Selling price 100$ per unit

Material 30$ per unitLabor 15$ per unitVariable overhead 5$ per unit

Fixed overhead 50,000$

Variable selling expenses 10$ per unit

Fixed selling expenses 10,000$

Year 1 Year 2 Year 3Units produced 2,000 4,000 2,000 Units sold 2,000 2,000 4,000

Year 1 Year 2 Year 3Sales 200,000$ 200,000$ 400,000$ Cost of goods sold 150,000 125,000 275,000 Gross profit 50,000$ 75,000$ 125,000$ Selling expenses 30,000 30,000 50,000 Net income 20,000$ 45,000$ 75,000$

Sales 200,000$ 200,000$ 400,000$ Var. cost of goods sold 100,000 100,000 200,000 Var. selling expenses 20,000 20,000 40,000 Contribution margin 80,000$ 80,000$ 160,000$ Fixed overhead 50,000 50,000 50,000 Fixed selling expenses 10,000 10,000 10,000 Net income 20,000$ 20,000$ 100,000$

Difference -$ 25,000$ (25,000)$

Absorption costing income statements

Variable costing income statements

A worker is paid for an 8-hour day. The worker can produce 10 units per hour and is paid $10 per hour ($1 per unit). The worker only produced 50 units on Monday.

Cost of capacity available: $80 Cost of capacity used: 50 units * $1 per unit = $50Cost of unused capacity: $80 - $50 = $30

CH2. Product Costing Systems:Concepts and Design Issues

Cost Objects: Anything whose cost we want to determine (Product, process, location, person, region, etc) Whether a cost is direct or indirect depends on the cost object

Direct cost: Easily and conveniently traceable to the cost object. Indirect: Not easily or conveniently traceable (Cost is shared among cost objects, No apparent “link” between the cost and the object, Not cost effective to trace)

Product costs: Reasonable and necessary costs to prepare the product for sale to the customer (Direct materials, Direct labor, Overhead), Part of inventory until product is sold

Period costs,Non-manufacturing costs, Expensed when incurred

Prime Cost: DL, DM; Conversion Cost: DL, OH.

Beginning raw materials inventory 5,000$ Add: Purchases of raw materials 187,000 Raw materials available 192,000$ Less: Ending raw materials inventory (7,000) Raw materials used in production 185,000$ (1)

Direct labor 71,000 Overhead 134,000

Total manufacturing cost 390,000$ Input

Add: Beginning work in process inventory 6,000 396,000$

Less: Ending work in process inventory (8,000)

Cost of goods manufactured 388,000$ Output (2)

Add: Beginning finished goods inventory 3,000 Goods available for sale 391,000$

Less: Ending finished goods inventory (2,000)

Cost of goods sold 389,000$ Expense (3)

Example CompanyStatement of Cost of Goods Manufactured and Sold

CH2. Product Costing Systems:Concepts and Design IssuesCost Drivers : The cause of a particular cost. a. Capacity driver (Decision to acquire capacity), b. Transaction driver ( Each occurrence causes the cost), c. Duration driver (Amount of cost depends on the duration of the event)Absorption vs. Variable Costing. Absorption costing :

Product costs include material, labor, variable and fixed overhead. All of the reasonable and necessary costs to produce the product

Income statement arranged by type of cost. Product or period, Revenue – cost of goods sold = gross profit, Gross profit – S&A expenses = net income

Variable costing Product costs only include material, labor and variable

overhead. Fixed overhead is treated as a period cost Income statement arranged by cost behavior.

Variable then fixed. Revenue – variable costs = contribution margin. Contribution margin – fixed costs = net income

Fixed overhead : Is it necessary to produce the product? Is it related to production volume? Is it a product or period cost?

Which is more useful? Financial reporting Absorption required. Decision making Variable does not distort cost as volume changes.

Miscelious Cost

Committed cost: Decision has been made to incur the cost in the future. Discretionary cost: Cost which can be increased or decreased at will Sunk cost: Cost incurred previously. Opportunity cost : Benefit given up when one alternative is chosen over another

Resources Supplied vs. Resources Used

Cost of resource supplied : Capacity (hours, etc.) available * cost per unit of capacity. Cost of resource used .Capacity used : cost per unit of capacity. Cost of unused capacity: Cost of resource supplied – cost of resource used

CH3 Cost Accumulation for Job-Shop & Batch Production

Job Costing: Units of output are distinctive (individual jobs, special orders), Each unit has a relatively high value, Costs can be traced feasibly to the units. Costs are traced or assigned to individual jobs.

Process Costing: Units of output are homogeneous (mass production). Each unit has a very low value. Not feasible to trace costs to units. Costs are traced to the process. Then an average cost per unit is calculated for the process.

Operation Costing is a hybrid often used for batches of similar products with different types of materials

The model can be used to control use of resources, helping to ensure that goals and objectives are met.

Managing and Using Cost Flow Information – Example

Boss, Co. began May with $1,000 of costs in (WIP) Inventory and $2,000 of completed units in Finished Goods Inventory. During May, Boss incurred $68,000 of production costs. Goods costing $62,000 were sent to Finished Goods during the month. Also, during May, goods costing $60,000 were sold.Using the Cost Flow Model, compute the ending inventory amounts for WIP Inventory and Finished Goods Inventory.

We can determine Direct Materials Cost and Direct Labor Cost for a Job as we do the work. But we won’t know actual Overhead Cost until the end of the accounting period, so we apply overhead to the job using a Predetermined Overhead Rate

Predetermined Overhead rate atau anggaran biaya overhead pabrik yang di tentukan oleh anggaran dari setiap level cost driver. 5 langkah pendekatan dalam menentukan Predetermined OH rate: 1. Mengidentifikasi biaya-biaya yang termasuk biaya tidak langsung, 2. Menentukan biaya-biaya untuk masing-masing item biaya yang telah di identifikasi pada langkah pertama, 3 Menentukan pemicu-pemicu biaya, 4. Memperkirakan jumlah dari pemicu biaya, 5. Menghitung Predetermined Overhead rate.

Costs Actual Cost Normal Cost Standard Cost

CH4 ABCTraditional Costing System

Sistem “Cost tradisional” tidak membiayakan indirect cost secara langsung ke produk. Tiga poin penting harus yang harus dibuat sehubungan dengan memperbaiki biaya tradisional

1. Melacak berbagai macam costs secara langsung ke produk selama biaya nya tidak melebihi manfaatnua.

2. Menkategorikan indirect cost, dalam suatu "cost pool".3. Menggunakan alokasi biaya untuk menetapkan indirect

cost ke produk.Activity – Based Costing Sistem Is it important to know how the work of the organization is done? Do we need costs to provide incentives for Improvements? Jika YA, pake ABCActivity based costing allocates costs based on the discreet tasks (activities) that drive those costs. 4 langkah Identify and classify the activities related to the company’s

products or services.Seluruh Aktifitas dalam siklus harus disertakan dalam pengidentifikasiaannya.. kemudian diklasifikasikan sebagai:a. Unit Level resources and activities . The work efforts

that transform resources into individual products and resources .

b. Batch Level resources and activities Manufacturing or service technology that affect multiple units of activity equally and simultaneously

c.Product Level resources and activities. Support specific products or service lines

d. Customer Level resources and activities Dilakukan untuk memenuhi kebutuhan pelanggan yang spesifik.

e.Facility Level resources and activities Support all of the organizations processes.Aktivitas tingkat fasilitas adalah kelompok aktivitas yang hanya akan berubah jika terdapat perubahan fasilitas / kapasitas produksi.

Tujuan dari pengklasifikasian klasifikasi sumber daya dan kegiatan ke dalam lima kategori adalah untuk membuat:

1.Akurasi tentang bagaimana organisasi melakukan pekerjaan dan 2. Kemampuan untuk melacak cost n resources ke product .

Perusahaan membuat daftar aktivitas mereka dalam berbagai cara, termasuk: “Top Down Approach” Tim ABC dari manajemen menengah atau di atas mengembangkan list aktivitas.Recycling Approach Menggunakan dokumentasi proses yang digunakan untuk keperluan lain.Interview or Participative Approach Tim ABC termasuk karyawan atau wawancara operasi.

Estimate the costs associated with each activity..Ketika memperkirakan biaya kegiatan, hanya biaya yang berkaitan dengan produk harus digunakan Biaya "kapasitas yang tidak terpakai" tidak harus diterapkan pada produk.

Calculate a cost-driver rate for each activity.Cost driver adalah perkiraan costper unit “cost driver” untuk setiap kegiatan. Sebuah “cost driver” merupakan karakteristik dari suatu kegiatan atau peristiwa yang menyebabkan suatu aktivitas atau kegiatan ke pembentukan biaya. Dua informasi menghitung tingkat cost driver adalah:

Biaya Kegiatan”Activity Cost” Volume Kegiatan

Assign activity costs to products using the cost-driver rate.

1. Mengidentifikasi semua kegiatan yang berkaitan dengan suatu produk atau jasa., 2. Tentukan berapa banyak unit setiap kegiatan yang digunakan per unit produk., 3. Menentukan biaya produk menggunakan biaya-driver tarif untuk setiap kegiatan

Product and Customer ProfitabilityCompanies will often look at the profitability for individual products or customers. Information required for each product or customer includes:Revenue, costs that can be traced, costs that can not be traced.

ABC is often considered as an option when one or more of the following conditions exist: Indirect costs are significant in proportion to direct costs and use only one or two cost-drivers. Goods are complex, requiring many inputs and processes. Simple, high-volume products perform more poorly than complex, low-volume products. Different departments believe costs are assigned inaccurately. The company loses bids it thought were low, and wins bids it thought were high. Operations have changed significantly, but the costing system has not changed.

Surgery Emergency Radiology

Human resources 240,000$ 120,000$ 72,000$ 48,000$

(50/100) (30/100) (20/100)

Purchasing 142,000$ 42,600$ 56,800$ 42,600$

(90/300) (120/300) (90/300)

Maintenance 620,000$ 186,000$ 341,000$ 93,000$

(3,600/12,000) (6,600/12,000) (1,800/12,000)

Service cost 1,002,000$ 348,600$ 469,800$ 183,600$

Department cost 6,971,000$ 3,285,000$ 2,756,000$ 930,000$

Total cost 7,973,000$ 3,633,600$ 3,225,800$ 1,113,600$

Step Methode

CH. 5 ABM

Mengevaluasi biaya dan nilai-nilai dari kegiatan dalamMengevaluasi biaya dan nilai-nilai dari kegiatan dalam proses. Untuk mengidentifikasi peluang dalamproses. Untuk mengidentifikasi peluang dalam meningkatkan efisiensi.meningkatkan efisiensi. . . . . ABM menambhakan ABC dengan:

a. Identifikasi aktivitas added and non add, , b.Mengidentifikasi nilai yang dirasakan pelanggan dari masing-masing aktivitas , c Mengidentifikasi peluang untuk meningkatkan aktivitas add dan mengurangi atau menghilangkan aktivitas non add

Aktivitas Aktivitas AKTIVITAS Add value meningkatkan nilai produk dan jasa di mata pelanggan. Non add- tidak memberikan kontribusi yang dirasakan oleh pelanggan

Contoh:Himshey Chocolate Company produces bulk chocolate which can be sold as is, or processed into bars and “smooches”a. Joint costs, including cocoa beans, milk, sugar, etc.

are $1,200,000 to produce 1,000,000 pounds of chocolate

b. Output: 100,000 pounds of bulk chocolate, 600,000 pounds of bars, 300,000 pounds of “smooches, 10,000 pounds of cocoa bean shells.

.Further processing costs and selling prices :Bulk chocolate: $5,000; $150,000 , Bars: $60,000; $800,000, Smooches: $45,000; $900,000, Shells: $500; $1,000

a. NRV

Bulk chocolate Bars Smooches Total

145,000$ 740,000$ 855,000$ 1,740,000$

8.33% 42.53% 49.14% 100.00%

Example: Yazz, Inc.

produces 130,000 units of

Product A and

400,000 units for

Product B. Using the following

cost informatio

n, how much

overhead should be allocated

to Product A?

Example: Yazz, Inc.

produces 130,000 units of

Product A and

400,000 units for

Product B. Using the following

cost informatio

n, how much

overhead should be allocated

to Product A?

Budgeted total manufacturingoverhead cost for the coming year

Budgeted total units in theallocation base for the coming period

POHR =