ABC成本分析法(英文版)(ppt 72页)

1、Topic 6 Activity-Based CostingMAA 703Management AccountingEvolution of ABC Conventional costing systems use a two-stage allocation process:1. service department costs are allocated to production departments. 2. production department overhead costs are allocated to products using a volume-based prede

2、termined overhead rate.Product costs dont make sense Problem: There may be no relationship between the overhead application base and the way that different products cause overhead costs The result:High-volume simple products are over- costed and over-pricedLow-volume complex products are under-coste

3、d and under-pricedPlantwide Overhead RatesCompanies have tended to use as the overhead application base.However direct labour is now a relatively minor part of total manufacturing cost. Many tasks that used to be done by hand are now done by automated equipment.A two stage process isnecessary becaus

4、e costsare allocated to departmentsand then to products.Finishing DepartmentShipping DepartmentPainting DepartmentDepartmental Overhead RatesDepartment1Department2Department3IndirectLaborIndirectMaterialsOtherOverheadDepartmental Overhead RatesDepartment1Department2Department3 Products Departmental

5、Overhead RatesIndirectLaborIndirectMaterialsOtherOverheadDepartment1Department2Department3 Products Direct Labour HoursMachineHoursRawMaterialsCostDepartmental Allocation BasesDepartmental Overhead RatesIndirectLaborIndirectMaterialsOtherOverheadCost Distortions caused by 2-stage allocations There i

6、s a no link between the cause of support activity costs and the basis for assigning these costs to products Why?1. Allocations are based on unit or volumerelated measures.2. Different products consume different amounts of support activities. Questionable profit margins To compete in the marketplace,

7、 some companies have had to cut the prices of high volume popular items. ButThey have been able to achieve high mark-ups on low volume specialty products.Erosion of company profits Price cuts produce increased sales in units but decreased total revenue High mark-ups on specialty products didnt offse

8、t the fall in profit margins of high volume productsCauses of problems Increased product diversity changing cost structures use of volume-based cost driversHave resulted in:distorted product costsSolution: Activity Based Costing ABC uses cost drivers that directly link activities performed to produc

9、ts made. cost drivers are selected which measure the average demand placed on each activity by each product. activity cost pools are assigned to products in proportion to the way that they consume each activity.Solution: Activity Based Costing ACTIVITIES CONSUME RESOURCES PRODUCTS CONSUME ACTIVITIES

10、 Activities are used to link resource costs to productsActivity Based Costing (ABC)The objective of activity-based costing is to understand the causes of overhead costs and to identify the real profitability of products and customers.ABC is agood supplement to our traditional cost systemI agree!Over

11、head 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.There are a numberof cost pools, each ofwhich is allocatedusing a uniquemeas

12、ure of activity.Allocation bases oftendiffer fromtraditional costingsystems.How Costs are Treated Under Activity-Based CostingLevel of ComplexityOverhead Allocation Plantwide OverheadRateDepartmentalOverheadRatesActivity BasedCostingActivity-based costing is a way of measuring both the cost of cost

13、objects and the performance of activities can help solve problems such as distorted product costspoor cost control the form of ABC adopted depends on the problems that need to be addressedDesigning an ABC SystemCost Objects(e.g., productsand customers)ActivitiesConsumptionof ResourcesCostIdentifying

14、 and Defining ActivitiesAn ACTIVITY is a part of the productionprocess for which managementwants a separate reporting ofcosts.Unit-LevelActivitiesBatch-Level ActivitiesProduct-sustainingActivitiesFacility-sustainingActivitiesOutput Unit-Level Costs. are resources sacrificed on activities performed o

15、n each individual unit of product or service e.g. Energy used by machines Machine depreciation or repairsThe Key Question: Does the amount of the activity cost pool increase with the number of units produced?Batch-Level Costs. are resources sacrificed on activities that are related to a batch of uni

16、ts rather than to each individual unit of product or service. Set-up activity costs may be driven by set-up hours. This will depend on the number set-ups carried out i.e. on the number of batches produced and the time each set-up takes.Product-Sustaining. (or service-sustaining) costs are resources

17、sacrificed on activities undertaken to support individual products or services.Design costs may be driven by the time spent by engineers designing the product itself and planning how it will be made.Facility-Sustaining Costs. are resources sacrificed on activities that cannot be traced to individual

18、 products or services but which support the organization as a whole. General administrationrentbuilding securityCEOs salaryDifferent forms of ABC Simple approach - includes manufacturing overhead only ABC system for all indirect costs - includes manufacturing and non-manufacturing costs Comprehensiv

19、e system - includes all product-related costs, except direct materialThe Mechanics of ABCClassic Brass Ltd makes finely machined brass fittings for a variety of applications.For this company, the ultimate cost objects are:Products,Customer orders, andCustomers.One overhead cost - shipping - can be t

20、raced directly to customer orders.The companys activity cost pools are shown on the next slide.Identify and Define Activities and Activity Cost PoolsAt Classic Brass, the ABC team, selected the following activity cost pools and activity measures:Identify and Define Activities and Activity Cost Pools

21、Production 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 wages and salaries400,000 Office equipment depreci

22、ation50,000 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)Whenever Possible, Directly Trace Overhead Costs to Activit

23、ies and Cost ObjectsAssign Costs to Activity Cost Pools Customer 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%

24、100%100%Shipping costs *General Administrative 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%Ac

25、tivity Cost PoolsAt Classic Brass the following distribution of resource consumption across activity cost pools is determined.*Not included because they are directly traced to customer orders. Customer Orders Product Design Order Size Customer Relations Other TotalProduction DepartmentIndirect facto

26、ry wages125,000$ Factory equipment depreciationFactory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAs

27、sign Costs to Activity Cost PoolsProduction 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 wages and salarie

28、s400,000 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) Customer Orders Product D

29、esign Order Size Customer Relations Other TotalProduction DepartmentIndirect factory wages125,000$ Factory equipment depreciation60,000 Factory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseM

30、arketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsProduction 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 Adm

31、inistrative DepartmentAdministrative wages 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(Manufac

32、turing and NonManufacturing)Assign Costs to Activity Cost Pools Customer Orders Product Design Order 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 Facto

33、ry utilities- 12,000 60,000 - 48,000 120,000 Factory building lease- - - - 80,000 80,000 General Administrative DepartmentAdministrative 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

34、,000 60,000 Marketing DepartmentMarketing wages and salaries50,000 25,000 - 150,000 25,000 250,000 Selling expenses5,000 - - 35,000 10,000 50,000 Total315,000$ 257,000$ 380,000$ 367,500$ 490,500$ 1,810,000$ Activity Cost PoolsAssign Costs to Activity Cost PoolsCalculate Activity RatesDirectMaterials

35、DirectLaborShippingCostsOverhead CostsTracedTracedTracedCost Objects:Products, Customer Orders, CustomersCalculate Activity RatesDirectMaterialsDirectLaborShippingCostsOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsCost Objects:Products, Customer Orders, CustomersFirst-Stage

36、 AllocationCalculate Activity RatesDirectMaterialsDirectLaborShippingCostsCost Objects:Products, Customer Orders, CustomersOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsFirst-Stage AllocationSecond-Stage Allocations$/MH$/Order$/Design$/CustomerUnallocatedStep 4: Calculate A

37、ctivity RatesThe ABC team estimates that Classic Brass will have the following total activities for each activity cost pool . . .1,000 customer orders,200 new designs,20,000 machine-hours100 customers. Now the team can compute the individual activity rates by dividing the total cost for each activit

38、y by the total activity levelsCalculate Activity RatesAfter the first-stage allocation is complete, computation of activity rates for each activity cost pool can be done as follows:Assign Costs to Cost ObjectsLets take a look at how our system works for just one customer Windward Yachts.Standard Sta

39、nchions (no design required)Custom Compass Housing (requires new design)Assign Costs to Cost ObjectsPrepare Management ReportsStandard StanchionsSales13,600$ Cost: Direct materials2,110$ Direct labor1,850 Shipping costs180 Customer orders630 Product design- Order size3,800 8,570 Product margin5,030$

40、 Prepare Management ReportsWindward YachtsProduct margins: Standard stanchion5,030$ Custom compass housing(1,114) Total product margin3,916 Less: Customer relations3,675 Customer margin241$ Prepare Management ReportsProduct MarginsTraditionalPredetermined manufacturingoverhead rate $1,000,000 20,000

41、 MH= $50/MH=Differences Between ABC and Traditional Product CostingActivity-based versus conventional product costs Conventional costing assumes product costs are driven by volume-based cost drivers Conventional costing ignores batch size - units produced in large batches consume a relatively low am

42、ount per unit of batch costs ABC can include non-manufacturing costsABC benefits will be greatest where. Overhead costs are a significant proportion of total cost, and a large part of overhead is not directly related to production volume The business has a diverse product range, and the individual p

43、roducts use of support resources differs from their use of volume-based cost driversABC benefits will be greatest where. Production activity involves diverse batch sizes and product complexity. There are likely to be high costs associated with making inappropriate decisions, based on inaccurate prod

44、uct costs. The cost of designing, implementing and maintaining an ABC system is relatively low due to sophisticated IT supportImpediments to introducing ABC Lack of awareness of ABC Uncertainty about the potential benefits from ABC Firms understand the need for change but are concerned about the ext

45、ensive resource requirements to implement ABC Resistance to change among managers and employees Reading by Booth and GiacobbeOther activity-based costing issues Sources of variations in types of ABC include whetheractual (past) or budgeted costs are analysedthe implementation is a one-off project or

46、 an on-going systemcost objects, other than products, are includedOther activity-based costing issues Implications of excess capacityABC estimates the cost of resources used to perform activities to produce and sell products, which may not always equal the cost of resources suppliedneed to account f

47、or the costs of unused capacity when budgeted costs have been used to generate activity-based product costsOther activity-based costing issues Behavioural issues change can be perceived as threatening ABC may require changes in data collected and collection and analysis proceduresbottom-up change ma

48、nagement may give some degree of ownership of any changes caused by ABCmanagement must be seen as committed to the change processLimitations of activity-based costing If a high level of facility-level costs are allocated to products, this can lead to an arbitrary element of product cost Unitised bat

49、ch, product and facility-level costs can lead to product costs that are of limited use for decision making The cost of updating an ABC system can be very high, but this is needed to avoid producing outdated, irrelevant informationActivity-based costing in service organisations ABC can be difficult t

50、o implement in service firms, becausehigh levels of facility costs cause problems with costing servicesindividual activities are difficult to identify because they are non-repetitivea non-repetitive production environment makes it difficult to identify service outputsActivity-based management (ABM)

51、Process of using information from activity-based costing to analyse activities, cost drivers and performance so that customer value and profitability are improved Customer valuethe features of a product which customers are willing to pay Using ABM to reduce costs Identify the major opportunities for

52、 cost reduction Determine the real causes of these costs Develop a program to eliminate the causes, and, therefore, the costs Introduce performance measures to monitor the effectiveness of cost reduction effortsIdentifying the major opportunities for cost reduction Value-added activitiesessential to

53、 the customer, or business Non-value-added activitiescan be eliminated without detriment to either the customers or the businessValue-Added Costs A value-added cost is a cost that customers perceive as adding value, or utility, to a product or service e.g. for a computer:Adequate memory Pre-loaded s

54、oftwareReliabilityEasy-to-use keyboardsNon-value-added costs A non-value-added cost is a cost that customers do not perceive as adding value, or utility, to a product or service.Cost of expeditingReworkRepairMaterial inspectionIdle timeActivity-Based Management ABM can be used for Product pricing an

55、d mix decisions Cost reduction and process improvement decisions Design decisionsProduct Pricing and Mix Decisions ABC gives management insight into the cost structures for making and selling a diverse range of products. It provides more accurate product cost information and more detailed informatio

56、n on costs of activities and the drivers of those costs.Cost Reduction and Process Improvement Decisions Manufacturing and distribution personnel use ABC systems to focus on cost reduction efforts. Managers set cost-reduction targets in terms of reducing the cost per unit of the cost-allocation base

57、.Design Decisions Management can identify and evaluate new designs to improve performance by evaluating how product and process designs affect activities and costs. Companies can work with their customers to evaluate the costs and prices of alternative design choices.Just-In-Time Production Systems Just-in-time (JIT) production systems take a “demand pull” approach in which goods are only manufactured when needed to satisfy customer orders. Demand triggers each step of the production process, starting with customer demand for a finished product at the end of the process, to th