ABC成本分析法

1、Topic 6 Activity-Based CostingMAA 703Management Accounting1Evolution of ABClConventional 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 pred

2、etermined overhead rate.2Product costs dont make senselProblem: There may be no relationship between the overhead application base and the way that different products cause overhead costslThe result:vHigh-volume simple products are over- costed and over-pricedvLow-volume complex products are under-c

3、osted and under-priced3Plantwide 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.4Finishing DepartmentShipping Dep

4、artmentPainting DepartmentDepartmental Overhead Rates5Department1Department2Department3IndirectLaborIndirectMaterialsOtherOverheadDepartmental Overhead Rates6Department1Department2Department3 Products Departmental Overhead RatesIndirectLaborIndirectMaterialsOtherOverhead7Department1Department2Depart

5、ment3 Products Direct Labour HoursMachineHoursRawMaterialsCostDepartmental Allocation BasesDepartmental Overhead RatesIndirectLaborIndirectMaterialsOtherOverhead8Cost Distortions caused by 2-stage allocationslThere is a no link between the cause of support activity costs and the basis for assigning

6、these costs to productslWhy?1. Allocations are based on unit or volumerelated measures.2. Different products consume different amounts of support activities. 9Questionable profit marginslTo compete in the marketplace, some companies have had to cut the prices of high volume popular items.lButThey ha

7、ve been able to achieve high mark-ups on low volume specialty products.10Erosion of company profitslPrice cuts produce increased sales in units but decreased total revenuelHigh mark-ups on specialty products didnt offset the fall in profit margins of high volume products11Causes of problemslIncrease

8、d product diversitylchanging cost structuresluse of volume-based cost driversHave resulted in:distorted product costs12Solution: Activity Based CostinglABC uses cost drivers that directly link activities performed to products made.lcost drivers are selected which measure the average demand placed on

9、 each activity by each product.lactivity cost pools are assigned to products in proportion to the way that they consume each activity.13Solution: Activity Based CostinglACTIVITIES CONSUME RESOURCESlPRODUCTS CONSUME ACTIVITIESlActivities are used to link resource costs to products14Activity Based Cos

10、ting (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!15Overhead rates maybe based on activityat capacity.Activity Based Costing (A

11、BC)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 uniquemeasure of activity.Allocation bases oftendiffer fromtraditional costingsys

12、tems.16How Costs are Treated Under Activity-Based CostingLevel of ComplexityOverhead Allocation Plantwide OverheadRateDepartmentalOverheadRatesActivity BasedCosting17Activity-based costinglis a way of measuring both the cost of cost objects and the performance of activitieslcan help solve problems s

13、uch as vdistorted product costsvpoor cost controllthe form of ABC adopted depends on the problems that need to be addressed18Designing an ABC SystemCost Objects(e.g., productsand customers)ActivitiesConsumptionof ResourcesCost1920Identifying and Defining ActivitiesAn ACTIVITY is a part of the produc

14、tionprocess for which managementwants a separate reporting ofcosts.Unit-LevelActivitiesBatch-Level ActivitiesProduct-sustainingActivitiesFacility-sustainingActivities21Output Unit-Level Costs.are resources sacrificed on activities performed on each individual unit of product or service e.g.Energy us

15、ed by machinesMachine depreciation or repairsThe Key Question: Does the amount of the activity cost pool increase with the number of units produced?22Batch-Level Costs.are resources sacrificed on activities that are related to a batch of units rather than to each individual unit of product or servic

16、e.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.23Product-Sustaining.(or service-sustaining) costs are resources sacrificed on activities undertaken to support individual p

17、roducts or services.Design costs may be driven by the time spent by engineers designing the product itself and planning how it will be made.24Facility-Sustaining Costs.are resources sacrificed on activities that cannot be traced to individual products or services but which support the organization a

18、s a whole.lGeneral administrationvrentvbuilding securityvCEOs salary25Different forms of ABClSimple approach - includes manufacturing overhead onlylABC system for all indirect costs - includes manufacturing and non-manufacturing costslComprehensive system - includes all product-related costs, except

19、 direct material26The 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 traced directly to customer orders.The companys acti

20、vity cost pools are shown on the next slide.27Identify and Define Activities and Activity Cost PoolsAt Classic Brass, the ABC team, selected the following activity cost pools and activity measures:28Identify and Define Activities and Activity Cost Pools29Production DepartmentIndirect factory wages50

21、0,000$ 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 depreciation50,000 Administrative building lease60,0

22、00 510,000 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 Activities and Cost Objects30Assign Costs to Activit

23、y 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%100%100%Shipping costs *General Administrat

24、ive 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 PoolsAt Classic Brass the follo

25、wing distribution of resource consumption across activity cost pools is determined.*Not included because they are directly traced to customer orders.31 Customer Orders Product Design Order Size Customer Relations Other TotalProduction DepartmentIndirect factory wages125,000$ Factory equipment deprec

26、iationFactory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and salariesSelling expensesTotalActivity Cost PoolsAssign Costs to Activity Cost PoolsProducti

27、on 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 depreciation50,

28、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)32 Customer Orders Product Design Order Size Customer Relations Oth

29、er TotalProduction DepartmentIndirect factory wages125,000$ Factory equipment depreciation60,000 Factory utilitiesFactory building leaseGeneral Administrative DepartmentAdministrative wages and salariesOffice equipment depreciationAdministrative building leaseMarketing DepartmentMarketing wages and

30、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 Administrative DepartmentAdministrative wa

31、ges 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)Assign Cost

32、s to Activity Cost Pools33 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 Factory utilities- 12,000 60,000 - 48,000

33、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- - - - 60,000 60,000 Marketing DepartmentMarke

34、ting 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 Pools34Calculate Activity RatesDirectMaterialsDirectLaborShippingCostsOverhead Co

35、stsTracedTracedTracedCost Objects:Products, Customer Orders, Customers35Calculate Activity RatesDirectMaterialsDirectLaborShippingCostsOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsCost Objects:Products, Customer Orders, CustomersFirst-Stage Allocation36Calculate Activity R

36、atesDirectMaterialsDirectLaborShippingCostsCost Objects:Products, Customer Orders, CustomersOrderSizeCustomerOrdersProductDesignCustomerRelationsOtherOverhead CostsFirst-Stage AllocationSecond-Stage Allocations$/MH$/Order$/Design$/CustomerUnallocated37Step 4: Calculate Activity RatesThe ABC team est

37、imates that Classic Brass will have the following total activities for each activity cost pool . . .v1,000 customer orders,v200 new designs,v20,000 machine-hoursv100 customers. Now the team can compute the individual activity rates by dividing the total cost for each activity by the total activity l

38、evels38Calculate Activity RatesAfter the first-stage allocation is complete, computation of activity rates for each activity cost pool can be done as follows:39Assign Costs to Cost ObjectsLets take a look at how our system works for just one customer Windward Yachts.Standard Stanchions (no design re

39、quired)Custom Compass Housing (requires new design)40Assign Costs to Cost Objects41Prepare 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$ 42Prepare Manage

40、ment Reports43Windward YachtsProduct margins: Standard stanchion5,030$ Custom compass housing(1,114) Total product margin3,916 Less: Customer relations3,675 Customer margin241$ Prepare Management Reports44Product MarginsTraditionalPredetermined manufacturingoverhead rate $1,000,000 20,000 MH= $50/MH

41、=4546Activity-based versus conventional product costslConventional costing assumes product costs are driven by volume-based cost driverslConventional costing ignores batch size - units produced in large batches consume a relatively low amount per unit of batch costs lABC can include non-manufacturin

42、g costs47ABC benefits will be greatest where.lOverhead costs are a significant proportion of total cost, and a large part of overhead is not directly related to production volumelThe business has a diverse product range, and the individual products use of support resources differs from their use of

43、volume-based cost drivers48ABC benefits will be greatest where.lProduction activity involves diverse batch sizes and product complexity.lThere are likely to be high costs associated with making inappropriate decisions, based on inaccurate product costs.lThe cost of designing, implementing and mainta

44、ining an ABC system is relatively low due to sophisticated IT support49Impediments to introducing ABClLack of awareness of ABClUncertainty about the potential benefits from ABClFirms understand the need for change but are concerned about the extensive resource requirements to implement ABClResistanc

45、e to change among managers and employeesvReading by Booth and Giacobbe50Other activity-based costing issueslSources of variations in types of ABC include whethervactual (past) or budgeted costs are analysedvthe implementation is a one-off project or an on-going systemvcost objects, other than produc

46、ts, are included51Other activity-based costing issueslImplications of excess capacityvABC estimates the cost of resources used to perform activities to produce and sell products, which may not always equal the cost of resources suppliedvneed to account for the costs of unused capacity when budgeted

47、costs have been used to generate activity-based product costs52Other activity-based costing issueslBehavioural issues vchange can be perceived as threateningABC may require changes in data collected and collection and analysis proceduresvbottom-up change management may give some degree of ownership

48、of any changes caused by ABCvmanagement must be seen as committed to the change process53Limitations of activity-based costinglIf a high level of facility-level costs are allocated to products, this can lead to an arbitrary element of product costlUnitised batch, product and facility-level costs can

49、 lead to product costs that are of limited use for decision makinglThe cost of updating an ABC system can be very high, but this is needed to avoid producing outdated, irrelevant information54Activity-based costing in service organisationslABC can be difficult to implement in service firms, becausev

50、high levels of facility costs cause problems with costing servicesvindividual activities are difficult to identify because they are non-repetitiveva non-repetitive production environment makes it difficult to identify service outputs55Activity-based management (ABM)lProcess of using information from

51、 activity-based costing to analyse activities, cost drivers and performance so that customer value and profitability are improvedlCustomer valuevthe features of a product which customers are willing to pay 56Using ABM to reduce costslIdentify the major opportunities for cost reductionlDetermine the

52、real causes of these costslDevelop a program to eliminate the causes, and, therefore, the costslIntroduce performance measures to monitor the effectiveness of cost reduction efforts57Identifying the major opportunities for cost reductionlValue-added activitiesvessential to the customer, or businessl

53、Non-value-added activitiesvcan be eliminated without detriment to either the customers or the business58Value-Added CostslA 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 softwareReliabilityEasy-t

54、o-use keyboards59Non-value-added costslA non-value-added cost is a cost that customers do not perceive as adding value, or utility, to a product or service.vCost of expeditingvReworkvRepairvMaterial inspectionvIdle time60Activity-Based Management lABM can be used forlProduct pricing and mix decision

55、slCost reduction and process improvement decisionslDesign decisions61Product Pricing and Mix DecisionslABC gives management insight into the cost structures for making and selling a diverse range of products.lIt provides more accurate product cost information and more detailed information on costs o

56、f activities and the drivers of those costs.62Cost Reduction and Process Improvement DecisionslManufacturing and distribution personnel use ABC systems to focus on cost reduction efforts.lManagers set cost-reduction targets in terms of reducing the cost per unit of the cost-allocation base.63Design

57、DecisionslManagement can identify and evaluate new designs to improve performance by evaluating how product and process designs affect activities and costs.lCompanies can work with their customers to evaluate the costs and prices of alternative design choices.64Just-In-Time Production SystemslJust-in-time (JIT) production systems take a “demand pull” approach in which goods are only manufactured when needed to satisfy customer orders.lDemand triggers each step of the production process, starting with customer demand for a finished product at the end of the process, to the demand for direc