Bài giảng môn Kế toán, kiểm toán - Chapter 5: Activity - Based costing and management

Activity-Based Costing and ManagementChapter 5Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Traditional, Volume-Based Product-Costing SystemAerotech produces three complex printed circuit boards referred to as Mode I, Mode II, and Mode III.The following information is obtained from company records:5-2Traditional, Volume-Based Product-Costing SystemAdditional information includes:Manufacturing overhead is determined as follows5-3Traditional, Volume-Based Product-Costing SystemBudgeted manufacturing overhead $3,894,000 Budgeted direct-labor hours 118,000= $33 per hour5-4Traditional, Volume-Based Product-Costing SystemWith these product costs, Aerotech established target selling prices (Cost × 125%).209.00 x 1.255-5Activity Based Costing System (ABC)ABC systems follow a two-stage procedure to assign overhead costs to products.Stage OneIdentify significant activities and assign overhead costs to each activity in proportion to resources used.Stage TwoIdentify cost drivers appropriate to each activity and allocate overhead to the products.5-6Overhead CostsTotal budgeted cost = $3,894,000ActivityCostPoolsMachinerycost pool$1,212,600Setupcost pool$3,000Engineeringcost pool$700,000Facilitycost pool$507,400Unit-LevelBatch-LevelProduct-Sustaining-LevelFacility-LevelIdentificationof ActivityCost PoolsActivitymust bedone oneach unitproduced.Activityperformedon eachbatchproduced.Activities needed to supportan entire product lineActivity required in orderfor the productionprocess to occur.5-7Receiving/Inspectioncost pool $200,000Material-Handlingcost pool $600,000Quality-Assurancecost pool $421,000Packaging/Shippingcost pool $250,000Machinerycost pool$1,212,600Setupcost pool$3,000Engineeringcost pool$700,000Facilitycost pool$507,400Unit-LevelBatch-LevelProduct-Sustaining-LevelFacility-Level5-8Machinery Cost PoolTotal budgeted cost = $1,212,600MaintenanceDepreciationComputer SupportLubricationElectricityCalibrationActivitycostpoolSTAGE ONEVarious overheadcosts relatedto machinery5-9Calculatethe poolrateBudgeted Machinery Costs $1,212,600 Budgeted Machine Hours 43,000 $28.20/hourCostAssignmentSTAGE TWO==5-10Calculation oftotal setup costSetup Cost PoolTotal budgeted cost = $3,000ActivitycostpoolSTAGE ONE5-11Calculatethe poolrate Budgeted Setup Costs $3,000Planned Production Runs 15 runs $200 per runCostAssignmentSTAGE TWO==5-12Various overheadcosts relatedto engineeringEngineering salariesEngineering suppliesEngineering softwareDepreciationEngineering Cost PoolTotal budgeted cost = $700,000ActivitycostpoolSTAGE ONE5-13Allocate basedon engineeringtransactionsCostAssignmentSTAGE TWOEngineering Cost PoolTotal budgeted cost = $700,0005-14Various overheadcosts relatedto generaloperationsPlant depr.Plant mgmt.Plant maint.Property taxesInsuranceSecurityFacility Cost PoolTotal budgeted cost = $507,400ActivitycostpoolSTAGE ONE5-15 Budgeted Facilities Cost $507,400Budgeted Direct-Labor Hours 118,000 $4.30/hourCostAssignmentSTAGE TWO==Calculatethe poolrate5-16Other Overhead Costs5-17Other Overhead Costs$14.825-18Product Cost from ABCThese are the new product costs when Aerotech uses ABC.5-19Distorted Product CostsBoth original and ABC target selling prices are based on (Cost × 125%).[$209.00 × 1.25][$183.44 × 1.25]The selling price of Mode I and II are decreased,while the selling price for Mode III is increased.5-20Can you identify any problems Aerotech is likely to face as a result of this distortion?Traditional costing understates the costof complex, low volume products.Distorted Product Costs5-21Cost DriversA characteristic of an event or activity that results in the incurrence of costs. In selecting a cost driver, we must consider . . .Degree ofCorrelationCost ofMeasurementBehavioralEffects5-22COLLECTING ABC DATAINTERVIEWS AND PAPER TRAILS - The information for ABC systems initially comes from interviews with employees in the support departments and a review of each department’s records.STORYBOARDING - A procedure used to develop a detailed process flow chart, which visually represents activities and the relationships among activities.MULTIDISCIPLINARY ABC PROJECT TEAMS – To gather information from all facets of an organization’s operations, it is essential to involve personnel from a variety of functional areas. A typical ABC project team includes ACCOUNTING, FINANCE, PRODUCTION, OPERATIONS, ENGINEERS, MARKETING, etc. 5-23Activity-Based ManagementThe use ofABC costing informationto helpmanagementmake decisions5-24Activity-Based ManagementActivity-based costing establishes relationshipsbetween overhead costs and activities so thatwe can better allocate overhead costs.Activity-based management focuses on managing activities to reduce costs. 5-25Two-Dimensional ABC and Activity-Based ManagementActivityTriggersCost ObjectsActivitiesRootCausesProcess ViewActivity AnalysisResource costsCost Assignment ViewPerformanceMeasuresActivity Evaluation5-26Elimination of Non-Value-Added CostsNon-value-added activitiesNecessaryUnnecessaryActivitiesReduce orEliminateContinually Evaluate and Improve5-27Using ABM to Eliminate Non-Value-Added Activities and CostsIdentify Activities.Identify Non-Value-Added Activities.Understand Activity Linkages, Root Causes, and Triggers. Establish Performance Measures.Report Non-Value-Added Costs. SpecifypartsSelectvendorReceivepartsProducegoodsInspectfinishedgoodsReworkdefectiveproducts5-28Customer Profitability AnalysisCustomer profitability analysis usesactivity-based costing to determinethe activities, costs, and profit associated with serving particular customers.5-29Customer Profitability AnalysisOrderssmallquantitiesOrdersfrequentlyOftenchangesordersRequiredspecialpackagingDemandfastserviceA costly customer5-30