英文成本管理会计chapter04

1、chapter 4activity-based costingquestions for writing and discussionunit costs provide essential information needed for inventory valuation and preparation of income statements. knowing unit costs is also critical for many decisions such as bidding decisions and accept-or-reject special order decisio

2、ns.cost measurement is determining the dollar amounts associated with resources used in production. cost assignment is associating the dollar amounts, once measured, with units produced an actual overhead rate is rarely used because of problems with accuracy and timeliness. waiting until the end of

3、the year to ensure accuracy is rejected because of the need to have timely information. timeliness of information based on actual overhead costs runs into difficulty (accuracy problems) because overhead is incurred non uniformly and because production also may be nonuniform.for plantwide rates, over

4、head is first collected in a plantwide pool, using direct tracing. next, an overhead rate is computed and used to assign overhead to productsfirst stage: overhead is assigned to production department pools using direct tracing, driver tracing, and allocatio n. second stage: in dividual departme ntal

5、 rates are used to assign overhead to products as they pass through the departments.departmental rates would be chosen over plantwide rates whenever some departments are more overhead intensive than others and if certain products spend more time in some departments than they do in others.plantwide o

6、verhead rates assign overhead to products in proportion to the amount of the unit-level cost driver used. if the products consume some overhead activities in different proportions than those assigned by the unit-level cost driver, then cost distortions can occur (the product diversity factor). these

7、 distortions can be significant if the nonunitlevel overhead costs represent a significant proportion of total overhead costslow-volume products may consume nonunit-level overhead activities in much greater proportions than indicated by a unit-level cost driver and vice versa for high-volume product

8、s if so, then the low-volume products will receive too little overhead and the high-volume products too much.if some products are undercosted and others are overcosted, a firm can make a number of competitively bad decisions for example, the firm might select the wrong product mix or submit distorte

9、d bids.nonunit-level overhead activities are those overhead activities that are not highly correlated with product!on volume measures examples include setups, material handling, and inspec- tiori. nonunit-level cost drivers are causal factorsfactors that explain the consumption of nonunitlevel overh

10、ead examples include setup hours, number of moves, and hours of in specti on.product diversity is present whenever products have different consumption ratios for differ- ent overhead activities.an overhead consumption ratio measures the proportion of an overhead activity consumed by a product.13. de

11、partme ntal rates typically use unit-level cost drivers .if products consume non unit-level overhead activities in different proportions than those of unit-level measures, then it is possible for departmental rates to move even further away from the true consumption ratios, since the departmental un

12、it-level ratios usually differ from the one used at the plant level.14. agree. prime costs can be assigned using direct tracing and so do not cause cost distortions. overhead costs, however, are not directly attributable and can cause distortions. for example, using unit-level activity drivers to tr

13、ace nonunit-level overhead costs would cause distorti ons.15. activity-based product costing is an overhead costing approach that first assigns costs to activities and then to products. the assignment is made possible through the identification of activities, their costs, and the use of cost drivers

14、.16. an activity dictionary is a list of activities accompanied by information that describes each activity (called attributes)17. a primary activity is consumed by the final cost objects such as products and customers, whereas secondary activities are consumed by other activities (ultimately consum

15、ed by primary activities).18. costs are assigned using direct tracing and resource drivers.19 homogeneous sets of activities are produced by associating activities that have the same level and that can use the same driver to assign costs to products. homogeneous sets of activities reduce the number

16、of overhead rates to a reasonable level.20. a homogeneous cost pool is a collection of overhead costs that are logically related to the tasks being performed and for which cost variations can be explained by a single activity driver. thus, a homogeneous pool is made up of activities with the same pr

17、ocess, the same activity level, and the same driver.21 unit-level activities are those that occur each time a product is produced. batch-level activitiesare those that are performed each time a batch of products is produced product-level or sus- taining activities are those that are performed as nee

18、ded to support the various products produced by a company. facility-level activities are those that sustain a factory's general manufacturing process.22 abc improves costing accuracy whenever there is diversity of cost objects. there are various kinds of cost objects, with products being only on

19、e type. thus, abc can be useful for improving cost assignments to cost objects like customers and suppliers. customer and supplier diversity can occur for a single product firm or for a jit manufacturing firm.23. activity-based customer costing can identify what it is costing to service different cu

20、stomers. once known, a firm can then devise a strategy to increase its profitability by focusing more on profitable customers, converting unprofitable customers to profitable ones where possible, and ufiring” customers that cannot be made profitable.24. activity-based supplier costing traces all sup

21、plier-caused activity costs to suppliers this new total cost may prove to be lower than what is signaled simply by purchase priceexercises4-1quarter 1quarter 2quarter 3quarter 4totalunits produced400,000160,00080,000560,0001,200,000prime costs$8,000,000$3,200,000$1,600,000$11,200,000 $24,000,000over

22、head costsunit cost:$3,200,000$2,400,000$3,600,000$2,800,000 $12,000,000prime$20$20$20$20$20overhead81545510total$28$35$65$25$302 actual costing can produce wide swings in the overhead cost per unit. the cause appears to be nonuniform incurrenee of overhead and nonuniform production (seasonal produc

23、tion is a possibility).3. first, calculate a predetermined rate:oh rate = $11,640,000/1,200,000=$9.70 per unitthis rate is used to assign overhead to the product throughout the year. since the driver is units produced, $9.70 would be assigned to each unit. adding this to the actual prime costs produ

24、ces a unit cost under normal costing:unit cost = $9.70 + $20.00 = $29.70this cost is close to the actual annual cost of $30.00.4-21. predetermined rates: drilling department:rate = $600,000/280,000 = $2.14* per mhrassembly department:rate = $392,000/200,000= $1.96 per dlh*rounded2. applied overhead:

25、drilling department: $2.14 x 288,000 = $616,320assembly department: $1.96 x 196,000 = $384,160overhead variances:drillinqassemblytotalactual overhead$602,000$ 412,000$ 1,014,000applied overheadoverhead varianee616,320384,1601,000,480$(14,320) over$ 27,840 under $13,5203. unit overhead cost=($2.14 x

26、4,000) + ($1.96 x 1,600)/8,000 = $11,696/8,000= $1.46*rounded4-31. yes. since direct materials and direct labor are directly traceable to each product, their cost assignment should be accurate2. elegant: (1.75 x $9,000)/3,000 = $5.25 per briefcasefina:(1.75 x $3,000)/3,000 = $1.75 per briefcasenote:

27、 overhead rate = $21,000/$12,000 = $1.75 per direct labor dollar (or 175 percent of direct labor cost).there are more machine and setup costs assigned to elegant than fina. this is clearly a distortion because the production of fina is automated and uses the machine resources much more than the hand

28、crafted elegant. in fact, the consumption ratio for machining is 0.10 and 0.90 (using machine hours as the measure of usage). thus, fina uses nine times the machining resources as elegant. setup costs are similarly distorted. the products use an equal number of setups hours yet, if direct labor doll

29、ars are used, then the elegant briefcase receives three times more machining costs than the fina briefcase.3. overhead rate = $21,000/5,000=$4.20 per mhrelegant: ($4.20 x 500)/3,000 = $0.70 per briefcase fina:($4.20 x 4,500)/3,000 = $6.30 per briefcasethis cost assignment appears more reasonable giv

30、en the relative demands each product places on machine resources. however, once a firm moves to a multiproduct setting, using only one activity driver to assign costs will likely produce product cost distortions. products tend to make different demands on overhead activities, and this should be refl

31、ected in overhead cost assignments. usually, this means the use of both unit- and nonunit-level activity drivers. in this example, there is a unitlevel activity (machining) and a nonunit-level activity (setting up equipment). the consumption ratios for each (using machine hours and setup hours as th

32、e activity drivers) are as follows:eleqa ntfinamachining0.100.90(500/5,000 and 4,500/5,000)setups0.500.50(100/200 and 100/200)setup costs are not assigned accurately. two activity rates are neededone based on machine hours and the other on setup hours:machine rate: $18,000/5,000 = $3.60 per mhrsetup

33、 rate:$3,000/200 = $15 per setup hourcosts assigned to each product:machi ning:eleqantfina$3.60 x 500$3.60 x 4,500$ 1,800$16,200setups:$15x 100totalunitsunit overhead cost1,500 $ 3,300 m 3,000 $ 1.101,500 $17,700 m 3,000 $5.904-4activity dictionary:activity nameactivitydescripti onprimary/secondarya

34、ctivity driverproviding nursing caresatisfying patient needsprimarynursing hourssupervisi ng nu rsescoordinating nursing activitiessec on darynumber of nursesfeeding patientsproviding meals to patientsprimarynumber of mealslaun deri ng bedding and clothescleaning and delivering clothes and beddingpr

35、imarypounds of la undryproviding physical therapytherapy treatme nts directed by physicianprimaryhours of therapymon itori ng patie ntsusing equipment to monitor patient conditi onsprimarymonitoring hours4-51.deluxepercentreqularpercentprice$900100%$750100%cost5766460080unit gross profit$32436%$1502

36、0%total gross profit:($324 x 100,000)$32,400,000$120,000,000($150x800,000)2. calculation of unit overhead costs:unit-level:machining:$200 x 100,000 $200 x 300,000batch-level:setups:$3,000 x 300 $3,000 x 200packing:$20 x 100,000 $20 x 400,000product-level:engineeri ng: $40 x 50,000 $40 x 100,000facil

37、ity-level:providing space: $1 x 200,000 $1 x 800,000 total overhead unitsoverhead per unitdeluxe$20,000,000900,0002,000,0002,000,000regular$60,000,000600,0008,000,0004,000,000pricecostunit gross profittotal gross profit: ($120x 100,000) ($175.50x800,000)200,000$25,100,000-100,000$251deluxeperce nt$9

38、00100%780*87*$12013%*$12,000,000800,000$73,400,000-800,000s91.75reqular$750.00574.50*$175.50percent100%77*23%*$140,400,0003. using activity-based costing, a much different picture of the deluxe and regular products emerges. the regular model appears to be more profitable perhaps it should be emphasi

39、zed4-6sales3allocation13jit$12,500,000750,000nonjit$12,500,000750,000a$125 x 100,000, where $125 = $100 + ($100 x 0.25), and 100,000 is the average order size times the number of ordersb0.50x $1,500,0002. activity rates:ordering rate selling rate service rate=$880,000/220 = $4,000 per sales order=$3

40、20,000/40 = $8,000 per sales call=$300,000/150 = $2,000 per service calljitnon-jitordering costs:$4,000 x 200$ 800,000$4,000 x 20$ 80,000selling costs:$8,000 x 20160,000$8,000 x 20160,000service costs:$2,000 x 100200,000$2,000 x 50100,000total$ l160.000$ 340.000for the non-jit customers, the custome

41、r costs amount to $750,000/20 = $37,500 per order under the original allocation. using activity assignments, this drops to $340,000/20 = $17,000 per order, a difference of $20,500 per order. for an order of 5,000 units, the order price can be decreased by $4.10 per unit without affecting customer pr

42、ofitability. overall profitability will decrease, however, unless the price for orders is increased to jit customers.3. it sounds like the jit buyers are switching their inventory carrying costs to emery without any sign ificant benefit to emery. emery needs to in crease prices to reflect the additi

43、onal demands on customer-support activities. furthermore, additional price increases may be needed to reflect the increased number of setups, purchases, and so on, that are likely occurring inside the plant. emery should also immediately initiate discussions with its jit customers to begin negotiati

44、ons for achieving some of the ben efits that a jit supplier should have, such as ion g-term con tracts. the ben efits of long-term con trading may offset most or all of the increased costs from the additional demands made on other activities.4-71 supplier cost:first, calculate the activity rates for

45、 assigning costs to suppliers: inspecting components: $240,000/2,000 = $120 per sampling hour reworking products: $760,500/1,500 = $507 per rework hour warranty work: $4,800/8,000 = $600 per warranty hournext, calculate the cost per component by supplier:supplier cost:vancefoypurchase cost:$23.50 x

46、400,000$ 9,400,000$21.50 x 1,600,000$34,400,000inspecting components:$120x404,800$120 x 1,960235,200reworking products:$507x9045,630$507 x 1,410714,870warra nty work:$600 x400240,000$600 x 7,6004,560,000total supplier cost$ 9,690,430$39,910,070units supplied-400,000-1,600,000unit cost$24.23*$24.94*r

47、oundedthe differenee is in favor of vance; however, when the price concession is consid ered, the cost of vance is $23.23, which is less than foy's component. lumus should accept the contractual offer made by vance.2. warranty hours would act as the best driver of the three choices. using this d

48、river, the rate is $1,000,000/8,000 = $125 per warranty hour. the cost assigned to each comp on ent would be:lost sales:$125x400 $125 x 7,600$ 50,000$950,000$ 50,000$950,000units supplied-400,0001,600,000increase in unit cost$0.13*$0.59*roundedproblems4-81.product cost assignment:overhead rates:patt

49、erns: $30,000/15,000 = $2.00 per dlh finishing: $90,000/30,000 = $3.00 per dlhunit cost computation:backpacksduffel baqspatter ns:$2.00x0.1 $2.00 x 0.2finishing: $3.00 x 0.2 $3.00 x 0.4total per unit$0.200.60$0.80$0.401.20$1.602. cost before addition of duffel bags:$60,000/100,000 = $0.60 per unitth

50、e assignment is accurate because all costs belong to the one product.3. activity-based cost assignment:stage 1: pool rate = $120,000/80,000 = $1.50 per transactionstage 2:overhead applied:backpacks: $1.50 x 40,000* = $60,000duffel bags: $1.50 x 40,000 = $60,000*805000 transactions/2 = 40,000 (number

51、 of transactions had doubled)unit cost:backpacks: $60,000/100,000 = $0.60 per unit duffel bags: $60,000/25,000 = $2.40 per unit4. this problem allows the student to see what the account!ng cost per unit should be by providing the ability to calculate the cost with and without the duffel bags. with t

52、his perspective, it becomes easy to see the benefits of the activity-based approach over those of the fun ctional-based approach. the activity-based approach provides the same cost per unit as the single-product set- ting. the functional-based approach used transactions to allocate accounting costs

53、to each producing department, and this allocation probably reflects quite well the con sumption of acco unting costs by each producing department. the problem is the sec on d-stage allocation. direct labor hours do not capture the consumptio n pattern of the in dividual products as they pass through

54、 the departments. the distortio n occurs, not in using transactions to assign accounting costs to departments, but in us- ing direct labor hours to assign these costs to the two products.in a single-product environment, abc offers no improvement in product costing accuracy. however, even in a single

55、-product environment, it may be possible to increase the accuracy of cost assignments to other cost objects such as customers.4-91 unit-level costs ($120 x 20,000)$ 2,400,000batch-level costs ($80,000 x 20)1,600,000product-level costs ($80,000 x 10)800,000facility-level ($20 x 20,000)400,000total co

56、st$ 5.200,0002. unit-level costs ($120 x 30,000)$ 3,600,000batch-level costs ($80,000 x 20)1,600,000product-level costs ($80,000 x 10)800,000facility-level costs400,000total cost$ 6.400.000the unit-based costs increase because these costs vary with the number of units produced. because the batches and engineering orders did not change, the batchlevel costs and product-level costs remain the same, behaving a