COST02An-Introduction-to-Cost-Terms-and-Purposes(成本管理会计-复旦-洪剑鞘)

AnIntroductiontoCostTermsandPurposesChapter2IntroductionDifferentcostconceptsandtermsareoftenusedinaccountingreports.Managerswhoappreciatetheseconceptsandtermsareableto...bestusetheinformationprovided,andavoidmisuseofthatinformation.LearningObjectivesDefineandillustrateacostobjectDistinguishbetweendirectcostsandindirectcostsExplainvariablecostsandfixedcostsInterpretunitcostswithcautionDistinguishamongmanufacturing,merchandising,andservice-sectorcompaniesLearningObjectivesDifferentiatebetweeninventoriablecostsandperiodcostsDescribethethreecategoriesofinventoriescommonlyfoundinmanufacturingcompaniesExplainwhydifferentwaysofcomputingproductcostsareappropriatefordifferentpurposesLearningObjective1DefineandillustrateacostobjectCostandCostTerminologyCost

isaresourcesacrificedorforgonetoachieveaspecificobjective.Itisusuallymeasuredasthemonetaryamountthatmustbepaidtoacquiregoodsandservices.Anactualcostisthecostincurred(ahistoricalcost)asdistinguishedfrombudgetedcosts.CostandCostTerminologyAcostobjectisanythingforwhichaseparatemeasurementofcostsisdesired.CostandCostTerminologyTherearetwobasicstagesofaccountingforcosts:CostaccumulationCostassignmenttovariouscostobjectsCostandCostTerminology

CostAccumulationCostObjectCostObjectCostObjectCostAssignmentCostandCostTerminologyCostaccumulationisthecollectionofcostdatainsomeorganizedwaybymeansofanaccountingsystem.Costassignmentisageneraltermthatencompasses...tracingaccumulatedcoststoacostobject,andallocatingaccumulatedcoststoacostobject.LearningObjective2

DistinguishbetweendirectcostsandindirectcostsDirectCostsDirectcostsofacostobjectarethosethatarerelatedtoagivencostobject(product,department,etc.)andthatcanbetracedtoitinaneconomicallyfeasibleway.DirectCostsCost-Tracingdescribestheassignmentofdirectcoststotheparticularcostobject.IndirectCosts...arerelatedtotheparticularcostobjectbutcannotbetracedtoitinaneconomicallyfeasibleway.IndirectCostsCostallocationdescribestheassigningofindirectcoststotheparticularcostobject.Ponce,Inc.hastwoproductiondepartments,AssemblyandFinishing,andtwoservicedepartments,MaintenanceandPersonnel.DirectandIndirectCostsDirectCosts:MaintenanceDepartment $30,000PersonnelDepartment $24,600AssemblyDepartment $70,000FinishingDepartment $50,000AssumethatMaintenanceDepartmentcostsareallocatedequallyamongtheproductiondepartments.Howmuchisallocatedtoeachdepartment?DirectandIndirectCosts

Allocated

$15,000$15,000Maintenance$30,000AssemblyDirectCosts$70,000FinishingDirectCosts$50,000DirectandIndirectCostsSeveralfactorsaffecttheclassificationofacostasdirectorindirect:ThematerialityofthecostinquestionAvailableinformation-gatheringtechnologyDesignofoperationsContractualarrangementsThedirect/indirectclassificationdependsonthechoiceofthecostobject.LearningObjective3ExplainvariablecostsandfixedcostsCostBehaviorPatternsVariablecostschangeintotalinproportiontochangesintherelatedleveloftotalactivityorvolume.Fixedcostsdonotchangeintotalforagiventimeperioddespitewidechangesintherelatedleveloftotalactivityorvolume.CostBehaviorPatternsAssumethatMetairieBicyclesbuysahandlebarat$52foreachofitsbicycles.Totalhandlebarcostisanexampleofacostthatchangesintotalinproportiontochangesinthenumberofbicyclesassembled(variablecost).Whatisthetotalhandlebarcostwhen1,000bicyclesareassembled?CostBehaviorPatterns1,000unitsx$52=$52,000Whatisthetotalhandlebarcostwhen3,500bicyclesareassembled?3,500unitsx$52=$182,000CostBehaviorPatternsTotalcosts($000)$182 $52 01,0003,500UnitsCostBehaviorPatternsAssumethatMetairieBicyclesincurred$94,500inagivenyearfortheleasingofitsplant.Thisisanexampleoffixedcostswithrespecttothenumberofbicyclesassembled.Thesecostsareunchangedintotaloveradesignatedrangeofthenumberofbicyclesassembledduringagiventimespan.CostBehaviorPatternsWhatistheleasing(fixed)costperbicyclewhenMetairieassembles1,000bicycles?$94,500÷1,000=$94.50Whatistheleasing(fixed)costperbicyclewhenMetairieassembles3,500bicycles?$94,500÷3,500=$27CostDriversAcostdriverisafactor,suchasthelevelofactivityorvolume,thatcausallyaffectscosts(overagiventimespan).Thecostdriverofvariablecostsisthelevelofactivityorvolumewhosechangecausesthe(variable)coststochangeproportionately.Thenumberofbicyclesassembledisacostdriverofthecostofhandlebars.RelevantRange...isthebandofthelevelofactivityorvolumeinwhichaspecificrelationshipbetweenthelevelofactivityorvolumeandthecostinquestionisvalid.Assumethatfixed(leasing)costsare$94,500forayearandthattheyremainthesameforacertainvolumerange(1,000to5,000bicycles).1,000to5,000bicyclesistherelevantrange.RelevantRangeIfannualdemandforMetairie’sbicyclesincreases,andthecompanyneedstoassemblemorethan5,000bicycles,itwouldneedtoleaseadditionalspacewhichwouldincreaseitsfixedcosts.RelevantRangeTotalfixedcosts($000)$100.0$94.5Relevantrange 01,0005,000VolumeRelationshipsofTypesofCostsDirectIndirectVariableFixedLearningObjective4InterpretunitcostswithcautionTotalCostsandUnitCostsAunitcost(alsocalledanaveragecost)iscomputedbydividingsomeamountofcosttotalbysomenumberofunits.The“units”maybeexpressedinvariousways:HoursworkedPackagesdeliveredBicyclesassembledTotalCostsandUnitCostsWhatistheunitcost(leasingandhandlebars)whenMetairieBicyclesassembles1,000bicycles?Totalfixedcost$94,500+Totalvariablecost$52,000=$146,500$146,500÷1,000=$146.50TotalCostsandUnitCostsTotalcosts($000) $146.5 $94.5 01,000VolumeUseUnitCostsCautiouslyAssumethatMetairieBicyclesmanagementusesaunitcostof$146.50(leasingandhandlebars).Managementisbudgetingcostsfordifferentlevelsofproduction.UseUnitCostsCautiouslyWhatistheirbudgetedcostforanestimatedproductionof600bicycles?600×$146.50=$87,900Whatistheirbudgetedcostforanestimatedproductionof3,500bicycles?3,500×$146.50=$512,750UseUnitCostsCautiouslyWhatshouldthebudgetedcostbeforanestimatedproductionof600bicycles?Totalfixedcost $94,500Totalvariablecost($52×600)= 31,200Total $125,700$125,700÷600=$209.50Usingacostof$146.50perunitwouldunderestimateactualtotalcostsifoutputisbelow1,000units.UseUnitCostsCautiouslyWhatshouldthebudgetedcostbeforanestimatedproductionof3,500bicycles?Totalfixedcost $94,500Totalvariablecost(52×3,500)= 182,000Total $276,500$276,500÷3,500=$79.00UseUnitCostsCautiouslyUsingacostof$146.50perunitinsteadof$79.00wouldoverestimateactualtotalcostsifoutputisabove1,000units.Fordecisionmaking,managersshouldthinkintermsoftotalcostsratherthanunitcosts.LearningObjective5Distinguishamongmanufacturing,merchandising,andservice-sectorcompaniesManufacturingManufacturing-sectorcompaniespurchasematerialsandcomponentsandconvertthemintofinishedgoods.Amanufacturingcompanymustalsodevelop,design,market,anddistributeitsproducts.MerchandisingMerchandising-sectorcompaniespurchaseandthenselltangibleproductswithoutchangingtheirbasicform.ServiceCompanies...provideservicesorintangibleproductstotheircustomers.Laboristhemostsignificantcostcategory.LearningObjective6

DifferentiatebetweeninventoriablecostsandperiodcostsTypesofInventoryManufacturing-sectorcompaniestypicallyhaveoneormoreofthefollowingthreetypesofinventories:DirectmaterialsinventoryWork-in-processinventory(workinprogress)FinishedgoodsinventoryTypesofInventoryDirectmaterialsinventory–directmaterialsinstockandawaitinguseinthemanufacturingprocess.Work-in-processinventory–goodspartiallyworkedonbutnotyetfullycompleted.Finishedgoodsinventory–goodsfullycompletedbutnotsold.TypesofInventoryMerchandising-sectorcompaniesholdonlyonetypeofinventory–theproductinitsoriginalpurchasedform.Service-sectorcompaniesdonotholdinventoriesoftangibleproducts.ClassificationofManufacturingCostsDirectmaterialscostsDirectmanufacturinglaborcostsIndirectmanufacturingcostsClassificationofManufacturingCostsDirectmaterialscostsaretheacquisitioncostsofallmaterialsthateventuallybecomepartofthecostobject.Directmaterialscostscanbetracedeconomically.Acquisitioncostsincludefreight-in(inwarddelivery)charges,salestaxes,andcustomsduties.ClassificationofManufacturingCostsDirectmanufacturinglaborcostsincludethecompensationofallmanufacturinglaborthatcanbetracedtothecostobjectinaneconomicallyfeasibleway.Wagesandfringebenefitspaidto:MachineoperatorsAssembly-lineworkersClassificationofManufacturingCostsIndirectmanufacturingcostsareallmanufacturingcoststhatareconsideredtobepartofthecostobject,butthatcannotbetracedtothatcostobjectinaneconomicallyfeasibleway.Othertermsforthiscostcategoryincludemanufacturingoverheadcosts

andfactory

overheadcosts.InventoriableCostsInventoriablecostsareallcostsofaproductthatareregardedasanassetwhentheyareincurredandthenbecomecostofgoodssoldwhentheproductissold.Formanufacturing-sectorcompanies,allmanufacturingcostsareinventoriablecosts.InventoriableCostsInventoriablecosts(directmaterials,directlaborandindirectmanufacturingcosts)areincludedinwork-in-processandfinishedgoodsinventory.Inventoriablecostsflowtotheincomestatementascostofthegoodssold.InventoriableCostsFormerchandising-sectorcompanies,

inventoriablecostsarethecostsofpurchasingthegoodswhichareresoldintheirsameform.Forservice-sectorcompanies,theabsenceofinventoriesmeanstherearenoinventoriablecosts.PeriodCostsPeriodcostsareallcostsintheincomestatementotherthancostofgoodssold.Periodcostsarerecordedasexpensesoftheaccountingperiodinwhichtheyareincurred.PeriodCostsFormanufacturing-sectorcompanies,periodcostsincludeallnon-manufacturingcosts(researchanddevelopment,distribution,etc.).Formerchandising-sectorcompanies,periodcostsincludeallcostsnotrelatedtothecostofgoodspurchasedforresale.Forservice-sectorcompanies,alloftheircostsareperiodcosts.LearningObjective7 DescribethethreecategoriesofinventoriescommonlyfoundinmanufacturingcompaniesCategoriesofInventoryThethreecategoriesofinventoryfoundinmanymanufacturingcompaniesdepictstagesintheconversionprocess:materialswork-in-processfinishedgoodsCategoriesofInventoryDirectmaterialsinventorycostsareusedtocomputethecostofmaterialsused.BeginningdirectmaterialsinventoryPurchasesofdirectmaterialsEndingdirectmaterialsinventoryDirectmaterialsusedCategoriesofInventoryWork-in-processinventorycostsareusedtocomputethecostofgoodsmanufactured.Beginningwork-in-processinventoryManufacturingcostsincurredduringtheperiodEndingwork-in-processinventoryCostofgoodsmanufacturedCategoriesofInventoryFinishedgoodsinventorycostsareusedtocomputethecostofgoodssold.BeginningfinishedgoodsinventoryCostofgoodsmanufacturedEndingfinishedgoodsinventoryCostofgoodssoldCategoriesofInventoryMetairieBicycleshad$50,000ofdirectmaterialsinventoryatthebeginningoftheperiod.Purchasesduringtheperiodamountedto$180,000andendinginventorywas$30,000.Howmuchdirectmaterialswereused?$50,000+$180,000–$30,000=$200,000CategoriesofInventoryDirectlaborcostsincurredwere$105,500.Indirectmanufacturingcostswere$194,500.Whatarethetotalmanufacturingcostsincurred?Directmaterialsused $200,000Directlabor 105,500Indirectmanufacturingcosts 194,500Totalmanufacturingcosts $500,000CategoriesofInventoryAssumethatthework-in-processinventoryatthebeginningoftheperiodwas$30,000,and$35,000attheendoftheperiod.Whatisthecostofgoodsmanufactured?Beginningwork-in-process $30,000Totalmanufacturingcosts 500,000Endingwork-in-process 35,000Costofgoodsmanufactured $495,000CategoriesofInventoryAssumethatthefinishedgoodsinventoryatthebeginningoftheperiodwas$10,000,and$15,000attheendoftheperiod.Whatisthecostofgoodssold?Beginningfinishedgoods $10,000Costofgoodsmanufactured 495,000Endingfinishedgoods 15,000Costofgoodssold $490,000CategoriesofInventory

Work-in-ProcessBeg.Balance 30,000495,000Directmtls.used 200,000Directlabor 105,500Indirect mfg.costs 194,500EndingBalance 35,000CategoriesofInventoryWork-in-ProcessFinishedGoods

495,00010,000490,000 495,000 15,000 CostofGoodsSold

490,000PrimeCostsPrimecostsarealldirectmanufacturingcosts.WhataretheprimecostsforMetairieBicycles?Directmaterialsused$200,000+Directlabor