Sustainable development of a domestic enterprise depends on the rational use of all types of resources, which necessitates the transition to an optimal cost management system. The urgency and significance of the cost management problem necessitates a thorough research and the determination of the optimal cost structure. The article proposes a modeling procedure for improvement of accounting and cost management. The article highlights the features of the management and cost optimization procedure based on functional modeling and re-designing of business processes in the context of the process approach chosen by the majority of enterprises. In order to improve cost management and the activity of the machine-building enterprise, the article proposed the use of the IDEF0 (Integration Definition for Function Modeling business process) modeling methodologies, which reflects the process approach to the formation and identification of business processes of the enterprise.The article proposes to apply a modeling and redesign process for business processes to find reserves for cost reduction and improvement of cost management system, and presents models of cost management and business processes of freight transport of a structural unit of a machine-building plant. To optimize the costs of the enterprise proposed the use of functional-cost analysis. The content is determined, application of modeling and redesign of business processes is grounded in order to find the reserves of cost reduction. The procedure of using modeling and re-designing of business processes at Ukrainian enterprises is determined. The practical significance of the results obtained is to improve the accounting and cost management systems, the results of which can be simulated, which will allow planning, forecasting and cost modeling across the entire business processes chain, developing measures for obtaining the desired results for individual operations and, in general, for functional activities, etc. Keywords costs, cost management, cost optimization, functional modeling, business process, modeling and re-designing of business processes.