of modern procurement controlling.
FAQ
What distinguishes functional costing from traditional cost accounting?
Functional costing allocates costs according to activities and functions, while traditional systems work in a cost centre-oriented manner. This enables more cause-based cost allocation and better transparency about resource consumption in specific business processes.
How is functional costing used in purchasing?
In the procurement sector, purchasing activities such as supplier search, negotiation and order processing are assessed as separate functions. This supports make-or-buy decisions, supplier evaluation and process optimization through precise cost transparency.
What are the prerequisites for implementation?
Successful implementation requires detailed process analysis, high-quality cost data and organizational support. In addition, suitable IT systems and trained employees are necessary for sustainable use of the system.
What are the advantages of functional costing?
Key benefits include improved cost transparency, more precise decision-making bases and optimized resource allocation. Companies can better identify cost drivers and derive targeted improvement measures.
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