mcgraw-hill /irwin copyright © the mcgraw-hill companies, inc. all rights reserved. supplementary...

McGraw-Hill /Irwin Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

Supplementary Slides- Activity Based Costing

Systems Design: Activity Based Costing

系统设计：作业成本法

McGraw-Hill /Irwin Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objective 1

Understand the basic approach in activity-based

costing and how it differs from conventional costing.


When cost systems （成本核算系统） were developed in the 1800s, the emphasis was on simplicity （简单化） because:

1. Cost and activity data had to be collected by hand and all calculations were done with paper and pencil.

成本和作业数据是靠手工收集的，所有的计算由纸笔完成2. Most companies produced a limited variety of

similar products, so there was little difference in the overhead costs consumed by each product. 大多数的企业生产有限的类似产品，因此每个产品消耗的费用成本差别不大。

When cost systems （成本核算系统） were developed in the 1800s, the emphasis was on simplicity （简单化） because:

1. Cost and activity data had to be collected by hand and all calculations were done with paper and pencil.

成本和作业数据是靠手工收集的，所有的计算由纸笔完成2. Most companies produced a limited variety of

similar products, so there was little difference in the overhead costs consumed by each product. 大多数的企业生产有限的类似产品，因此每个产品消耗的费用成本差别不大。

Assigning Overhead Costs to Products把制造费用分配给产品


Plantwide Overhead Rate

Plantwide Overhead RateA single overhead rate used throughout an entire factory. 全厂范围内的制造费用分配率在整个工厂范围只使用一个制造费用分配率

Plantwide Overhead RateA single overhead rate used throughout an entire factory. 全厂范围内的制造费用分配率在整个工厂范围只使用一个制造费用分配率

Direct labor has often been used as the allocation base for overhead（人们通常以直接人工作为制造费用分配的基础） because:

1. Direct labor information was already being recorded.

直接人工的信息早已被记录2. Direct labor was a large component of product costs.

直接人工是产品成本中的大部分3. Managers believed direct labor and overhead costs

were highly correlated.

经理人认为直接人工和费用成本高度相关

Direct labor has often been used as the allocation base for overhead（人们通常以直接人工作为制造费用分配的基础） because:

1. Direct labor information was already being recorded.

直接人工的信息早已被记录2. Direct labor was a large component of product costs.

直接人工是产品成本中的大部分3. Managers believed direct labor and overhead costs

were highly correlated.

经理人认为直接人工和费用成本高度相关


Today, direct labor may no longer be a satisfactory base for allocation of overhead.

现在 , 直接人工已不适合作为制造费用分配的基础1. Most companies sell a large variety of products that consume differing

amounts of overhead. 大多数公司销售多种消耗不同费用的产品。2. As a percentage of total costs, direct labor has been shrinking and overhead

has been increasing. Many of the new overhead costs may not be correlated with direct labor. 在总成本的比例中，直接人工缩水，费用上升。许多新的费用成本可能与直接人工不相关。

3. Technology advancements have reduced the cost and complexity of gathering diverse sources of data.

科技进步降低了成本和收集不同来源数据的复杂性。

Today, direct labor may no longer be a satisfactory base for allocation of overhead.

现在 , 直接人工已不适合作为制造费用分配的基础1. Most companies sell a large variety of products that consume differing

amounts of overhead. 大多数公司销售多种消耗不同费用的产品。2. As a percentage of total costs, direct labor has been shrinking and overhead

has been increasing. Many of the new overhead costs may not be correlated with direct labor. 在总成本的比例中，直接人工缩水，费用上升。许多新的费用成本可能与直接人工不相关。

3. Technology advancements have reduced the cost and complexity of gathering diverse sources of data.

科技进步降低了成本和收集不同来源数据的复杂性。

Plantwide Overhead Rate

A plantwide overhead allocation system may not be optimalfor many companies in today’s business environment.

A plantwide overhead allocation system may not be optimalfor many companies in today’s business environment.


A number of allocation bases are used for assigning costs to products.

作业成本法在分配制造费用时使用了很多的分配基础 .

Activity-Based Costing (ABC)


CostCost


Consumption of ResourcesConsumption of Resources

ActivitiesActivities

Cost Objects(e.g., products and customers)

Cost Objects(e.g., products and customers)


Activity

An event that causes the consumption of overhead

resources导致费用资源消耗的事件

Setting upmachines设定机器

Examples of Activities

Admitting hospitalpatients

收治病人

Opening a bank account开立银行账户

Billingcustomers给顾客帐单



Activity Cost Pool作业成本库

A “cost bucket” in which costs related to a particular

activity are accumulated

Activity Measure作业度量

Expresses how much of the activity is carried out and is used as the allocation base for applying overhead costs


Activity Rate

作业分配率

A predetermined overhead rate for each activity

cost pool.



For each activity inisolation, this system works exactlylike the job-order costing system.

对每个独立的作业，系统像批次订单成本系统那样运作

A predetermined overhead rate is computed foreach activity and then applied to jobs andproducts based on the amount of activity

consumed by the job or product.

对每个作业， POHR 被计算出来并根据批次或产品消耗的作业量被运用到批次和产品中

A predetermined overhead rate is computed foreach activity and then applied to jobs andproducts based on the amount of activity

consumed by the job or product.

对每个作业， POHR 被计算出来并根据批次或产品消耗的作业量被运用到批次和产品中


Designing an Activity-BasedCosting System

The challenge is to select a reasonably small number of activitiesthat explain the bulk of the variation in overhead

costs

挑战是如何选择合理的小规模作业，来解释费用成本的大量变动 .

The challenge is to select a reasonably small number of activitiesthat explain the bulk of the variation in overhead

costs

挑战是如何选择合理的小规模作业，来解释费用成本的大量变动 .

Activities are usually chosen by interviewing a broad range of managers to find out what activities they

think consume most of the organization’s resources.与经理人面谈，找出他们认为最消耗企业资源的活动

Activities are usually chosen by interviewing a broad range of managers to find out what activities they

think consume most of the organization’s resources.与经理人面谈，找出他们认为最消耗企业资源的活动


Related activities arefrequently combined to reduce

the amount of detail andrecord-keeping costs.

相关的作业通常被合并来减少细节和簿记成本

An activity dictionary defines each of the activitiesthat will be included in the activity-based costingsystem and how the activities will be measured.

作业词典定义了作业成本系统中的每个作业以及如何衡量作业

An activity dictionary defines each of the activitiesthat will be included in the activity-based costingsystem and how the activities will be measured.

作业词典定义了作业成本系统中的每个作业以及如何衡量作业

For example, several activities maybe involved in handling and moving

raw materials, but these may becombined into a single activity

entitled material handling.

Designing an Activity-BasedCosting System


Graphic Example of Activity-Based Costing

LaborRelated Pool

LaborRelated Pool

MachineRelated Pool

MachineRelated Pool

SetupPool

SetupPool

ProductionOrder PoolProductionOrder Pool

GeneralFactory Pool

GeneralFactory Pool

PartsAdmin. Pool

PartsAdmin. Pool

First-Stage Cost Assignment

Various Manufacturing Overhead CostsVarious Manufacturing Overhead Costs


Unit-LevelActivity

单位水平作业

Batch-LevelActivity

批次水平作业

Facility-LevelActivity

设施水平作业

Product-LevelActivity

产品水平作业

Graphic Example ofActivity-Based Costing

LaborRelated Pool

LaborRelated Pool

MachineRelated Pool

MachineRelated Pool

SetupPool

SetupPool

ProductionOrder PoolProductionOrder Pool

GeneralFactory Pool

GeneralFactory Pool

PartsAdmin. Pool

PartsAdmin. Pool

First-Stage Cost Assignment

Various Manufacturing Overhead CostsVarious Manufacturing Overhead Costs

ProductsProducts

$/DLH $/MH $/Setup $/Order $/MH$/Part Type

Second-Stage Allocations


Using Activity-Based CostingComtek Sound, Inc.

Comtek Sound, Inc. makes two products: CD players and DVD players.

The company has been losing bids to supply CD players, its main product, to lower priced competitors.

The company has been winning all bids to supply DVD players, its secondary product.

Comtek Sound, Inc. makes two products: CD players and DVD players.

The company has been losing bids to supply CD players, its main product, to lower priced competitors.

The company has been winning all bids to supply DVD players, its secondary product.



For the current year, Comtek has budgeted sales of 50,000 DVD units and 200,000 CD units.

Comtek’s traditional cost system applies manufacturing overhead to products based on direct labor hours.

Both products require two direct labor-hours to complete, for a total of 500,000 direct labor hours.

For the current year, Comtek has budgeted sales of 50,000 DVD units and 200,000 CD units.

Comtek’s traditional cost system applies manufacturing overhead to products based on direct labor hours.

Both products require two direct labor-hours to complete, for a total of 500,000 direct labor hours.

HoursDVDs: 50,000 units @ 2 hours per unit = 100,000 CDs: 200,00 units @ 2 hours per unit = 400,000 Total direct labor-hours 500,000



Unit costs for materials and labor are: Unit costs for materials and labor are:

DVD CDUnits Units

Direct materials 90$ 50$ Direct Labor 20$ 20$


Total manufacturing overhead costs for the current year are estimated to be $10,000,000. The company develops the following overhead

rate based upon labor-hours:

Total manufacturing overhead costs for the current year are estimated to be $10,000,000. The company develops the following overhead

rate based upon labor-hours:

Predeterminedoverhead rate = $20 per DLH=

$10,000,000500,000 DLHs

Direct Labor-Hours as a Base


DVD Unit CD UnitDirect materials 90$ 50$ Direct labor 20 20 Manufacturing overhead 40 40 (2 DLHs x $20 per DLH)

Unit product cost 150$ 110$

Direct Labor-Hours as a Base

Since each product requires two hours of direct labor, $40 of overhead is assigned to

each product.

Since each product requires two hours of direct labor, $40 of overhead is assigned to

each product.



Compute activity rates for an activity-based costing

system.


The ABC project team at Comtek hasdeveloped the following basic information.

Activity and Activity Measures

Estimated Overhead

Cost Total DVD CD

Labor related (DLH) 800,000$ 500,000 100,000 400,000 Machine related (MH) 2,100,000 1,000,000 300,000 700,000 Machine setups (setups) 1,600,000 4,000 3,000 1,000 Production orders (orders) 3,150,000 1,200 800 400 Parts administration (part types) 350,000 700 400 300 General factory (MH) 2,000,000 1,000,000 300,000 700,000

10,000,000$

Expected Activity

Computing Activity Rates


We can calculate the following activity rates:

Activity and Activity Measures

Estimated Overhead

Cost

Total Expected Activity

Labor related (DLHs) 800,000$ ÷ 500,000 = 1.60$ per DLHMachine related (MHs) 2,100,000 ÷ 1,000,000 = 2.10 per MHMachine setups (setups) 1,600,000 ÷ 4,000 = 400.00 per setupProduction orders (orders) 3,150,000 ÷ 1,200 = 2,625.00 per orderParts administration (part types) 350,000 ÷ 700 = 500.00 per part typeGeneral factory (MHs) 2,000,000 ÷ 1,000,000 = 2.00 per MH

10,000,000$

Activity Rate

Using the new activity rates, let’s assign overheadto the two products based upon expected activity.

Computing Activity Rates



Compute product costs using activity-based costing.


Computing Overhead Cost per Unit

Activity and Activity MeasuresExpected Activity

Activity Rate

Labor related (DLHs) 100,000 × 1.60$ = 160,000$ Machine related (MHs) 300,000 × 2.10 = 630,000 Machine setups (setups) 3,000 × 400.00 = 1,200,000 Production orders (orders) 800 × 2,625.00 = 2,100,000 Parts administration (part types) 400 × 500.00 = 200,000 General factory (MHs) 300,000 × 2.00 = 600,000 Total overhead cost assigned 4,890,000$ Number of units produced 50,000 Overhead cost per unit 97.80$

Amount

DVD Units


Computing Overhead Cost per Unit

Activity and Activity MeasuresExpected Activity

Activity Rate

Labor related (DLHs) 400,000 × 1.60$ = 640,000$ Machine related (MHs) 700,000 × 2.10 = 1,470,000 Machine setups (setups) 1,000 × 400.00 = 400,000 Production orders (orders) 400 × 2,625.00 = 1,050,000 Parts administration (part types) 300 × 500.00 = 150,000 General factory (MHs) 700,000 × 2.00 = 1,400,000 Total overhead cost assigned 5,110,000$ Number of units produced 200,000 Overhead cost per unit 25.55$

Amount

CD Units


Note that the unit product cost of a CD unit decreased from $110 to $95.55 . . . .Note that the unit product cost of a CD unit decreased from $110 to $95.55 . . . .

. . . . while the unit cost of a DVD unit increased from $150 to $207.80.

. . . . while the unit cost of a DVD unit increased from $150 to $207.80.

Comparing the Two Approaches

DVD Unit CD Unit DVD Unit CD UnitDirect material 90.00$ 50.00$ 90.00$ 50.00$ Direct labor 20.00 20.00 20.00 20.00 Manufacturing overhead 97.80 25.55 40.00 40.00 Unit product cost 207.80$ 95.55$ 150.00$ 110.00$

Activity-Based Costing Direct-Labor Costing



Contrast the product costs computed under activity-

based costing and conventional costing

methods.





The ABC system assigns $14.45 less overhead than the traditional

system to each CD player.

The ABC system assigns $14.45 less overhead than the traditional

system to each CD player.





The ABC system assigns $57.80 more overhead than the traditional

system to each DVD player.

The ABC system assigns $57.80 more overhead than the traditional

system to each DVD player.




When a company implements activity-based costing, overhead cost often shifts from high-volume to low-volume products with a higher unit product cost

resulting for the low-volume products.

当企业实施作业成本时，费用成本通常从高产量的产品向低产量的产品倾斜，导致低产量产品拥有高单位成本

When a company implements activity-based costing, overhead cost often shifts from high-volume to low-volume products with a higher unit product cost

resulting for the low-volume products.

当企业实施作业成本时，费用成本通常从高产量的产品向低产量的产品倾斜，导致低产量产品拥有高单位成本

Low-volume product

Shifting of Overhead Cost




High-volume product

Shifting of Overhead Cost

The traditional system assigns the same amount of all overhead costs to each CD or DVD player

($40 per unit).

The traditional system assigns the same amount of all overhead costs to each CD or DVD player

($40 per unit).


Activity-Based ManagementFocuses on managing activities to eliminate

waste and reduce delays and defects.

着眼于管理作业来消除浪费和减少延误和残次

Activity-Based ManagementFocuses on managing activities to eliminate

waste and reduce delays and defects.

着眼于管理作业来消除浪费和减少延误和残次

Targeting Process Improvements

An ABC system can help identifyareas where the company can benefitfrom improving its current processes.帮助发掘通过改善流程有益于企业的领域

An ABC system can help identifyareas where the company can benefitfrom improving its current processes.帮助发掘通过改善流程有益于企业的领域


Benefits of Activity-Based Costing

ABC improves the accuracy of product costing （提高产品成本核算） by:

Increasing the number of cost pools used to accumulate overhead costs. 增加累计费用成本的成本库的数量

Using activity cost pools that are more homogeneous than departmental cost pools. 使用比部门成本库更加趋同的成本库

Assigning overhead costs using activity measures that cause those costs, rather than relying solely on direct labor hours. 使用作业度量分配费用成本，而不是仅仅依靠直接人工时

ABC improves the accuracy of product costing （提高产品成本核算） by:

Increasing the number of cost pools used to accumulate overhead costs. 增加累计费用成本的成本库的数量

Using activity cost pools that are more homogeneous than departmental cost pools. 使用比部门成本库更加趋同的成本库

Assigning overhead costs using activity measures that cause those costs, rather than relying solely on direct labor hours. 使用作业度量分配费用成本，而不是仅仅依靠直接人工时

Activity-based costing also highlights activities that could benefit most from process

improvement efforts, such as Six Sigma.

强调了通过改善流程，如六西格玛，最受益的作业。

Activity-based costing also highlights activities that could benefit most from process

improvement efforts, such as Six Sigma.

强调了通过改善流程，如六西格玛，最受益的作业。


Costs of implementing an ABC system may outweighthe benefits （可能会得不偿失） . However, the benefits are more likely to be worth the costs （更有可能物有所值） when:

1. Products differ substantially in volume, batch size, and in activities required. 产品在数量，批次大小和作业要求上很不相同

2. Conditions have changed substantially since the existing cost system was established. 自从现有成本核算系统建立以来，情况发生了极大的变化

3. Overhead costs are high and increasing and no one seems to understand why. 费用成本很高而且还在增长，没有人知道为什么

4. Management does not trust the existing cost system and it ignores data from it when making decisions.管理者不信任现有的成本核算系统，并在决策的时候忽略从中而来的数据

Costs of implementing an ABC system may outweighthe benefits （可能会得不偿失） . However, the benefits are more likely to be worth the costs （更有可能物有所值） when:

1. Products differ substantially in volume, batch size, and in activities required. 产品在数量，批次大小和作业要求上很不相同

2. Conditions have changed substantially since the existing cost system was established. 自从现有成本核算系统建立以来，情况发生了极大的变化

3. Overhead costs are high and increasing and no one seems to understand why. 费用成本很高而且还在增长，没有人知道为什么

4. Management does not trust the existing cost system and it ignores data from it when making decisions.管理者不信任现有的成本核算系统，并在决策的时候忽略从中而来的数据

Limitations Activity-Based Costing 局限性

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