成本与管理会计 亨格瑞 第13版 英文版 ca05

2019/9/10,1,Activity-Based Costing and Activity-Based Management,CHAPTER 5,2019/9/10,2,LEARNING OBJECTIVES,Explain how broad averaging undercosts and overcosts products or services Present three guidelines for refining a costing system Distinguish between simple and activity-based costing systems Describe a four-part cost hierarchy Cost products or services using activity-based costing Explain how activity-based costing systems are used in activity-based management Compare activity-based costing systems and department costing systems Evaluate the costs and benefits of implementing activity-based costing systems,2019/9/10,3,Structure of Lecture,Under- and over-costing why it happens? Activity Based Costing (ABC) Indicators of need for ABC ABC system Difference between ABC and Traditional Product Costs Activity Based Management (ABM) Value and non-value added costs,2019/9/10,4,LEARNING OBJECTIVE 1 Explain how broad averaging undercosts and overcosts products or services,2019/9/10,5,Background,Easy to trace Direct materials and direct labor costs Overhead cannot be traced easily and must be allocated with estimates. Recall that Factory Overhead is applied to production in a rational and systematic manner, using some type of averaging. There are a variety of methods to accomplish this goal.,Simple Methods Complex Methods Unrealistic Realistic,2019/9/10,6,Broad Averaging and Cross-subsidization,P110,2019/9/10,7,Broad Averaging and Cross-subsidization,conts.,Historically, firms produced a limited variety of goods while their indirect costs were relatively small. Allocating overhead costs was simple: use broad averages to allocate costs uniformly regardless of how they are actually incurred The use of broad averages in allocating indirect costs can have a number of adverse consequences. Traditional product-costing methods use a single indirect cost rate to allocate costs to all products.,2019/9/10,8,Broad Averaging and Cross-subsidization, conts.,Different products consume activities at different rates, traditional costing does not recognize these differences. Peanut-butter costing uses broad averages to assign (or spread) costs uniformly to cost objects. The result can be undercosting or overcosting of products. Overcosting a product consumes a low level of resources but is allocated high costs per unit (Emmas dinner) Undercosting a product consumes a high level of resources but is allocated low costs per unit (Jamess dinner),2019/9/10,9,Broad Averaging and Cross-subsidization,conts.,When a company has a situation in which undercosting or overcosting of products occurs, this is referred to as product-cost cross-subsidization. P110 The results of overcosting one product and undercosting another. The overcosted product absorbs too much cost, making it seem less profitable than it really is. The undercosted product is left with too little cost, making it seem more profitable than it really is.,2019/9/10,10,The Need for ABC,Line managers do not believe the product costs reports,Marketing does not use costs reports for pricing decisions,Product-line profit margins are hard to explain,Sales are increasing, but profits are declining.,Some products that have reported high profit margins are not sold by competitors,Direct labor is a small percentage of total costs,2019/9/10,11,LEARNING OBJECTIVE 2 Present three guidelines for refining a costing system,2019/9/10,12,Rationale for Refining Costing System,Increase in product diversity,Advances in IT,Competition in markets,Increase in Indirect Costs,Strategic decision Price decision Market decision,Make trace more cost-effective Provide more data Multiple cost driver pools,Advance in product and process technology increase indirect cost, lower direct costs,Customized products Differentiate from competitors,Guidelines for Refining a cost systems,1. Direct-cost tracing classify as many of the total costs as direct costs as is economically feasible. 2. Indirect-cost pools expand the number of cost pools until each of these pools is homogeneous. 3. Cost-allocation basis identify the preferred cost-allocation base for each indirect-cost pool.,2019/9/10,13,Refining a Costing System,A refined cost system reduces the use of broad averages for assigning costs to resources. There are three principal reasons that have accelerated the demand for such refinements.P115 Increase in product diversity. The growing demand for customized products has led to product diversity with the result that products demand differing levels of resources.,2019/9/10,14,Refining a Costing System,conts,A refined cost system reduces the use of broad averages for assigning costs to resources. There are three principal reasons that have accelerated the demand for such refinements. Increase in indirect costs. With modern technology, companies have experienced a decrease in direct costs with a resulting increase in indirect costs. Competition in product markets. Marke