案例管理会计学

1、Chapter 6Variable Costing and Segment Reporting: Tools for ManagementLearning Objective 6-1Explain how variable costing differs from absorption costing and compute unit product costs under each method.Overview of Variable and Absorption CostingDirect MaterialsDirect LaborVariable Manufacturing Overh

2、eadFixed Manufacturing OverheadVariable Selling and Administrative ExpensesFixed Selling and Administrative ExpensesVariableCostingAbsorptionCostingProductCostsPeriodCostsProductCostsPeriodCostsQuick Check Which method will produce the highest values for work in process and finished goods inventorie

3、s? a. Absorption costing.b. Variable costing.c. They produce the same values for these inventories.d. It depends Which method will produce the highest values for work in process and finished goods inventories? a. Absorption costing.b. Variable costing.c. They produce the same values for these invent

4、ories.d. It depends. . .Quick Check Harvey Company produces a single product with the following information: available:Unit Cost ComputationsUnit product cost is determined as follows:Under absorption costing, all production costs, variable and fixed, are included when determining unit product cost.

5、 Under variable costing, only the variable production costs are included in product costs. Unit Cost ComputationsLearning Objective 6-2Prepare e statements using both variable and absorption costing.Lets assume the following additional information for Harvey Company.20,000 units were sold during the

6、 year at a priceof $30 each.There is no beginning inventory.Now, lets compute net operating e using both absorptionand variable costing.Variable and Absorption Costing e StatementsVariablemanufacturing costs onlyAll fixedmanufacturingoverhead isexpensed.Variable Costing Contribution Format e Stateme

7、ntAbsorption Costing e StatementFixed manufacturing overhead deferred in inventory is 5,000 units $6 = $30,000.Unit product costLearning Objective 6-3Reconcile variable costing and absorption costing net operating es and explain why the two amounts differ.Comparing the Two MethodsFixed mfg. overhead

8、 $150,000 Units produced 25,000 units= = $6 per unitWe can reconcile the difference betweenabsorption and variable e as follows:Comparing the Two MethodsExtended Comparisons of e Data Harvey Company Year TwoUnit Cost ComputationsSince the variable costs per unit, total fixed costs, and the number of

9、 units produced remained unchanged, the unit cost computations also remain unchanged.Variable Costing Contribution Format e StatementVariablemanufacturing costs only.All fixedmanufacturingoverhead isexpensed.Absorption Costing e StatementFixed manufacturing overhead released from inventory is 5,000

10、units $6 = $30,000.Unit product cost.We can reconcile the difference betweenabsorption and variable e as follows:Fixed mfg. overhead $150,000 Units produced 25,000 units= = $6 per unitComparing the Two MethodsComparing the Two MethodsSummary of Key InsightsEnabling CVP AnalysisVariable costing categ

11、orizes costs as fixed and variable so it is much easier to use this e statement format for CVP analysis.Because absorption costing assigns fixed manufacturing overhead costs to units produced ($6 per unit for Harvey Company), a portion of fixed manufacturing overhead resides in inventory when units

12、remain unsold. The potential result is positive operating e when the number of units sold is less than the break-even point.Explaining Changes in Net Operating eVariable costing e is only affected by changes in unit sales. It is not affected by the number of units produced. As a general rule, when s

13、ales go up, net operating e goes up, and vice versa. Absorption costing e is influenced by changes in unit sales and units of production. Net operating e can be increased simply by producing more units even if those units are not sold.Supporting Decision Making Variable costing correctly identifies

14、the additional variable costs incurred to make one more unit ($10 per unit for Harvey Company). It also emphasizes the impact of total fixed costs on profits.Because absorption costing assigns fixed manufacturing overhead costs to units produced ($6 per unit for Harvey Company), it gives the impress

15、ion that fixed manufacturing overhead is variable with respect to the number of units produced, but it is not. The result can be inappropriate pricing decisions and product discontinuation decisions.Learning Objective 6-4Prepare a segmented e statement that differentiates traceable fixed costs from

16、common fixed costs and use it to make decisions.Decentralization and Segment Reporting A segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data. Quick MartAn Individual StoreA Sales TerritoryA Service CenterKeys to Segmented e StatementsThere are

17、 two keys to building segmented e statements:A contribution format should be used because it separates fixed from variable costs and it enables the calculation of a contribution margin.Traceable fixed costs should be separated from common fixed costs to enable the calculation of a segment margin.Ide

18、ntifying Traceable Fixed Costs Traceable fixed costs arise because of the existence of a particular segment and would disappear over time if the segment itself disappeared.The salary of Fritos product manager at PepsiCo is a traceable fixed cost of the Fritos segment.Identifying Common Fixed Costs C

19、ommon fixed costs arise because of the overall operation of the company and would not disappear if any particular segment were eliminated. The salary of the CEO of General Motorsis a common fixed cost of the variousdivisions of General Motors.Traceable Costs Can e Common CostsIt is important to real

20、ize that the traceable fixed costs of one segment may be a common fixed cost of another segment.For example, the landing fee paid to land an airplane at an airport is traceable to the particular flight, but it is not traceable to first-class, business-class, and economy-class passengers.Segment Marg

21、inThe segment margin, which is computed by subtracting the traceable fixed costs of a segment from its contribution margin, is the best gauge of the long-run profitability of a segment.TimeProfitsTraceable and Common CostsFixedCostsTraceableCommonDont allocatecommon costs to segments.Levels of Segme

22、nted StatementsLets look more closely at the Television Divisions e statement.Webber, Inc. has two divisions.Levels of Segmented StatementsCost of goodssold consists of variable manufacturingcosts.Fixed andvariable costsare listed inseparatesections.Our approach to segment reporting uses the contrib

23、ution format.Levels of Segmented StatementsSegment marginis Televisions contributionto profits.Contribution marginis computed by taking sales minus variable costs.Our approach to segment reporting uses the contribution format.Levels of Segmented StatementsLevels of Segmented StatementsCommon costs s

24、hould not be allocated to the divisions. These costs would remain even if one of the divisions were eliminated.Traceable Costs Can e Common CostsAs previously mentioned, fixed costs that are traceable to one segment can e common if the company is divided into smaller segments.Lets see how this works

25、 using the Webber, Inc. example!Traceable Costs Can e Common CostsProductLinesRegularBig ScreenTelevisionDivisionWebbers Television DivisionTraceable Costs Can e Common CostsWe obtained the following information fromthe Regular and Big Screen segments.Traceable Costs Can e Common CostsFixed costs di

26、rectly tracedto the Television Division $80,000 + $10,000 = $90,000Segmented e Statements Decision Making and Break-even AnalysisOnce a company prepares contribution format segmented e statements, it can usethose statements to make decisions and perform break-even analysis.Segmented e Statements Dec

27、ision Making5% increase in sales$5,000 additionaladvertisingMarginincreasesby $2,250Marginincreasesby $5,250Division marginincreases by$2,500Learning Objective 6-5Compute companywide and segment break-even points for a company with traceable fixed costs.Segmented e Statements Break-even AnalysisThe

28、companywide break-even point is computed by dividing the sum of the companys traceable fixed costs and common fixed costs by the companys overall contribution margin ratio. Segmented e Statements Break-even AnalysisBreak-even $170,000 + $25,000 Point 0.54 = = $361,111Contribution Margin $270,000 Rat

29、io$500,000 = = 0.54Segmented e Statements Break-even AnalysisThe companywide break-even point is computed by dividing the sum of the companys traceable fixed costs and common fixed costs by the companys overall contribution margin ratio. A business segments break-even point is computed by dividing i

30、ts traceable fixed costs by its contribution margin ratio. Segmented e Statements Break-even AnalysisSegmented e Statements Break-even AnalysisBreak-even $90,000 Point 0.50 = = $180,000TelevisionContribution Margin $150,000 Ratio $300,000 = = 0.50ComputerBreak-even $80,000 Point 0.60 = = $133,333Con

31、tribution Margin $120,000 Ratio $200,000 = = 0.60A business segments break-even point is computed by dividing its traceable fixed costs by its contribution margin ratio. Notice the $25,000 of companywide common fixed costs are excluded from the segment break-even calculations because the common fixe

32、d costs are not traceable to segments and are not influenced by segment-level decisions. Segmented e Statements Break-even AnalysisOmission of CostsCosts assigned to a segment should include all costs attributable to that segment from the companys entire value chain. Product Customer R&D Design Manu

33、facturing Marketing Distribution ServiceBusiness Functions Making Up The Value ChainUpstream CostsDownstream CostsInappropriate Methods of Allocating Costs Among SegmentsSegment1Segment3Segment4Inappropriateallocation baseSegment2Failure to tracecosts directlyCommon Costs and Segments Segment1Segmen

34、t3Segment4Segment2Common costs should not be arbitrarily allocated to segments based on the rationale that “someone has to cover the common costs” for two reasons:This practice may make a profitable business segment appear to be unprofitable.Allocating common fixed costs forces managers to be held a

35、ccountable for costs they cannot control.Quick Check Assume that Hoaglands Lakeshore prepared its segmented e statement as shown.Quick Check How much of the common fixed cost of $200,000 can be avoided by eliminating the bar?a. None of it.b. Some of it.c. All of it.Quick Check How much of the common

36、 fixed cost of $200,000 can be avoided by eliminating the bar?a. None of it.b. Some of it.c. All of it.A common fixed cost cannot be eliminated by dropping one of the segments. Quick Check Suppose square feet is used as the basis for allocating the common fixed cost of $200,000. How much would be al

37、located to the bar if the bar occupies 1,000 square feet and the restaurant 9,000 square feet?a. $20,000b. $30,000c. $40,000d. $50,000 Suppose square feet is used as the basis for allocating the common fixed cost of $200,000. How much would be allocated to the bar if the bar occupies 1,000 square fe

38、et and the restaurant 9,000 square feet?a. $20,000b. $30,000c. $40,000d. $50,000Quick Check The bar would be allocated 1/10 of the cost or $20,000.Quick Check If Hoaglands allocates its common costs to the bar and the restaurant, what would be the reported profit of each segment?Allocations of Common CostsHurray, now everything adds up!Quick Check Should the bar be eliminated?a. Yesb. No Should the bar be eliminated?a.