成本与管理会计亨格瑞第13版英文版CA05ppt课件

1、Activity-Based Costing andActivity-Based ManagementCHAPTER 5LEARNING OBJECTIVESExplain how broad averaging undercosts and overcosts products or servicesPresent three guidelines for refining a costing systemDistinguish between simple and activity-based costing systemsDescribe a four-part cost hierarc

2、hy Cost products or services using activity-based costingExplain how activity-based costing systems are used in activity-based managementCompare activity-based costing systems and department costing systemsEvaluate the costs and benefits of implementing activity-based costing systemsStructure of Lec

3、tureUnder- and over-costing why it happens?Activity Based Costing (ABC)Indicators of need for ABCABC systemDifference between ABC and Traditional Product CostsActivity Based Management (ABM)Value and non-value added costsLEARNING OBJECTIVE 1Explain how broad averaging undercosts and overcosts produc

4、ts or servicesBackgroundEasy to trace Direct materials and direct labor costs Overhead cannot be traced easily and must be allocated with estimates.Recall that Factory Overhead is applied to production in a rational and systematic manner, using some type of averaging. There are a variety of methods

5、to accomplish this goal.Simple Methods Complex Methods Unrealistic Realisticentreedessertdrinkstotalemma110415james2081442jessica154827matthew144624total601632108average154827Broad Averaging and Cross-subsidizationP110 Broad Averaging and Cross-subsidization,conts.Historically, firms produced a limi

6、ted variety of goods while their indirect costs were relatively small. Allocating overhead costs was simple: use broad averages to allocate costs uniformly regardless of how they are actually incurredThe use of broad averages in allocating indirect costs can have a number of adverse consequences.Tra

7、ditional product-costing methods use a single indirect cost rate to allocate costs to all products.Broad Averaging and Cross-subsidization, conts. Different products consume activities at different rates, traditional costing does not recognize these differences.Peanut-butter costing uses broad avera

8、ges to assign (or spread) costs uniformly to cost objects.The result can be undercosting or overcosting of products. Overcosting a product consumes a low level of resources but is allocated high costs per unit (Emmas dinner)Undercosting a product consumes a high level of resources but is allocated l

9、ow costs per unit (Jamess dinner)Broad Averaging and Cross-subsidization,conts.When a company has a situation in which undercosting or overcosting of products occurs, this is referred to as product-cost cross-subsidization. P110The results of overcosting one product and undercosting another.The over

10、costed product absorbs too much cost, making it seem less profitable than it really is.The undercosted product is left with too little cost, making it seem more profitable than it really is.The Need for ABCLine managers do notbelieve the productcosts reportsMarketing does notuse costs reports forpri

11、cing decisionsProduct-line profitmargins are hardto explainSales are increasing,but profits are declining.Some products thathave reported highprofit margins are notsold by competitorsDirect labor is asmall percentageof total costsLEARNING OBJECTIVE 2Present three guidelines for refining a costing sy

12、stemRationale for Refining Costing SystemIncrease in product diversityAdvances in ITCompetition in marketsIncrease in Indirect CostsStrategic decision Price decisionMarket decisionMake trace more cost-effectiveProvide more dataMultiple cost driver pools Advance in product and process technology incr

13、ease indirect cost, lower direct costsCustomized productsDifferentiate from competitorsGuidelines for Refining a cost systems1. Direct-cost tracingclassify as many of the total costs as direct costs as is economically feasible. 2. Indirect-cost pools expand the number of cost pools until each of the

14、se pools is homogeneous. 3. Cost-allocation basisidentify the preferred cost-allocation base for each indirect-cost pool.Refining a Costing SystemA refined cost system reduces the use of broad averages for assigning costs to resources. There are three principal reasons that have accelerated the dema

15、nd for such refinements.P115Increase in product diversity. The growing demand for customized products has led to product diversity with the result that products demand differing levels of resources.Refining a Costing System,contsA refined cost system reduces the use of broad averages for assigning c

16、osts to resources. There are three principal reasons that have accelerated the demand for such refinements.Increase in indirect costs. With modern technology, companies have experienced a decrease in direct costs with a resulting increase in indirect costs.Competition in product markets. Markets hav

17、e become more competitive, forcing managers to obtain more accurate cost information to help them make strategic decisions.Refining a Costing System,contsThree guidelines are presented for refining a costing system.Direct-cost tracing. Identify as many direct costs as is economically feasible.Indire

18、ct-cost pools. Expand the number of cost pools so that each pool is somewhat homogeneous. Each cost in the pool has a similar cause-and-effect relationship with a single cost driver.Cost-allocation bases. The cost driver serves as the cost allocation base for each homogeneous indirect-cost pool.LEAR

19、NING OBJECTIVE 3Distinguish between simple and activity-based costing systemsRefining a Costing System,contsA simple costing system has few indirect (often one) cost rates and allocates costs broadly.In todays complex manufacturing environment, this can lead to inaccurate product costs. An activity-

20、based system (ABC) identifies activities as fundamental cost objects.Costs are then assigned to the activities and allocated to the individual products. Simple Methods Complex Methods Unrealistic RealisticRefining a Costing System,contsAn Example Consider an example of two products of Cactus Jelly:

21、Regular and Deluxe De-spinedCactiCorp sells equal quantities of eachRegular sells for $40 per jar, and Deluxe $50Both products have the same Direct Materials costsDeluxe takes twice as much Direct Labor due to the extensive de-spining requiredRefining a Costing System,contsAn Example, continued Base

22、d on the previous assumptions, costs could be allocated, based on units, as follows:1234423Refining a Costing System,contsAn Example, continued Or it could be costed differently using another cost driver, in this case, Direct Labor Hours1234423Refining a Costing System,contsAn Example, continued Or

23、it could be costed using two separate cost drivers. Using multiple cost drivers is called Activity-Based CostingDrivers could be any relevant or related activityNumber of PatientsNumber of MealsPounds, Gallons, Barrels, Board-Feet, etc.The next slide displays cost allocation for the Cactus Jelly usi

24、ng two new drivers together12Refining a Costing System,contsRefining a Costing System,contsABC yields different cost per unit results as compared to the previous single-driver methods:3Refining a Costing System,contsAn Example, concluded: Different Costs Lead to Different ProfitsActivity-based costi

25、ngP116Designing an ABC SystemCost Objects(e.g., productsand customers)ActivitiesConsumptionof ResourcesCostProducts Consume ActivitiesActivities Consume ResourcesReasoning for ABCActivity-based costing,conts.In order to implement activity-based costing, a seven-step procedure should be followed.P117

26、Step 1:Identify the products that are the chosen cost objects.Step 2:Identify the direct costs of the products.Step 3:Select the activities and cost-allocation bases to use for allocating indirect costs to the products.Activity-based costing,conts.In order to implement activity-based costing, a seve

27、n-step procedure should be followed.Step 4:Identify the indirect costs associated with each cost-allocation base (activity).Step 5:Compute the rate per unit of each cost-allocation base (activity) used to allocate indirect costs to the products.Step 6:Compute the indirect costs allocated to the prod

28、ucts.Activity-based costing,conts.In order to implement activity-based costing, a seven-step procedure should be followed.Step 7:Compute the total costs of the products by adding all direct and indirect costs assigned to the products.This process is not a strict step-by-step procedure. You may get t

29、o one step and realize you need to revise something you did in a previous step, so you will frequently find yourself going back to a previous step in implementing an activity-based costing system. Activity-based costing, conts. ABC is generally perceived to produce superior costing figures due to th

30、e use of multiple drivers across multiple levels.ABC is only as good as the drivers selected, and their actual relationship to costs. Poorly chosen drivers will produce inaccurate costs, even with ABC.LEARNING OBJECTIVE 4Describe a four-part cost hierarchy Activity-based costing,conts. Cost Hierarch

31、ies .In an ABC system, costs are categorized on the basis of the different types of cost drivers utilized. ABC systems commonly use a cost hierarchy having four levels. These cost drivers differ in their relationship between the indirect cost and the product or service.P119Output unit-level costs ar

32、e the costs of activities performed on each individual unit of a product or service. These costs increase as the number of units produced increases.Activity-based costing,conts.Cost Hierarchies. These cost drivers differ in their relationship between the indirect cost and the product or service.P119

33、Batch-level costs are the costs of activities related to a group of units of products or services rather than the individual unit. Set-up costs are an example of batch level costs, as this cost is incurred once for each batch, regardless of the size of the batch.Activity-based costing,conts.Cost Hie

34、rarchies. These cost drivers differ in their relationship between the indirect cost and the product or service.P119Product-sustaining costs (service-sustaining costs) are the costs of activities undertaken to support individual products or services regardless of the number of units or batches produc

35、ed. Design costs are an example of this type of cost.Activity-based costing,conts.Cost Hierarchies .These cost drivers differ in their relationship between the indirect cost and the product or service.P120Facility-sustaining costs are the costs of activities that cannot be traced to individual produ

36、cts or services but support the organization as a whole. Examples of this type of cost include general administration, rent, and building security. These costs usually lack a cause-and-effect relationship between the cost and the allocation base.LEARNING OBJECTIVE 5Cost products or services using ac

37、tivity-based costingActivity-based costing,conts.Another Examplea major automobile manufacturer ,Plastim makes two types of lenses:a complex lens,CL5,and a simple lens,S3 . P111-11315000 complex lens CL5,and 60000 simple lens S3Plastim plans to use 39750 direct manufacturing labor-hours,use 9750 dir

38、ect manufacturing labor-hours to CL5Indirect costs 2385000Example for presentation: BackgroundSimple costing system at plastim corporation, produce S3 and CL5, p112Molds Modifications for kindsmoldedFinished, cleaned, and inspectedpackedDelivered as wholerepairedRelative with qualityDesignManufactur

39、ingDistributionCustomer service1. operating at capacity2. high-quality products results in minimal customer-service costsConflict between S3 and CL5Market enforce: many competitor on s3Price: S3, $63 New supplier,$53S3Market enforce: No competitorPrice: CL5, $CL5Plastim?Unprofitable, give up.Lower t

40、he price or reducing the costprofitable, enhance Produce morePrice on inventory cost, only allocate manufacturing costActivity-based costing,conts.Simple Methods P113Activity-based costing,conts.Simple Methods P113complex MethodsP122Activity-based costing,conts.P122Activity-based costing,conts.Simpl

41、e vs complex Methods P123Activity-based costing,conts.P125Activity-based costing,conts.Differences Between ABC and Traditional Product Costs P124Product margins are different for four reasons: Traditional costing assigns design costs to both products based on machine hours. ABC assigns product desig

42、n costs to a product only if product design work is required. Traditional costing assigns customer order costs, a batch-level cost, using a unit-level allocation base, machine hours. ABC assigns these batch-level costs using a batch-level activity measure. Traditional costing assigns only manufactur

43、ing costs to products. ABC also assigns nonmanufacturing costs to products. Traditional costing assigns all manufacturing costs to products. The ABC system does not assign organization-sustaining manufacturing costs to the products.Differences Between ABC and Traditional Product CostsManufacturingco

44、stsNonmanufacturingcosts ABC assigns both types of costs to products.Traditionalproduct costingABCproduct costingDifferences Between ABC and Traditional Product Costs Plant wide OverheadRateDepartmentalOverheadRatesActivityBasedCostingNumber of cost poolsLevel of complexityABC uses more cost pools.D

45、ifferences Between ABC and Traditional Product CostsABC uses more allocation bases.Traditional CostingNumber ofAllocation BasesABCBases usuallyrely solely onvolumemeasures.Volumemeasuresplus otherbases.ConclusionsEach method is mathematically correct and acceptableEach method yields a different cost

46、 figure, which will lead to different Gross Margin calculationsOnly Overhead is involved. Total Costs for the firm remain the same they are just allocated to different cost objects within the firmABC is generally perceived to produce superior costing figures due to the use of multiple drivers across

47、 multiple levelsABC is only as good as the drivers selected, and their actual relationship to costs. Poorly chosen drivers will produce inaccurate costs, even with ABCSelection of the appropriate method and drivers should be based on experience, industry practices, as well as a cost-benefit analysis

48、 of each option under considerationActivity-Based Costing and External ReportingMost companies do not use ABC for external reporting because . . .External reports are less detailed than internal reports.It may be difficult to make changes to the companys accounting system.ABC does not conform to GAA

49、P.Auditors may be suspect of the subjective allocation process based on interviews with employees.LEARNING OBJECTIVE 6Explain how activity-based costing systems are used in activity-based managementActivity-Based ManagementActivity-based management (ABM) is a method of management decision making tha

50、t uses activity-based costing information to improve customer satisfaction and profitability.P124Activity-based management allows companies to better plan and manage their activities.ABM is defined broadly to include decisions about Pricing and product mixCost reduction Process improvementProduct de

51、sign作业本钱法的二维观念继续运营本钱分配观资 源过程分析作 业本钱对象过程观Activity-Based Management,conts.The Role of ABC/M ToolsWhat ABM doesAnalysis andClassificationValue-addedcostsActivitiesContinually Evaluate and ImproveA value-added cost is a cost that customers perceive as adding value, or utility, to a product or service:Ad

52、equate memory Pre-loaded softwareReliabilityEasy-to-use keyboardsValue-Added CostsNon value-addedActivitiesReduce orEliminateUsing ABM to Eliminate Non-Value-Added Activities and CostsIdentify Activities.Identify Non-Value-Added Activities.Understand Activity Linkages, Root Causes, and Triggers.Esta

53、blish Performance Measures.Report Non-Value-Added Costs. SpecifypartsSelectvendorReceivepartsProducegoodsInspectfinishedgoodsReworkdefectiveproductsAchieving Cost ReductionActivityReductionActivityEliminationActivitySelectionActivitySharingReduceNon-Value-AddedCostsWhy do organizations have incentiv

54、esto eliminate non-value added activities?Competitors are constantly strivingto create more value for customers at lower cost The organization can apply the freed- up resources to value-added activities or distribute them to the employees of theorganization.Competition can appear quicklyNon-value Ad

55、ded ActivitiesKeys to Successfully Implementing ABC and ABM1. Organizational Culture.2. Top-Management Commitment.3. Change Champion.4. Change Process.5. Continuing Education.LEARNING OBJECTIVE 7Compare activity-based costing systems and department costing systemsCompare activity-based costing syste

56、ms and department costing systems A comparison of activity-based costing systems and department costing systems P127Companies may use costing systems that have features of ABC, such as multiple cost pools and allocation bases.If these systems do not emphasize individual activity bases, it may be a refined cost system, but cannot be called an activity-based costing system.Compare activity-based costing systems and department costing systems ,conts.A compari