亨格瑞管理會計英文第15版練習(xí)答案解析

.PAGE.CostManagementSystemsandActivity-BasedCosting4-A1 <20-30min.>SeeTable4-A1onthefollowingpage.4-A2<25-30min.>1. MerchandiseInventories,1,000devices@$97 $97,0002. Directmaterialsinventory $40,000 Work-in-processinventory 0 Finishedgoodsinventory 97,000 Totalinventories $137,0003.NILEELECTRONICSPRODUCTS StatementofOperatingIncome FortheYearEndedDecember31,20X9 Sales<9,000unitsat$170> $1,530,000 Costofgoodssold: Beginninginventory $0 Purchases 970,000 Costofgoodsavailableforsale $970,000 Lessendinginventory 97,000 Costofgoodssold<anexpense> 873,000 Grossmarginorgrossprofit $657,000 Lessotherexpenses:selling&administrativecosts 185,000 Operatingincome<alsoincomebeforetaxes inthisexample> $472,000.PAGE.TABLE4-A1STATEMENTOFOPERATINGINCOME OPERATINGINCOMEBYPRODUCTLINEEXTERNALREPORTINGPURPOSE INTERNALSTRATEGICDECISIONMAKINGPURPOSE Custom Large SmallDetailedStd.Std.CostType,AssignmentMethodSales $155,000$30,000$45,000$80,000Costofgoodssold:

Directmaterial 40,000 5,000 15,000 20,000Direct,DirectTraceIndirectmanufacturing 41,00028,0001 5,0008,000Indirect,Alloc.–Mach.Hours81,00033,00020,00028,000Grossprofit 74,000<3,000>25,00052,000Sellingandadministrativeexpenses:

Commissions 15,000 1,500 3,500 10,000Direct,DirectTraceDistributiontowarehouses 10,4001,0002 3,0006,400Indirect,Allocation-WeightTotalsellingandadmin.expenses 25,4002,5006,50016,400Contributiontocorporateexpensesandprofit48,600$<5,500>$18,500$35,600Unallocatedexpenses:

Administrativesalaries 8,000Otheradministrativeexpenses 4,000Totalunallocatedexpenses 12,000Operatingincomebeforetax $36,6001Totalmachinehoursis1,400+250+400=2,050.Indirectmanufacturingcostpermachinehouristhen$41,000÷2,050=$20.Theallocationtocustomdetailedis$20×1,400machinehours=$28,000.2Totalweightshippedis25,000kg+75,000kg+160,000kg=260,000kg.Indirectdistributioncostsperkilogramisthen$10,400÷260,000kg=$0.04.Theallocationtocustomdetailedis$0.04×25,000kg=$1,000...4. ORINOCO,INC. StatementofOperatingIncome FortheYearEndedDecember31,20X9Sales<9,000unitsat$170>$1,530,000 Costofgoodsmanufacturedandsold: Beginningfinishedgoodsinventory $0 Costofgoodsmanufactured: BeginningWIPinventory $0 Directmaterialsused 530,000 Directlabor 290,000Indirectmanufacturing150,000Totalmfg.coststoaccountfor $970,000 Lessendingwork-in- processinventory 0970,000 Costofgoodsavailableforsale $970,000 Lessendingfinishedgoodsinventory 97,000 Costofgoodssold<anexpense> 873,000 Grossmarginorgrossprofit $657,000 Lessotherexpenses:sellingandadministrativecosts 185,000 Operatingincome<alsoincomebeforetaxes inthisexample> $472,0005. Thebalancesheetforthemerchandiser<Nile>hasjustonelineforinventories,theendinginventoryoftheitemspurchasedforresale.Thebalancesheetforthemanufacturer<Orinoco>hasthreeitems:directmaterialsinventory,work-in-processinventory,andfinishedgoodsinventory.Theincomestatementsaresimilarexceptforthecomputationofcostofgoodsavailableforsale.Themerchandiser<Nile>simplyshowspurchasesfortheyearplusbeginninginventory.Incontrast,themanufacturer<Orinoco>showsbeginningwork-in-processinventoryplusthethreecategoriesofcostthatcomprisemanufacturingcost<directmaterialsused,directlabor,andfactory<ormanufacturing>overhead>andthendeductstheendingwork-in-processinventory.Themanufacturerthenaddsthebeginningfinishedgoodsinventorytothiscostofgoodsmanufacturedtogetthecostofgoodsavailableforsale.6. Thepurposeisprovidingaggregatemeasuresofinventoryvalueandcostofgoodsmanufacturedforexternalreportingtoinvestors,creditors,andotherexternalstakeholders.4-A3<10-15min.>Therecanbemanyjustifiableanswersforeachitemotherthanthelistedcostdriverandbehavior.ThepurposeofthisexerciseistogenerateanactivediscussionregardingthosechosenbyFirstBank’smanagers.Onepointthatshouldbeemphasizedisthatmanytimesmanagerschoosecostdriversthatarenotthemostplausibleorreliablebecauseoflackofdataavailability.Costdriversarealsousedasabasistoallocateactivityandresourcecostsandsotheavailabilityofdataisoftenanimportantconsideration.Activity Or CostResourceCostDriverBehaviora.* R Numberofsquarefeet Fb.** R Numberofpersonhours Fc. R Numberofcomputertransactions Vd. A Numberofschedules e. R Numberofpersonhours Ff. R Numberofloaninquiries Vg.*** A Numberofinvestments h. A Numberofapplications i. R Numberofpersonhours Vj. R Numberofminutes Vk. R Numberofpersonhours Fl. A Numberofloans *Anargumentcanbemadethatmaintenanceofthebuildingisanactivity.Ifthiswasthecase,resourcessuchassuppliesandlaborwouldberesourcesconsumed,andseveralresourcecostdriverswouldbeneeded.Inaddition,aseparateresourceandassociatedcostdriverwouldbeneededforinsurancecosts.However,thecompanyhadacontractformaintenance<fixedprice>,sothiswasafixed-costresourcethatwasaddedtootheroccupancycostssuchasinsurance.Thecostdriverchosenforalltheseoccupancycostswassquarefeetoccupiedbythevariousdepartments.**Normally,thecostdriverusedforanylaborresourceispersonhours.Itisassumedthatthestaffpersonhoursusedareregularhoursratherthanovertimeortemporarylaborhours.Thus,thecostisfixedwithrespecttochangesinhoursused.Asthehoursusedincreases<decreases>theutilizationoftheresourcesincreases<decreases>andeventually,managementwillneedtomakeadecisionwhethertoexpandcapacity<orwhethertocutbackonlabor>.Thisisanexampleofastepcostthatisfixedoverwiderangesofcost-driverlevel.***Studentsmaytrytodeterminethecostbehaviorofactivitieseventhoughtheproblemrequirementsdonotaskforit.Pointoutthatactivitiesalmostalwayshavemixedcostbehaviorbecausetheyconsumevariousresources.Someofthesearefixed-costandothersvariable-costresources.Forexample,theactivity"researchtoevaluatealoanapplication"consumessuchfixed-costresourcesasmanagerlabortimeandcomputers<assumedownedbythebank>.Thisactivityalsoconsumesvariable-costresourcessuchastelecommunicationstimeandexternalcomputingservices.4-A4 <20-30min.>1. Thefirststepistodeterminethecostpercost-driverunitforeachactivity: Monthly Cost- Costper Manufacturing Driver DriverActivity[Costdriver] Overhead Activity UnitMaterialHandling[Directmaterialscost] $12,000 $200,000 $0.06Engineering[Engineeringchangenotices] 20,000 20 1,000.00Power[Kilowatthours] 16,000 400,000 0.04TotalManufacturingOverhead $48,000 Next,thecostsofeachactivitycanbeallocatedtoeachofthethreeproducts:PHYSICALFLOW/ALLOCATEDCOSTCost Senior Basic DeluxeMaterialHandling $.06×25,000=$1,500 $.06×50,000=$3,000 $.06×125,000=$7,500 Engineering $1,000×13=13,000 $1,000×5=5,000 $1,000×2=2,000Power $.04×50,000=2,000 $.04×200,000=8,000 $.04×150,000=6,000Total $16,500$16,000$15,5002. Overheadratebasedondirectlaborcosts: Rate=Totalmanufacturingoverhead÷Totaldirectlaborcost=$48,000÷$8,000=$6.00/DL$ Overheadallocatedtoeachproductis:Senior: $6.00×4,000 = $24,000Basic: $6.00×1,000= 6,000Deluxe: $6.00×3,000 = 18,000Total $48,000NoticethatmuchlessmanufacturingoverheadcostisallocatedtoBasicusingdirectlaborasacostdriver.Why?BecauseBasicusesonlyasmallamountoflaborbutlargeamountsofotherresources,especiallypower.3. Theproductcostsinrequirement1aremoreaccurateifthecostdriversaregoodindicatorsofthecausesofthecosts--theyarebothplausibleandreliable.Forexample,kilowatthoursiscertainlyabettermeasureofthecostofpowercoststhanisdirectlaborhours.Therefore,theallocationofpowercostsinrequirement1iscertainlybetterthaninrequirement2.Materialshandlingandengineeringarelikewisemoreplausible.Amanagerwouldbemuchmoreconfidentinthemanufacturingoverheadallocatedtoproductsinrequirement1.Remember,however,thatthereareincrementalcostsofdatacollectionassociatedwiththemoreaccurateABCsystem.Thebenefit/costcriteriamustbeappliedindecidingwhichcostingsystemis"best."4-B1 <20-30min.>SeeTable4-B1onthefollowingpage.4-B2 <25-30min.>1. $1,080,000÷45,000hours=$24perdirect-laborhour2. <a> $585,000÷15,000hours=$39perdirect-laborhour <b> $495,000÷30,000hours=$16.50perdirect-laborhour3. <a> $585,000÷97,500hours=$6permachinehour <b> $495,000÷30,000hours=$16.50perdirect-laborhour4. <a> $24×<1.0+14.0>=$360.00 $24×<1.5+3.0>=$108.00 $24×<1.3+8.0>=$223.20 <b> <$39×1.0>+<$16.50×14.0>=$39.00+$231.00=$270.00 <$39×1.5>+<$16.50×3.0>=$58.50+$49.50=$108.00 <$39×1.3>+<$16.50×8.0>=$50.70+$132.00=$182.70 <c> <$6×12.0>+<$16.50×14.0>=$72.00+$231.00=$303.00 <$6×17.0>+<$16.50×3.0>=$102.00+$49.50=$151.50 <$6×14.0>+<$16.50×8.0>=$84.00+$132.00=$216.00Firstconsiderusingdepartmentalinsteadoffirm-widerates<partbvs.parta>.Departmentalratesthatusedirect-laborhoursasthebasedecreasethecostappliedtounitsofAandCandleaveBunaffected.Otherproductsthatuserelativelylessassemblytimewillincreaseincost.Nowexaminechangingtoabaseofmachinehoursinmachining<partcvs.parta>.ProductBistheonlyonewithanincreaseincostin<c>comparedto<a>.Why?BecauseB'susesonly16%ofthedirectlaborhoursusedforA,B,andC,soitisisallocatedonly16%ofthecostsallocatedonthebasisofdirectlaborhours.Butituses40%ofthemachinehours,andthereisallocated40%ofcoststhatareallocatedonthebasisonmachinehours.Therefore,itreceivesrelativelymorecostswithabaseofmachinehoursthanwithabaseofdirect-laborhours...TABLE4-B1STATEMENTOFOPERATINGINCOMEOPERATINGINCOMEBYPRODUCTLINEThousandsofDollars Lawn HandScooter Mower Tool CostType,PartsPartsPartsAssignmentMethod LawnMowerParts HandToolParts CostType,AssignmentMethodSales $990$350$380$260Costofgoodssold:

Directmaterial 400 175 125 100Direct,DirectTraceIndirectmanufacturing 94681 1412Indirect–Mach.Hrs494243139112Grossprofit 496107241148Sellingandadministrativeexpenses:

Commissions 55 25 20 10Direct,DirectTraceDistributiontowarehouses 150202 8050Indirect-WeightTotalsellingandadministrativeexpenses 2054510060Contributiontocorporateexpensesandprofit291$62$141$88Unallocatedexpenses:

Corporatesalaries 11Othergeneralexpenses 17Totalunallocatedexpenses 28Operatingincomebeforetax $2631Totalmachinehoursis8,500+1,750+1,500=11,750.Indirectmanufacturingcostpermachinehouristhen$94,000÷11,750=$8.Theallocationtoscooterpartsis$8×8,500machinehours=$68,000.2Totalweightshippedis100,000kg+400,000kg+250,000kg=750,000kg.Indirectdistributioncostsperkilogramisthen$150,000÷750,000kg=$0.20.Theallocationtoscooterpartsis$0.20×100,000kg=$20,000...4-B3<30-35min.>Theexistingsystemallocatesallcostsbasedondirectlaborcost.Therateforallocatingindirectproductioncostsis:Estimatedindirectproductioncost÷Estimateddirectlaborcost=￥24,500,000÷￥35,000,000=70%Thatis,eachtime￥1isspentondirectlabor,Watanabeadds￥0.7ofindirectproductioncosttothecostoftheproduct.2.UnderanABCsystem,Watanabewouldallocateindirectproductioncostsseparatelyforeachactivity.Thiswouldresultinthefollowingfourallocationrates:Receiving: Receivingcosts÷Directmaterialcost =￥4,800,000÷60,000,000=￥0.08per￥1ofdir.mat.Assembly: Assemblycosts÷Numberofcontrolunits =￥13,800,000÷92,000=￥150percontrolunitQual.Control: Qualitycontrolcost÷QChours =￥1,800,000÷600=￥3,000perQChourShipping: Shippingcost÷#ofboxesshipped =￥4,100,000÷8,200=￥500perboxshipped3.<a>Thecostwillcontain3components<inthousandsofyen>: Directmaterial ￥8,000 Directlabor 2,000 Indirectproductioncost<￥2,000×.7=1,400> 1,400 Totalcost ￥11,400 Price<￥11,400×1.3> ￥14,820<b>Thecostwillhave7components,4ofthemallocatingindirectproductioncosts<totalsinthousandsofyen>:Directmaterials ￥8,000 Directlabor 2,000 Receiving<￥0.08×8,000> ￥640 Assembly<￥150×5,000> 750 Qualitycontrol<￥3,000×50> 150 Shipping<￥500×600> 300 Totalindirectproductioncost 1,840 Totalcost ￥11,840 Price<11,840×1.3> ￥15,3924.TheorderfromNissanrequiresarelativelylargeamountofreceiving,qualitycontrol,andshippingresourcescomparedtotherelativeamountoflaborrequired.Thismakesitsindirectproductioncostsarerelativelyexpensiverelativetothelaborrequired.Thefollowingillustrateswhyanallocationonthebasisoflaborcostresultsinlesscoststhanallocationsbasedonthefouractivities: BudgetedCost- NissanCost- NissanActivityAllocationBaseAllocationBasePercentageDirectmaterials 60,000,000 8,000,000 13.3%Directlabor 35,000,000 2,000,000 5.7Receiving 60,000,000 8,000,000 13.3Assembly 92,000 5,000 5.4Qualitycontrol 600 50 8.3Shipping 8,200 600 7.3Usingthesingledirect-laborcost-allocationbase,thisorderwouldreceive5.7%ofallindirectproductioncosts.ThemainreasonthatindirectproductioncostsforthisorderundertheABCsystemarerelativelyhighisthelargerelativecostofmaterialsthatdrivesalargeallocation<13.3%>ofreceivingcoststothisorder.Theallocationsofbothqualitycontrolandshippingcostsareslightlylargerthattheywouldbeusingadirect-laborcost-allocationbase,whiletheallocationofassemblycostsisslightlysmaller.4-B4 <50-60min.>1.Asummaryoftheanalysesfollows. Pen Cell-PhoneCasingsCasingsCompanyBaseGrossProfitPercentage* 1.25% 38.75% 8.07%PlanGrossProfitPercentage** 10.80% 37.20% 17.40%SupportofProductManager? Strong None SupportofPresident? Moderate*SeeExhibit4-6onp.136ofthetext.**SeePanelBofExhibit4-B4thatfollows.Exhibit4-B4,PanelsAandBonthefollowingpagescanbeusedtoexplaintheimpactofthecontroller’sideausingtheprocessmapofthetraditionalcostingsystemandtherelatedfinancialreports.Noticethatthe$80,000annualdecreaseinthecostofengineersneedstobeconvertedtoa$20,000quarterlysavings.Thecontroller’sideawillresultinanincreaseof9.55%inthegrossprofitofthepen-casingslinebutadecreaseof1.55%inthecell-phoneline.Theproductmanagerofpencasingswouldprobablygivestrongsupporttotheideabutthecell-phonecasingsmanagerwouldmostlikelynotsupporttheidea.Althoughthecompany-levelgrossprofitmarginimproves,thepresident’ssupportmaynotbestrong.Why?Thereisnotastrongconsensusamongproduct-linemanagers.Topmanagementisnormallyhesitanttosupportactionsthatdonothavetheunanimoussupportamongproduct-linemanagersunlessthereissolidevidenceofmaterialimprovementinprofitability.Whilethecurrentlosswouldbereversed,thereturnonsalesisstillnominalat3,500÷$480,000=.73%.Exhibit4-B4:PanelAProcessMapofTraditionalCostSystemUnallocatedUnallocated$80,000DirectMaterialsforPenCasings$22,500DirectLaborforPenCasings$135,000DirectMaterialsforCellPhoneCasings$24,000DirectLaborforCellPhoneCasings$15,000PenCasingsSales$360,000CellPhoneCasingsSales$120,000AllIndirectResources$200,000AllUnallocatedValueChainCosts$80,000CostDriver[DirectLaborHours=4,500+1,000=5,500]..Exhibit4-B4:PanelBPRO-FORMAFINANCIALREPORTS:TRADITIONALCOSTALLOCATIONSYSTEM Statementofopertingincome contributiontocorporatecosts andprofit [externalreportingpurpose] [internalstrategicdecisionmaking ANDOPERATIONAL-CONTROLPURPOSE] PenCasings CellPhoneCasingsSales $480,000$360,000$120,0001Costofgoodssold:Directmaterial 46,500 22,500 24,0002Directlabor 150,000 135,000 15,000Indirectmanufacturing 200,000163,636336,3644Costofgoodssold 396,500321,13675,364Grossprofit 83,500 $38,864$44,636Corporateexpenses<unallocated> 80,000Operatingincome$3,500Grossprofitmargin 17.40%510.80% 37.20%1.$80,000×.75×22.$12,000×23.$200,000×[4,500/<4,500+1,000>]4.$200,000×[1,000/<4,500+1,000>]5.$83,500/$480,000..Perhapsthemostimportantfactorbearingonthepresident’ssupportislackofconfidenceintheaccuracyofthecostandhencegrossmarginfigures.Sheprobablywillinquirewhethertheshiftintheconsumptionpercentagesbythetwoactivitiesiscapturedbythetraditionalcostingsystem.Doesthechangeinallocationratesfrom90:10to82:18basedondirectlaborhourchangesaccuratelycapturetheimpactoftheoperationalchanges?Aninformalanalysisofthecontroller’sideamightlooklikethefollowingtable.OperationalChangeLikelyImpactontheConsumptionofResourcesthatSupport:PenCasingsCell-PhoneCasingsLesspurchasingworktosupplypartsforcell-phonecasingsLessengineeringdesignworkoncellphonecasingsLessequipmentusedtosupportcell-phoneproductionIncreaseincell-phoneproductionBasedontheinformalanalysis,thePresidentprobablywouldexpecttheprofitabilityofcell-phonecasingstoimproveandtheprofitabilityofpencasingstobeunaffected.Thisdisagreeswiththenumericalanalysis.Giventhepropensityofmanagerstoembracenumericalresults,lessweightwilllikelybegiventhisanalysiscomparedtothe"objective"numbers.Asaresult,shemayquestionthevalidityofthenumericalanalysisaswellasthevalueofthetraditionalcostingsystem!Finally,thefocusofimprovementeffortsshouldbedirectlyonthepen-casingproductline.Thisinitiativedealsmostlywiththecell-phoneline.Whatcanbedonetoimproveprofitabilityofthepencasings?Canpricesberaisedwithoutlosingtoomuchvolume?Canoperationalimprovementsbemadetolowertheindirectmanufacturingcosts?Thecontroller’sideaisworthyofsomesupportbutitdoesnotaddresstheprofitabilityissueheadon.2.Exhibit4-B4,PanelConthefollowingpageisaprocessmapthatcanbeusedtoexplaintheimpactofthecontroller’sidea.PanelDattheendofthesolutionprovidesadetailedevaluationofthecontroller’sidea. Pen Cell-PhoneCasingsCasingsCompanyBaseGrossProfitPercentage* 16.22% <28.63%> 8.07%PlanGrossProfitPercentage** 17.26% 17.81% 17.40%SupportofProductManager? Neutral Strong SupportofPresident? Strong*Seethetableonp.139ofthetext.**SeepanelDofExhibit4-B4thatfollows.Thecontroller’sideawillresultinaslightincreaseinthegrossprofitofthepen-casingslinebutadramaticturnaroundintheprofitabilityofthecell-phoneline.Theproductmanagerofpencasingswouldprobablybeneutralorslightlypositiveabouttheideabecausetheideadoesnotfocusonoperationalimprovementsthatdirectlyaffectthepen-casingsline.Thecell-phonecasingsmanagerwouldgivestrongsupporttotheidea–thismaysavehis/herjob!Thepresidentwouldstronglysupportthisideawhileencouragingallmanagersinvolvedtokeepupthegoodwork.Also,notethatthenumbersagreewiththeinformalanalysis–generatingconfidenceintheintegrityofthecostaccountingsystem.Exhibit4-B4,PanelCProcessMapforABCSystem..Exhibit4-B4:PanelDPRO-FORMAFINANCIALREPORTSFORLOPEZPLASTICSCOMPANY:ACTIVITY-BASEDCOSTALLOCATIONSYSTEM Statementofopertingincome contributiontocorporatecosts andprofit [externalreportingpurpose] [internalstrategicdecisionmaking ANDOPERATIONAL-CONTROLPURPOSE] PenCasings CellPhoneCasingsSales $480,000$360,000$120,000Costofgoodssold:Directmaterial 46,500 22,500 24,000Directlabor 150,000 135,000 15,000Processingactivity 154,000 126,0001 28,0002Productionsupportactivity 46,00014,375331,6254Costofgoodssold 396,500297,87598,625Grossprofit 83,500 $62,125$21,375Corporateexpenses<unallocated> 80,000Operatingloss $3,500Grossprofitmargin 17.40% 17.26% 17.81%1. $154,000×[4,500laborhours/<4,500laborhours+1,000laborhours>]2. $154,000×[1,000laborhours/<4,500laborhours+1,000laborhours>]3. $46,000×[5distinctparts/<5distinctparts+11distinctparts>]4. $46,000×[11distinctparts/<5distinctparts+11distinctparts>] ..3.Asvicepresident,youprobablyarepleasedwiththenewABCsystem.Thecostdriversthatareusedtoallocateactivitycostsappeartobeplausibleandreliableandthusprobablyrepresentasoundcause-effectmodelofoperations.Thiswillimproveboththeaccuracyofproductcostingandoperatingmanagers’controlovercosts.OperatingmanagerswillbepleasedwiththeABCsystembecauseithelpsthemunderstandhowtheirday-to-dayworkimpactscostsandprofits.Fromabehavioralperspective,thisshouldbehighlymotivational.Thisproblememphasizestheimportanceofthecost-accountingsystemtomanagers.Differentsystemscanresultinsignificantlydifferentmanagementdecisions.Inthiscase,theproduct-linemanagers’supportforthecontroller’sideachangeswhenanABCsystemisusedtoevaluatetheidea.Althoughthecompany-levelgrossmarginsdonotchange,itispossiblethatthepresidentwouldstronglysupporttheideabasedonABCdata.Why?Neitheroftheproduct-linemanagersisagainsttheidea,andonestronglysupportsit.Inaddition,thepresidentmayhavemoreconfidenceintheaccuracyoftheABCanalysis.Thesubstantiallossesofthecurrentquarterhavebeencompletelyeliminatedandtheseriousprofitabilityproblemofthecell-phonecasingproductlinehasbeenreversed.Acostmanagementsystemisacollectionoftoolsandtechniquesthatidentifieshowmanagement’sdecisionsaffectcosts.ThethreepurposesofaCMSaretoprovidecostinformationforoperationalcontrol,costinformationforstrategicdecisions,andmeasuresofinventoryvalueandcostofgoodsmanufactured<orpurchased>forexternalreportingtoinvestors,creditors,andotherexternalstakeholders.4-2a.Theproductionmanagerneedsoperationalcontrolinformation. b.Settingtheproductmixisastrategicdecision.c.Thecostofinventorythatappearsonthebalancesheetisinformationthatisusedbyexternalinvestors,creditors,andotherstakeholders.4-3 Costobjectsareanyitemsforwhichdecisionmakersdesireaseparatemeasurementofcosts.Theyincludedepartments,products,services,territories,andcustomers.4-4 No.Productsareoneofthemaincostobjectsformostcompanies,butdepartmentsarealsoimportantcostobjectsbecausetheyrepresentalogicalgroupingofactivitiesforwhichmanagersdesireaseparatedeterminationofcosts.4-5 Themajorpurposeofadetailedcost-accountingsystemistomeasurecostsfordecisionmakingandfinancialreporting.Costaccountingsystemsbecomemoredetailedasmanagementseeksmoreaccuratedatafordecisionmaking.4-6 Thetwomajorprocessesperformedbyacostaccountingsystemarecostaccumulationandcostassignment.Costaccumulationiscollectingcostsbysome"natural"classification,suchasmaterialsorlabor,orbyactivitiesperformedsuchasorderprocessingormachineprocessing.Costassignmentisattachingcoststooneormorecostobjects,suchasactivities,processes,departments,customers,orproducts.4-7 Managersmakeimportantdecisionsonadailybasis.Theybasethesedecisionsinlargepartonfinancialdataprovidedbythecostaccountingsystem.Soitiscriticallyimportantthatthecostaccountingsystemprovideaccurateandreliablefinancialinformation.4-8Managerscanspecificallyandexclusivelyidentifydirectcostswithagivencostobject<thatis,directlytracethem>inaneconomicallyfeasibleway.Indirectcostscannotbesoidentified.However,managerscanusuallyidentifyaplausibleandreliablecostdrivertousetoallocateresourcecoststocostobjectsthatconsumetheresources.Whendirecttracingisnoteconomicallyfeasibleandaplausibleandreliablecostdrivercannotbefound,costsshouldremainunallocated.4-9 Yes,thesamecost<forexample,thedepartmentsupervisor'ssalary>canbedirectwithrespecttoadepartmentbutindirectwithrespecttothevarietyofproductsflowingthroughadepartment<e.g.,tables,chairs,andcabinets>.4-10 Somecostscanbephysicallylinkedwithadepartment<oraproduct>,butnotinaneconomicallyfeasibleway.Anexampleistheuseofdepartmentalmetersformeasuringpowerusage.Suchdevicescouldmeasurepowercostsasdirectcostsofadepartment.Thealternativeistoregardfactorypowercostsasindirectcostsofindividualdepartments.Managersoftendecidewhethertheresultingincreasedaccuracyprovidedbyindividualpowermetersisworththeiradditionalcost;thus,thetestofeconomicfeasibilitywilldecidewhetheraparticularcostisregardedasdirectorindirect.4-11 Thefourpurposesofcostallocationare<1>topredicttheeconomiceffectsofstrategicandoperationalcontroldecisions,<2>toobtaindesiredmotivation,<3>tocomputeincomeandassetvaluations,and<4>tojustifycostsorobtainreimbursement.4-12GenerallyAcceptedAccountingPrinciples<GAAP>requirepublically-heldcompaniestoallocateallproduction-relatedcostsandonlyproduction-relatedcoststoitsproductsforfinancialreportingtothepublic.4-13 No.Thecostsinacostpoolarenotphysicallytracedtocostobjects.Onlydirectcostsaretracedtocostobjects.Acostpoolcontainsindirectcoststhatareallocatedtocostobjectsusingasinglecost-allocationbase.4-14 Somepossibletermsarereallocate,assign,distribute,redistribute,load,apportion,reapportion,andburden.4-15 Forfinancialstatementpurposes,thetypicalaccountingsystemdoesnotallocatecostsassociatedwithvalue-chainfunctionsotherthanproductiontothephysicalunitsproduced.However,forguidingdecisionsregardingproduct-pricingandproduct-mixdecision