Should Cost Analysis
Should cost analysis is the process of estimating the cost of a product or service by analyzing the individual components that make up the total cost. This type of analysis can be used to determine if a company is paying too much for a product or service, or to negotiate better terms with suppliers.
There are several methods that can be used to calculate should costs, but all involve breaking down the total cost into its component parts and then estimating the cost of each part. This can be done by looking at historical data, market prices, or by using engineering models. Once the cost of each component is estimated, they can be added back together to get an estimate of the total should cost.
Should cost analysis is a valuable tool for companies to use when trying to control costs or improve profitability. By understanding where their money is going and how much each component should cost, they can make better decisions about where to cut costs and where to invest in improvements.