Measuring Cost Effectiveness

manj82

Hi,

Is a Cost-Benefit Analysis a way of measuring cost effectiveness?

Can someone please tell me how you would measure cost effectiveness?
I can't seem to find it in my book and it's one of the Knowledge and Understanding statements for Unit 10.

Am not sure how I would show this.

Thanks,

visha

In your project you need to discuss the changes that you will make to the accounting system. You then need to cost that changes and compare it with the current practice to confirm how cost effective is your suggestion/recommendation. for example you may say that instead of posting the annual report to our shareholder (say 2500) costing £3.00 for postage, you may recommend that the reports is e-mailed to say atleast 20% of your shareholder then the cost savings will be: 2500 times 20% = 500 times £3.00 equal a savings of £ £1500. less cost of e-mail - say 10 minutes admin cost at £60 per hr equals £10 leaving a net savings of (1500-10) £1490.