财务管理会计案例培训课件英文版(ppt 44)

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1、Activity Based Costing:A Tool to Aid Decision Making Chapter8 The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillActivity Based Costing(ABC)The objective of activity-based costing is to understand overhead and the profitability of products and customers.ABC is agood supplement to our traditional co

2、st systemI agree!The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillOverhead rates maybe based on activityat capacity.Activity Based Costing(ABC)Activity-Based CostingBoth manufacturingand nonmanufacturingcosts may be assigned toproducts.Some manufacturingcosts may be excludedfrom productcosts.Ther

3、e are a numberof cost pools each ofwhich is allocatedusing a uniquemeasure of activity.Allocation bases oftendiffer fromtraditional costingsystems.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillHow Costs are Treated Under Activity-Based CostingLevel of ComplexityOverhead Allocation Plantwide Ov

4、erheadRateDepartmentalOverheadRatesActivity BasedCosting The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillPlantwide Overhead RateCompanies tend to use as the overhead allocation base.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillA two stage process isnecessary because costsare allocated to

5、departmentsand then to products.Finishing DepartmentShipping DepartmentPainting DepartmentDepartmental Overhead Rates The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDepartment1Department2Department3IndirectLaborIndirectMaterialsOtherOverheadDepartmental Overhead Rates The McGraw-Hill Companies,

6、Inc.,2000Irwin/McGraw-HillDepartment1Department2Department3 Products Departmental Overhead RatesIndirectLaborIndirectMaterialsOtherOverhead The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDepartment1Department2Department3 Products Direct Labor HoursMachineHoursRawMaterialsCostDepartmental Alloca

7、tion BasesDepartmental Overhead RatesIndirectLaborIndirectMaterialsOtherOverhead The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDesigning an ABC SystemCost Objects(e.g.,productsand customers)ActivitiesConsumptionof ResourcesCost The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDesigning an A

8、BC SystemlIdentify and define activities and activity pools.lWhere possible,trace costs to activities and cost objects.lAssign costs to activity cost pools.lCalculate activity rates.lAssign costs to cost objects.lPrepare management reports.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillIdentify

9、ing Activity to IncludeUnit-LevelActivityBatch-Level ActivityProduct-LevelActivityCustomer-LevelActivityOrganization-sustainingActivity The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillIdentifying Activity to Include is a“bucket”in which costs are accumulated that relate to a single activity in t

10、he ABC system.$The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillThe Mechanics of ABCAt Classic Brass,the ultimate cost objects are:Products,Customer orders,andCustomers.One overhead cost-shipping-can be traced directly to customer orders.The companys overhead costs are shown on the next slide.The

11、 McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillProduction DepartmentIndirect factory wages500,000$Factory equipment depreciation300,000 Factory utilities120,000 Factory building lease80,000 1,000,000$Shipping costs traced to customer orders40,000 General Administrative DepartmentAdministrative wag

12、es and salaries400,000 Office equipment depreciation50,000 Administrative building lease60,000 510,000 Marketing DepartmentMarketing wages and salaries250,000 Selling expenses50,000 300,000 Total overhead costs1,850,000$Overhead Costs at Classic Brass(Manufacturing and NonManufacturing)The McGraw-Hi

13、ll Companies,Inc.,2000Irwin/McGraw-HillActivity-Based Costing at Classic BrassDirectMaterialsDirectLaborShippingCostsOverhead CostsTraced$/DLHTracedCost Objects:Products,Customer Orders,Customers The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillActivity-Based Costing at Classic BrassDirectMateria

14、lsDirectLaborShippingCostsOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsCost Objects:Products,Customer Orders,CustomersFirst-Stage Allocation The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillActivity-Based Costing at Classic BrassDirectMaterialsDirectLaborShippingCostsCo

15、st Objects:Products,Customer Orders,CustomersOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsFirst-Stage AllocationSecond-Stage Allocations$/MH$/Order$/Design$/CustomerUnallocated The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillAssigning Costs to Activity Cost Pools Custo

16、mer Orders Product Design Order Size Customer Relations Other TotalProduction DepartmentIndirect factory wages25%40%20%10%5%100%Factory equipment depreciation20%0%60%0%20%100%Factory utilities0%10%50%0%40%100%Factory building lease0%0%0%0%100%100%Shipping costs traced to customer orderN/AGeneral Adm

17、inistrative DepartmentAdministrative wages and salaries15%5%10%30%40%100%Office equipment depreciation30%0%0%25%45%100%Administrative building lease0%0%0%0%100%100%Marketing DepartmentMarketing wages and salaries20%10%0%60%10%100%Selling expenses10%0%0%70%20%100%Activity Cost PoolsManagement at Clas

18、sic Brass believes overhead should be distributed as follows:The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill Customer Orders Product Design Order Size Customer Relations Other TotalProduction DepartmentIndirect factory wages125,000$Factory equipment depreciationFactory utilitiesFactory building

19、 leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAssigning Costs to Activity Cost PoolsIndirect factory wages$500,000Percent consum

20、ed by customer orders 25%$125,000Using the total costs and percentage consumption of overhead,costs are assigned to activity pools.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill Customer Orders Product Design Order Size Customer Relations Other TotalProduction DepartmentIndirect factory wages1

21、25,000$Factory equipment depreciation60,000 Factory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAssig

22、ning Costs to Activity Cost PoolsFactory equipment depreciation$300,000Percent consumed by customer orders 20%$60,000Using the total costs and percentage consumption of overhead,costs are assigned to activity pools.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill Customer Orders Product Design O

23、rder Size Customer Relations Other TotalProduction DepartmentIndirect factory wages125,000$200,000$100,000$50,000$25,000$500,000$Factory equipment depreciation60,000 -180,000 -60,000 300,000 Factory utilities-12,000 60,000 -48,000 120,000 Factory building lease-80,000 80,000 General Administrative D

24、epartmentAdministrative wages and salaries60,000 20,000 40,000 120,000 160,000 400,000 Office equipment depreciation15,000 -12,500 22,500 50,000 Administrative building lease-60,000 60,000 Marketing DepartmentMarketing wages and salaries50,000 25,000 -150,000 25,000 250,000 Selling expenses5,000 -35

25、,000 10,000 50,000 Total315,000$257,000$380,000$367,500$490,500$1,810,000$Activity Cost PoolsAssigning Costs to Activity Cost PoolsUsing the total costs and percentage consumption of overhead,costs are assigned to activity pools.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillComputation of Acti

26、vity RatesThe ABC team has determined that Classic Brass has the following total activities for each activity cost pool.v1,000 customer orders,v200 new designs,v20,000 machine-hoursv100 customers.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill 1,000 Orders 200 Designs 20,000 machine-hours 100 C

27、ustomers Other Production DepartmentIndirect factory wages125$Factory equipment depreciationFactory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salar

28、iesSelling expensesTotalActivity Cost PoolsComputation of Activity Rates Customer Orders Indirect factory wages125,000$Number of orders1,000 Indirect factory wages/order125$The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillComputation of Activity Rates 1,000 Orders 200 Designs 20,000 machine-hours

29、 100 Customers Other Production DepartmentIndirect factory wages125$1,000$5$500$N/AFactory equipment depreciation60 -9 -Factory utilities-60 3 -Factory building lease-General Administrative DepartmentAdministrative wages and salaries60 100 2 1,200 Office equipment depreciation15 -125 Administrative

30、building lease-Marketing DepartmentMarketing wages and salaries50 125 -1,500 Selling expenses5 -350 Total315$1,285$19$3,675$Activity Cost Pools The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillAssigning Costs to Cost ObjectsLets take a look at how our system works for just one customer-Windward Y

31、achts.vWindward ordered two products-Stanchions and customer compass housings.Here are the details:Standard Stanchions(no design required)The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillAssigning Costs to Cost ObjectsLets take a look at how our system works for just one customer-Windward Yachts.

32、vWindward ordered two products-Stanchions and customer compass housings.Here are the details:Custom Compass Housing(requires new design)The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill 2 Orders No new design 200 machine hours N/A Total Production DepartmentIndirect factory wages250$Factory equip

33、ment depreciationFactory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAssigning Costs to Cost Objects$

34、125 per order 2 orders=$250 The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillAssigning Costs to Cost Objects 2 Orders No new design 200 machine hours N/A Total Production DepartmentIndirect factory wages250$-$1,000$-$1,250$Factory equipment depreciation120 -1,800 -1,920 Factory utilities-600 -600

35、 Factory building lease-General Administrative DepartmentAdministrative wages and salaries120 -400 -520 Office equipment depreciation30 -30 Administrative building lease-Marketing DepartmentMarketing wages and salaries100 -100 Selling expenses10 -10 Total630$-$3,800$-$4,430$Activity Cost Pools The M

36、cGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill 1 Order 1 new design 4 machine hours N/A Total Production DepartmentIndirect factory wages125$Factory equipment depreciationFactory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment deprec

37、iationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAssigning Costs to Cost Objects$125 per order 1 order=$125 The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillAssigning Costs to Cost Objects 1 Order 1 new design 4 machine hou

38、rs N/A Total Production DepartmentIndirect factory wages125$1,000$20$-$1,145$Factory equipment depreciation60 -36 -96 Factory utilities-60 12 -72 Factory building lease-General Administrative DepartmentAdministrative wages and salaries60 100 8 -168 Office equipment depreciation15 -15 Administrative

39、building lease-Marketing DepartmentMarketing wages and salaries50 125 -175 Selling expenses5 -5 Total315$1,285$76$-$1,676$Activity Cost Pools The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillProduct MarginsStandard StanchionsSales13,600$Cost:Direct materials2,110$Direct labor1,850 Shipping costs1

40、80 Customer orders630 Product design-Order size3,800 8,570 Product margin5,030$Custom Compass HousingSales650$Cost:Direct materials13$Direct labor50 Shipping costs25 Customer orders315 Product design1,285 Order size76 1,764 Product margin(1,114)$The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillCu

41、stom Compass HousingSales650$Cost:Direct materials13$Direct labor50 Shipping costs25 Customer orders315 Product design1,285 Order size76 1,764 Product margin(1,114)$Product MarginsStandard StanchionsSales13,600$Cost:Direct materials2,110$Direct labor1,850 Shipping costs180 Customer orders630 Product

42、 design-Order size3,800 8,570 Product margin5,030$Windward YachtsProduct margins:Standard stanchion5,030$Custom compass housing(1,114)Total product margin3,916 Less:Customer relations3,675 Customer margin241$The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillProduct MarginsStandard StanchionsCompas

43、s HousingSales13,600$650$CostsDirect materials(2,110)(13)Direct labor(1,850)(50)Manufacturing overhead(10,000)(200)Product margin(360)$387$Traditional Cost Accounting SystemPredetermined manufacturingoverhead rate$1,000,000 20,000 MH=$50/MH=The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillProduct

44、 MarginsStandard StanchionsCompass HousingSales13,600$650$CostsDirect materials(2,110)(13)Direct labor(1,850)(50)Manufacturing overhead(10,000)(200)Product margin(360)$387$Traditional Cost Accounting System400 units x 0.5 MH/unit x$50/MH=$10,000 The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDi

45、fference Between ABC and Traditional Product CostsABC will ordinarily shift batch-level and product-level overhead costs from high-volume products produced in large batches to low-volume products produced in small batches.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillDifference Between ABC and

46、 Traditional Product CostsUnder ABC both manufacturing and nonmanufacturing costs may be assigned to products.Organization-sustaining costs and the costs of idle capacity are not assigned to products.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillEase of AdjustmentCosts that adjust automaticall

47、y to changes in activity:vDirect materials.vShipping.Costs that could be adjusted to changes in activity:vDirect labor.vFactory utilities.vAdministrative wages and salaries.vOffice equipment depreciation.vMarketing wages and salaries.vSelling expenses.Costs that are difficult to adjust to changes in

48、 activity:vFactory equipment depreciation.vFactory building lease.vAdministrative building lease.The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillCustom Compass HousingSales650$Green costs:Direct materials13$Shipping costs25 38 Green margin612 Yellow costs:Direct labor50.00 Indirect factory wages

49、1,145.00 Factory utilities72.00 Administrative wages168.00 Office equip.depreciation15.00 Marketing wages175.00 Selling expenses5.00 1,630 Yellow margin(1,018)Red costs:Factory equip.depreciation96 Factory building lease 0Admin.Building lease 096 Red margin(1,114)$The McGraw-Hill Companies,Inc.,2000

50、Irwin/McGraw-HillSimplified Approach to ABCAfter the first-stage allocation is complete,computation of activity rates for each activity cost pool can be simplified as follows:Computation of the Activity Rates Customer Orders Product Design Order Size Customer Relations Other Costs from first-stage a

51、llocation315,000$257,000$380,000$367,500$490,500$Total activity1,000 200 20,000 100 N/ACost per unit of activity315$1,285$19$3,675$The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillSimplified Approach to ABCStandard Stanchions:Sales13,600$Costs:Direct materials2,110$Direct labor1,850 Shipping cost

52、s180 Customer orders(2)630 Product design-Order size(200)3,800 8,570 Product margin5,030$2 orders$315 per order The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillSimplified Approach to ABCCustom Compass Housing Sales650$Costs:Direct materials13$Direct labor50 Shipping costs25 Customer orders(1)315

53、 Product design1,285 Order size76 1,764 Product margin(1,114)$1 design$1,285 per design The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-HillSimplified Approach to ABCCustomer margin for Windward Yachts is shown below:Customer Profitability AnalysisProduct margins:Standard stanchion$5,030 Custom compass housing(1,114)Total product margins3,916 Less:Customer relations(3,675)Customer margin241 The McGraw-Hill Companies,Inc.,2000Irwin/McGraw-Hill