Professional Documents
Culture Documents
CH4 - Acct
CH4 - Acct
ﯾﻘﯿﻦ
Learning Objectives
Discuss the difference between traditional costing and
1
activity-based costing.
4-1
LEARNING Discuss the difference between traditional
1
OBJECTIVE costing and activity-based costing.
Manufacturing overhead are generally not easily traced so that company always estimate the value.
Illustration 4-3
Total unit costs—
traditional costing
4-3 LO 1
The Need for a New Approach
4-6 LO 1
Activity-Based Costing
.(1 يتم تعيني التكاليف العامة ملجموعات تكلفة النشاط )الخطوة:1 املرحلة
.(4-2 باستخدام محركات التكلفة )الخطوات، تخصيص النفقات العامة املخصصة ملجموعات تكلفة النشاط للمنتجات:2 املرحلة
4-7 . زاد احتمال وجود املزيد من األنشطة ومحركات التكلفة، كانت عملية تصنيع املنتج أكثر تعقيدًا
LOكلما
1
Illustration 17-2
Activities and related cost drivers
Illustration 4-5
4-8 Activities and related cost drivers LO 1
1 Costing Systems
Solution: 1. False
False. 2.True
True. 3.True
True. 4. False
False. 5.True
True.
4-9 LO 1
LEARNING Apply activity-based costing to a
2
OBJECTIVE manufacturer.
Activity-Based Costing
Involves the following four steps.
4-10 LO 2
Identify and Classify Activities and Allocate
Overhead to Cost Pools (Step 1)
Illustration 4-6
Activity cost pools and
estimated overhead
4-11 LO 2
Identify Cost Drivers (Step 2)
Illustration 4-9
4-13 LO 2
Allocate Overhead Costs to Products (Step 4)
If it is not geven
Illustration 17-8
Illustration 4-10
Expected use of cost
drivers per product
4-14 LO 2
Allocate Overhead Costs to Products (Step 4)
Allocate overhead cost = activity-based overhead rates X expected use of cost drivers per products
Illustration 4-11
Allocation of
activity cost pools
to products
4-15 LO 2
Allocate Overhead Costs to Products (Step 4)
The overhead cost per unit = total cost allocated / total units produced
4-16 LO 2
Comparing Unit Costs
Illustration 17-10
Overpricing Underpricing
Illustration 4-12
Likely consequence of differences in assigning overhead. Comparison of unit
product costs
4-17 LO 2
2 Apply ABC to Manufacturer
Casey Company has five activity cost pools and two products. It expects to
produce 200,000 units of its automobile scissors jack and 80,000 units of
its truck hydraulic jack. Having identified its activity cost pools and the cost
drivers for each cost pool, Casey Company accumulated the following data
relative to those activity cost pools and cost drivers.
4-18 LO 2
2 Apply ABC to Manufacturer
Casey Company has five activity cost pools and two products. It expects to
produce 200,000 units of its automobile scissors jack and 80,000 units of
its truck hydraulic jack. Having identified its activity cost pools and the cost
drivers for each cost pool, Casey Company accumulated the following data
relative to those activity cost pools and cost drivers.
Using the data provided,
a. Prepare a schedule showing the computations of the activity-based
overhead rates per cost driver.
b. Prepare a schedule assigning each activity’s overhead cost to the
two products.
c. Compute the overhead cost per unit for each product.
d. Comment on the comparative overhead cost per unit.
4-19 LO 2
2 Apply ABC to Manufacturer
a. Prepare a schedule showing the computations of the activity-based overhead rates per cost driver.
4-20 LO 2
2 b. Prepare a schedule assigning each activity’s
overhead cost to the two products.
4-21 LO 2
2 Apply ABC to Manufacturer
These data show that the total overhead assigned to 80,000 hydraulic
jacks exceeds the overhead assigned to 200,000 scissors jacks. The
overhead cost per hydraulic jack is $34.25. It is only $12.80 per
scissors jack.
4-22 LO 2
LEARNING Explain the benefits and limitations of
3
OBJECTIVE activity-based costing.
. تستخدم بدالً من حوض سباحة واحد على مستوى املصنع وسائق تكلفة واحد-
. العديد من مجموعات تكلفة األنشطة مع املزيد من محركات التكلفة ذات الصلة-
.► التكاليف املوزعة على أساس محركات التكلفة املستخدمة إلنتاج كل منتج
4-24 LO 3
The Advantage of Multiple Cost Pools
Illustration 4-13
A more detailed view of Atlas’s machining activities
4-25 LO 3
The Advantage of Multiple Cost Pools
4-27 LO 3
The Advantage of Multiple Cost Pools
4-28 LO 3
The Advantage of Multiple Cost Pools
► Example: A hospital
utility: service
4-29 LO 3
Illustration 4-14
Hierarchy of
activity levels
4-30 LO 3
The Advantage of Enhanced Cost Control
In developing an ABC system, managers increase their awareness of the activities performed by the company in its production
and supporting processes. This awareness helps managers classify activities as value-added or non-valued-added.
Value-Added Activities
Increase the perceived value of a product or service to
customers, such as:
4-31 LO 3
The Advantage of Enhanced Cost Control
Non-Value-Added Activities
Adds cost to, or increases the time spent on, a
product/service without increasing its perceived value, such as:
4-32 LO 3
Advantage of Better Management Decisions
Limitations
ABC systems are more complex than traditional systems.
u Expensive to use.
u Arbitrary allocations remain.
.املخصصات التعسفية ال تزال قائمة
When to Use
1. Product lines differ in volume and manufacturing complexity.
2. Product lines are numerous and diverse.
3. Overhead costs constitute a significant portion of total costs.
4. Manufacturing process or the number of products has
changed significantly.
5. Production or marketing managers are ignoring data.
4-34 LO 3
3 Classify Activity Levels
4-36 LO 4
Traditional Costing Example
4-37 LO 4
Traditional Costing Example
4-38 LO 4
Activity-Based Costing Example
Illustration 4-18
Condensed annual budget of
a service firm under activity-
based costing
4-39 LO 4
Activity-Based Costing Example
Illustration 4-19
Assigning overhead in
a service company
4-40 LO 4
Activity-Based Costing Example
Illustration 4-20
Comparison of traditional costing
with ABC in a service company
4-41 LO 4
4 Apply ABC to Service Company
4-42 LO 4
4 Apply ABC to Service Company
(b) Determine the overhead allocated to Job A1027 which has 150 pieces, requires
200 miles of driving, and 0.75 hours of logistics.
4-43 LO 4
LEARNING APPENDIX 4A: Explain just-in-time (JIT)
5
OBJECTIVE processing.
. JIT manufacturing is dedicated to having the right amount of materials,
JIT: inventory system in which goods are manufactured or purchased just in time for sell
4-44 LO 5
LEARNING APPENDIX 4A: Explain just-in-time (JIT)
5
OBJECTIVE processing.
u Multiskilled work force. Under JIT, machines are often strategically grouped into work cells or
workstations.
u Total quality control system. The company must establish total quality control throughout the
manufacturing operations
4-45 LO 5
LEARNING APPENDIX 4A: Explain just-in-time (JIT)
5
OBJECTIVE processing.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of these
programs or from the use of the information contained herein.
4-47
EXERCISE
Labor hours
Labor hours
Labor hours
Gallons of chemicals
Number of cartful OR Labor hours
Number of cartfuls
Gallons of juice
Gallons of juice
Number of bottels
Number of boxes
Number of shipments
Number of gallons processed