Cost Accounting(英文版)(ppt 33页).ppt

Author CollinsQian Reviewer BobArmacost bc CostAccounting March1998 Copyright 1998Bain Company Inc 2 CU7122397ECA ImportanceofcostallocationClientexampleDefinitionsdirectvs indirect fixedvs variablebreakevenvolumeExercisescostallocationbreakevenvolumeKeytakeaways Agenda 3 CU7122397ECA ImportanceofcostallocationClientexampleDefinitionsdirectvs indirect fixedvs variablebreakevenvolumeExercisescostallocationbreakevenvolumeKeytakeaways Agenda 4 CU7122397ECA Whichproductsareprofitable Whatisthebreakevenvolumebyproduct Whichproductsrequirecostreductionefforts Howshouldwepriceourproducts Whichcustomersegmentsaremostprofitable Itiscriticaltohaveaccurateandcompletecostdatatomakesoundstrategicandtacticalmanagementdecisions WhyAllocateCosts 5 CU7122397ECA Historically only20 ofmanufacturingcostswere shared acrossproductlines Today typically50 ofcostsare shared acrossproducts Sharedcostsmightincluderent freight andadministrativecosts Forsimplicity accountingtrackscostsbyfunction e g materials salaries benefits ratherthanbytheactivitydevotedtoproductlines e g maintenanceofproductA freightforproductB Forcoststhatarenoteasilyassignedtoindividualproductlines companiesnormallyselectthemostconvenientwaytoassignthem notnecessarilythebestwayforexample companiestendtoallocaterentcostsbasedonsomethingthatiseasytomeasure suchasdirectlabordollarsforeachproductline Abetterallocationmethod however mightbetheactualspaceresourcedemandsofeachproductline Mostcompanieslackaccuratecostdatabyproduct WhyCostsAreOftenNotAllocatedCorrectly 6 CU7122397ECA ImportanceofcostallocationClientexampleDefinitionsdirectvs indirect fixedvs variablebreakevenvolumeExercisescostallocationbreakevenvolumeKeytakeaways Agenda 7 CU7122397ECA MiddleAmericaManufacturing aBainclient believedthatallthreeofitsproductlineswereprofitable Returnonsales 10 0 2 4 1 6 Sales 250MM 100MM 75MM MiddleAmericaManufacturing EstimatedProfitability 8 CU7122397ECA Afterathoroughevaluation theBainteamfoundthat 8 0MMincostshadbeenallocatedincorrectlyamongthethreeproducts MiddleAmericaManufacturing CostAllocation 9 CU7122397ECA TheBainteamalsodeterminedthatanadditional 18 8MMincostsshouldbeallocatedtothethreeproducts MiddleAmericaManufacturing AdditionalCosts 10 CU7122397ECA Bain sanalysisindicatedthatbothbicyclesandwalkingmowerswereunprofitable MiddleAmericathenbegantoinvestigatewhethertoexitorfixthesetwobusinesses Returnonsales 7 2 3 0 6 9 Sales 250MM 100MM 75MM MiddleAmericaManufacturing ActualProfitability 11 CU7122397ECA ImportanceofcostallocationClientexampleDefinitionsdirectvs indirect fixedvs variablebreakevenvolumeExercisescostallocationbreakevenvolumeKeytakeaways Agenda 12 CU7122397ECA Definitions Coststhatdonotvarydirectlywithchangesinoutput Coststhatvarydirectlywithchangesinoutput Costsincurreddirectlyintheproductionordeliveryofafirm sproductorservice Thesecostscaneasilybeidentifiedwith orassignedto aparticularproduct Costsgenerallyincurredbythefirmoutsideoftheproductionprocess Thesecostscannoteasilybeidentifiedwith orassignedto aparticularproduct Allcostscanbebrokendownalongtwodimensions Fixed Variable Direct Indirect vs vs Examples EquipmentdepreciationRentAdvertising RawmaterialsProductionlaborDeliverycosts DirectlaborDedicatedequipmentRawmaterials SG AOfficesuppliesPlantmanager Ruleofthumb Ifaparticularcostchangeswhenproductionincreasesordecreases thecostisvariable Ifaparticularcost goesaway whenaproductisdroppedfromtheproductline thecostisdirect TypesofCosts 13 CU7122397ECA Allcostsarevariableoveraverylongtimehorizon i e forverylargeincreasesinvolume Coststorunandmaintainacomputersystemthattracksproductordersareclearlyfixedforasmallchangeinvolume suchasthatassociatedwithaslightlybusymonth However theyarevariableforalargechangeinvolume suchasthatassociatedwithanewplant Mostcostsaresemi variable i e theytendtobeaddedinlumpsasvolumeincreases Supervisorylabortendstobeconsideredfixedbecauseitisunlikelythatadditionalsupervisorswouldhavetobeaddedtohandleasmallincrease say10 involume Buttheworkforcecanonlyincreasesomuchbeforeanadditionalsupervisorisneeded Intheory productionlaborisvariable However inmanyclientsituations restraintsplacedbyunionsanddifficultyinhiringandfiringpeopleinresponsetoshort termvolumefluctuationsmakeit inpractice semi variable Definingtheappropriatetimehorizonfortheanalysisisimportant Ameaningfulanalysiswillisolatethefixedcostandvariablecomponentsofaparticularcost Fixedvs Variable 14 CU7122397ECA Thefollowingisanillustrationofcostbehaviorforfixed semi variable andvariablecosts Cost Dollars Volume Units Variablecosts Semi variablecosts Fixedcosts Fixedvs Variable Illustration 15 CU7122397ECA Itisusefultoknowthefollowingtermswhendoingcostanalysis Simplifiedincomestatement VariableCost GrossMargin FixedCost OperatingMargin Revenue PriceperUnitxVolume Grossmarginisalsocalled GrossProfit or ContributionMargin OperatingMarginisalsocalled OperatingProfit Revenue IncomeStatementTerms 16 CU7122397ECA Breakevenvolumeisthevolumeatwhichthecompanycoversitsfixedcosts Atbreakevenvolume theoperatingprofitiszero Volume Contributionmargin i e revenuelessvariablecosts Fixedcosts Breakevenvolume OperatingLoss Fixedcosts Unitcontribution Priceperunit Variablecostperunit Breakevenvolume Fixedcosts OperatingProfit ContributionMargin BreakevenVolume 17 CU7122397ECA OperatingProfit Revenue Costs Revenue VariableCosts Fixedcosts PriceperunitxVolume VariablecostperunitxVolume Fixedcosts Volumex Priceperunit Variablecostperunit Fixedcosts VolumexUnitcontribution FixedcostsThebreakevenvolumeisthevolumeforwhichoperatingprofit 00 BreakevenvolumexUnitcontribution Fixedcosts Fixedcosts Unitcontribution Priceperunit Variablecostperunit Breakevenvolume Fixedcosts BackupforBreakevenFormula 18 CU7122397ECA ImportanceofcostallocationClientexampleDefinitionsdirectvs indirect fixedvs variablebreakevenvolumeExercisescostallocationbreakevenvolumeKeytakeaways Agenda 19 CU7122397ECA AllproductsaremadeusingthesameequipmentandmachineryPlantsupervisorsoverseeproductionofallthreeproductsEquipmentcapacityexiststoincreaseproductionby50 SalespeoplesellallthreeproductsSalespeoplearepaidabasesalary plusacommissionwhichisapercentageofthesellingpriceMostadvertisingisproductspecificThecompanyusesatruckingcompanytodeliverproductstocustomers costsarebasedonthelengthoftripandweight MapleLeafCompanywantstoallocatecoststothethreeproductsitmakesandsells CostAllocationExercise Background 20 CU7122397ECA Howwouldyoucharacterizethefollowingcostsoveratimehorizoninwhichthecompanyplanstoincreasesalesvolumeby10 Fixed Variable Direct Indirect CEO ssalaryRawmaterialsSupervisorylaborProductionfloorlaborRent EquipmentdepreciationOfficesuppliesFreighttocustomerElectricitytorunmachinesInterestexpensetofinanceinventory AdvertisingGoodwillamortizationSalescommissionsSalespeoples salariesSalestravelandexpenses Costs CostAllocationExercise Question 21 CU7122397ECA CostAllocationExercise Answer Mostcostsarefixedindirectorvariabledirect Fixed Variable Direct Indirect Advertising RawmaterialsProductionfloorlaborFreighttocustomerInterestexpensetofinanceinventorySalescommissions EquipmentdepreciationCEO ssalarySupervisorylaborRentOfficesuppliesGoodwillamortizationSalespeople ssalariesSalestravelandexpenses Electricitytorunmachines 22 CU7122397ECA CostComponents Fixedvs Variable Directvs Indirect Advertising Fixed becauseadvertisingisusuallynottieddirectlytovolume Direct because inthiscase mostofitisproductspecific Equipmentdepreciation Fixed becauseexcesscapacityexistsfora10 increaseinvolume Indirect becauseallproductsaremadeonthesamemachines CEO ssalary Fixed assuminghis hersalarydoesnotchangewith10 salesincrease Indirect becauseCEOoverseesthewholecompany Supervisorylabor Fixed becauseitisunlikelythatadditionalsupervisorswillbeneededtohandlea10 increaseinvolume Indirect becausesupervisorsoverseeproductionofallthreeproducts Indirect becauseallthreeproductsareproducedatthesamesite Rent Fixed assumingcurrentfacilityhasexcesscapacity CostAllocationExercise DetailedAnswer 1of3 23 CU7122397ECA CostComponents Fixedvs Variable Directvs Indirect Officesupplies Fixed becauseitisunlikelythatadditionalofficesupplieswillbeneededtohandle10 increaseinvolume Indirect becausetheofficesuppliesareusedtosupportallthreeproducts Goodwillamortization Fixed becausegoodwillisnotdirectlyrelatedtovolume Indirect assumingthegoodwillisincurredtosupportthewholecompany Salespeople ssalaries Fixed assumingthatcurrentsalesforcecanhandle10 additionalvolume Indirect becauseeachsalesmansellsallthreeproducts Salestravelandexpenses Fixed assumingthat10 volumeincreasewillnotrequiresignificantincreaseinsalesactivities Indirect becausesales forcehandlesallthreeproducts Rawmaterial Variable becausea10 increaseinvolumewouldrequire10 morerawmaterials Direct becauserawmaterialsaredirectlytraceabletoindividualproducts CostAllocationExercise DetailedAnswer 2of3 24 CU7122397ECA CostComponents Fixedvs Variable Directvs Indirect Direct becauseeventhoughtheproductsaremadeonthesamemachine thehoursspentworkingoneachoftheproductsaredirectlytraceable Productionfloorlabor Variable becausemoreproductionlaborwillbeneededtohandletheincreaseinvolume Freighttocustomers Variable becausethefreightcostclearlyincreaseswiththevolumeincrease Direct becauseweightanddistancecanbedirectlytracedtoindividualproducts Interestexpensetofinanceinventory Variable becausemoreinventorymeansmoreinventoryfinancingandhencemoreinterestexpense Direct becauseinventoryisproductspecific Salescommissions Variable becausesalescommissionsarepaidbasedonapercentageofsales Direct becausecommissionsarebasedonindividualproductsales Electricitytorunmachines Variable becauseitclearlyvarieswithvolume Indirect becauseallproductsaremadeonthesamemachines CostAllocationExercise DetailedAnswer 3of3 25 CU7122397ECA LaborInmanyclientsituations restraintsplacedbyunionsanddifficultyinhiringandfiringpeopleinresponsetoshorttermvolumefluctuationsmakeaportionoflaborcostsbehaveasfixedcostsElectricitytorunmachinesIntheorythisisdirect butinpracticeitisconsideredindirectbecauseitisdifficulttotraceelectricitycosttoproductsAlso the80 20ruleapplieshere Electricityisusuallyasmallcostitem and forsimplicity couldbeallocatedusingmachinehoursspentonproductionAdvertisingUsually advertisingisnottiedtovolume Forexample advertisingtosupportacorporatebrandisnottiedtothevolumeoftheproductsunderthatbrand Ifadvertisingisnottiedtovolume itisfixedandindirect Therearefewcaveats CostAllocationExercise Caveats 26 CU7122397ECA Adeanofabusinessschoolisconsideringstartinganexecutiveprogram Sheestimatestherevenuesandcostsasfollows Question Howmanystudentsdoestheprogramneedtobreakeven Costs Revenue AdvertisingClassroomrental Eachclassroomcanaccommodate15students ProgramadministrationProgramdirector ssalaryFacultysalaries Theprogramwillbestaffedwith1facultymemberforevery5students GuestlecturerRoomandboardperstudentTextandsuppliesperstudent Tuitionperstudent 3 000 13 500 500 30 000perclassroom 15 000 20 000 20 000perfacultymember 12 000 3 200 BreakevenExercise Background 27 CU7122397ECA Step1 Categorizecosts AdvertisingClassroomrentalProgramadministrationProgramdirector ssalaryFacultysalariesGuestlecturesRoomandboardperstudentTextandsuppliesperstudent Fixed Variable Step2 Calculatefixedcosts Fixedcosts 3 000Advertising 15 000Programadministration 20 000Programdirector ssalary 12 000Guestlectures 50 000 Semi Variable First youmustcategorizecostsandcalculatefixedcosts BreakevenExercise Answer 1of3 28 CU7122397ECA Step4 CalculateunitcontributionUnitcontribution Priceperunit Variablecostperunit 13 500tuition 3 200roomandboard 500textandsupplies 9 800 Step3 Calculatesemi variablecostsClassroomFaculty10students 30 000 40 00015students 30 000 60 00020students 60 000 80 000 Thenyoumustcalculatesemi variablecostsandtheunitcontribution BreakevenExercise Answer 2of3 29 CU7122397ECA Themosteffectivewaytocalculateth