管理會計(jì)課后習(xí)題Ronald Hilton 第七章

CHAPTER7

ACLOSERLOOKATOVERHEADCOSTS

ANSWERSTOREVIEWQUESTIONS

7.1Whenwerefertomanufacturingoverheadcostswearedescribingtheindirectmanufacturingcostsofproducts.

Thesearethefactorycoststhatareincurredinproducingproductsbutcannotbetraceddirectlytothem.They

includeallmanufacturingcostsotherthandirectmaterialanddirectlabour,suchasthecostsofsupervision,

power,factorysecurityandsoon.Fromaproductcostingperspective,wecanexpandourdefinitionof

overheadstoincludeallproduct-relatedcostsotherthandirectcostsasmanagersmayrequirecomprehensive

estimatesofproductcostsformakingproduct-relateddecisions(seeChapter4).However,asAustralian

accountingstandardAASB102Inventoriesrequiresthatinventoryvaluationsinexternalreportsof

manufacturingbusinessesonlyincludemanufacturingcosts,adistinctionisdrawnbetweenindirectcostswithin

themanufacturingarea,calledmanufacturingoverhead,andotherindirectcostsincurredalongthevaluechain,

upstreamanddownstream,ofthemanufacturingorproductionarea.

Upstreamcostsanddownstreamcosts,regardlessofwhethertheentityisamanufactureroraserviceprovider

includecostsincurredbeforeandaftertheproductionprocess,suchasresearchanddevelopment,designand

supplycosts,marketing,distributionandcustomerservicecosts.

Theindirectcostsofresponsibilitycentresarecostsassignedtoaunitinanorganisationsuchasadepartmentor

divisionwhereamanagerisheldaccountableforperformance.Indirectcostscannotbetraceddirectlytothe

centresotheyneedtobeassignedinstead.

7.2Costobject:issomethingthatisassignedaseparatemeasureofcostbecausemanagementneedsuchcost

information;forexample,responsibilitycentres,products,projectsandsoon.(Thevariousproduction

departmentsinamanufacturingfirmalsoprovideexamplesofcostobjects.Forexample,thematerialhandling

costpoolmaybeallocatedacrossthevariousproductiondepartmentsthatusematerialhandlingservices.Ina

hospitalcostsmaybeassignedtoreception,award,adoctor,operatingtheatresorintensivecareunit(ICU)and

soon.)

Costpool:acollectionofcoststhataretobeassignedtocostobjects.Costsareoftenpooledbecausetheyhave

thesamecostdriver.(Anexampleofacostpoolisallcostsrelatedtomaterialhandlinginamanufacturingfirm.)

Costallocationbase:issomefactororvariablethatisusedtoallocatecostsinacostpooltocostobjects.(An

exampleofacostallocationbasemaybetheweightofmaterialshandledforeachproductiondepartmentthat

usesmaterialhandlingservices.Thisbasewouldbeusedtoassignthecostsinthematerialhandlingcostpoolto

theproductiondepartments.)

Costdriver,isafactororactivitythatcausesacosttobeincurred.(Fromtheexampleabove,theallocationbase

ofweightofmaterialshandledforeachproductiondepartmentmaybeacostdriverdependingonitscausal

relationshiptothecostsinthecostpool.)

Thedifferencebetweencostallocationbasesandcostdriversisthatcostdriversareallocationbasesbutnotall

allocationbasesarecostdrivers.Ideallyallocationbasesshouldbecostdrivers;thatis,thereshouldbeacause

andeffectrelationshipbetweenthecostsinthecostpoolandtheallocationbase.Inpractice,someallocation

basesdonothavethisrelationship,ortherelationshipisimperfect.Underthesecircumstancestheaccuracyof

thecostallocationscanbequestioned.

7.3AsshowninExhibit7.2(Estimatingthecostofacostobject),inestimatingthecostofacostobject,directcosts

aretraceddirectlytothecostobjectandindirectcosts(thosewithnodirectlinkagetothecostobject)are

collectedintocostpoolsandassignedtothecostobjectbymeansofallocationbases,preferablycostdrivers.

SomepossibleexamplesofcostobjectsandtheirdirectandindirectcostsfortheNGOsinvolvedinthetsunami

reliefefforts(describedinthe"Reallife-Measuringtsunamirecoverycosts:anoverheadornot?'onpage276)

follow:

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CostobjectsDirectcostsIndirectcosts

Programstodeliver?Campaignandadministrativecosts?Generalofficeandadministrative

immediatedisasterreliefthatcanbedirectlytracedtocostsofNGO(depreciationof

specificprogramofficeequipment,general

stationeryandpostage,rent,

?Salariesofprogramdesignerand

cleaning,generalaccountingand

planners

officestaffsalaries,bankfeesetc)

?Salariesofappealworkers

?SalariesofCEOandtop

?Salariesofreliefworkersinmanagement

disasterarea

?Legal,insuranceandrisk

?Transportofstaffandreliefgoodsmanagementcostsnotdirectly

todisasterareatraceable

?Accommodationforreliefworkers?Marketing,advertising,publishing

andothercostsforgeneral

?Technicalandlogisticalconsulting

awarenessandfundraising

costscampaigns

?Foodandcleanwater?Consultingandadvocacyactivity

?Medicinescostsofseekingchangein

governmentandinstitutional

?Temporaryshelterpolicies

?Externalauditandreportingcosts

Projectsto:?Administrativecoststhatcanbe?Generalofficeandadministrative

directlytracedtospecificprojectscostsofNGO(depreciationof

?rebuildafteradisaster

officeequipment,general

event?Salariesofprojectdesignersand

stationeryandpostage,rent,

planners

?constructadditionalcleaning,generalaccountingand

infrastructure?Salariesofstaffinvolvedinprojectofficestaffsalaries,bankfeesetc)

fieldwork

?deliverlong-term?SalariesofCEOandtop

communitydevelopment?Transportofstaffandmaterialstomanagement

field

?Legal,insuranceandrisk

?Accommodationforfieldstaffmanagementcostsnotdirectly

traceable

?Technicalandengineering

consultingcosts?Marketing,advertising,publishing

andothercostsforgeneral

?Buildingandinfrastructureawarenessandfundraising

materialscampaigns

?Consultingandadvocacyactivity

costsofseekingchangein

governmentandinstitutional

policies

?Externalauditandreportingcosts

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7.4Acostallocationbaseissomefactororvariablethatallowsustoallocatecostsinacostpooltoacostobject.

Onepossibleallocationbaseforassigningadvertisingcoststothevariousattractionsofalargethemepark

wouldbethenumberofpeoplepatronisingthepark'sattractions.Thiswouldassumethatthenumberofpeople

attendingacertainpartofthethemeparkwouldbeanindicationoftheadvertisingresourcesconsumedbyeach

attraction.Noticethatinmostcasesthesalesrevenuegeneratedbythevariouscomponentsofthethemepark

wouldnotbeaviableallocationbasesincemostthemeparkshaveasingleadmissionfeefortheentirepark.

Notethatsomepeoplewouldconsider'corporate'advertisingofthisnatureshouldnotbeallocatedtothe

varioussubunitsofthebusiness,asitisveryhardtodetermineacausalcostdriver.Inactivity-basedcosting

terminologytheadvertisingcouldberegardedasafacilitycost.

7.5Thedevelopmentofdepartmentaloverheadratesinvolvesatwo-stageprocess.

Instageone,overheadcostsareassignedtothefirm'sproductiondepartments.First,overheadcostsare

distributedtoalldepartments,includingbothsupportandproductiondepartments.Second,supportdepartment

costallocationtakesplacewhichinvolvescostsbeingallocatedfromthesupportdepartmentstotheproduction

departments.Attheendofstageone,alloverheadcostshavebeenassignedtotheproductiondepartments.

Instagetwo,overheadapplicationoccursasthecoststhathavebeenaccumulatedintheproductiondepartments

areappliedtotheproductsthatpassthroughthedepartmentsusingtheoverheadratesetforeachproduction

department.

7.6Asupportdepartmentisaunitinanorganisationthatisnotinvolveddirectlyinproducingtheorganisation's

goodsorservices.However,asupportdepartmentdoesprovideservicesthatenabletheorganisation's

productionprocesstotakeplace.Productiondepartments,ontheotherhand,areunitsthataredirectlyinvolved

inproducingtheorganisation^goodsandservices.

Examplesof'production'departmentsinabankmayincludechequeprocessing,tellers,loandepartmentsandso

on.Examplesofsupportdepartmentsinarestaurantchainmayincludewashingdishes(eithermanualor

stackingandunstackingdishwashers),cleaning,ordering/buying(somefranchisesrelyonorderingfroma

centralunitandsomerequirepurchasingatthelocalmarket),bookingsdesk,headoffice,laundryand

accounting.

7.7Activity-basedcostingcanbeusedtoassignmanufacturingoverheadcoststoproductsintwostages.Inthefirst

stageoverheadcostsareassignedtoactivitycostpools(thatis,activities).Inthesecondstage,activitycostsare

assignedfromtheactivitiestoproductsinproportiontotheproducts*consumptionofeachactivity,measuredby

theamountofactivitydriverconsumed.Intraditionalcostingsystems,whenatwo-stageallocationprocessis

used,thefirststageistoassignoverheadcoststoproductiondepartmentsandthesecondstageistoassignthe

overheadcostsfromtheproductiondepartmentstoproductsinproportiontotheproducts'consumptionofthe

departmentaloverheadcostdrivers.

7.8Usingdepartmentaloverheadratesinsteadofasingleplantwideoverheadratecanimprovetheaccuracyof

productcostinformation.Theallocationbasesusedforeachdepartmentarelikelytobemorerealisticin

representingtherelationshipbetweenoverheadcostsandtheproduct,comparedtousingjustoneplantwiderate.

However,usingdepartmentaloverheadratesrequiresthedistributionofoverheadcoststodepartments,the

allocationofsupportdepartmentcoststoproductiondepartmentsandthecollectionofcostdriverdataby

productiondepartments.Whilethisapproachusuallyprovidesmoreusefulinformationthanthesinglecostpool

approach,itismoreexpensivetooperateandstillcanprovidemisleadinginformation.Aproblemwiththis

approachisthatcostswithdifferentbehaviourpatternsareaddedtogetherbeforeallocationtotheproduct.Itis

difficulttoidentifyarealisticcostdriverforacostpoolthatincludessetupcosts,spacecostsandindirect

materialcosts,forexample.

Usingactivity-basedcostingshouldimprovetheaccuracyofcostinformation.Allocatingcoststoactivities

ratherthandepartmentsenablestheidentificationofevenmoreappropriateallocationbases.ForexampleABC

usesbothvolumeandnon-volumebasedcostdriversasallocationbasesandattemptstoaggregatecoststhat

havesimilarbehaviourpatterns.Again,however,thereisanadditionalcostinanalysingcostsandcostdriversat

anactivitylevelratherthanatadepartmentlevel.

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7,9Acostdriverisanactivityorfactorthatcausescoststobeincurred.Avolume-basedcostdriverisacostdriver

thatisameasureoforproxyforthevolumeofproduction.Anassumptionunderlyingtheuseofavolume-based

costdriveristhatcostsarecaused,ordriven,bythevolumeofproduction.Examplesincludedirectlabourhours,

machinehoursanddirectmaterialvolume.

Non-volumebasedcostdriversarecostdriversthatarenotdirectlyrelatedtothenumberofunitsproduced.For

exampleinmanufacturingthesetupcostsarenotdrivendirectlybytheunitsofoutputsinceeachbatchcanvary

involume.Inabank,non-volumebasedcostscanincludehumanresourcemanagement(drivenbystaff

numbers),cleaning(drivenbyfloorspaceorroomnumbers),andITservicing(possiblydrivenbythenumberof

computers).

7.10Labourcostisacommonlyusedbaseforallocatingoverheadcoststocostobjectsincludingprojectssuchas

thoseundertakenbyFFA.Althoughsuchprojectsmaybeselffundedbythemembercountriestheyresultin

additionaloverheadcostsbeingincurredbytheFFA.Astheseoverheadcostscannotbespecificallytracedcost-

effectivelytotheindividualprojects,anappropriateallocationbaseisneededtoallocatethemtotheindividual

projectstoavoidcross-subsidisationofprojectsfrommembercontributionsanddonations.

Itislikelythatthereissomerelationshipbetweenthelevelofsalarycostsfortheprojectsandtheincreasein

overheadcostsincurredbytheFFA(aslarger,highercostprojectsarelikelytorequiremoresupportfromFFA),

thoughthecorrelationisunlikelytobeperfect.Intheabsenceofastrongerlogicalconnectionandamore

practical,costeffectiveallocationbasetheuseofsalarycostsastheallocationbasemaybereasonable.However,

itisnotsurprisingthatthemembercountriesquestionedandsoughtindependentadviceontheaccountabilityof

theseeminglyhighoverheadrecoveryrateof66%ofsalarycosts,becausetothemtheoverheadrecoveryisan

uncontrollablecost.

7,11Theprimarybenefitofusingapredeterminedoverheadrateinsteadofanactualoverheadrateistoprovide

timelyinformationfordecisionmaking,planningandcontrol.Alsothepredeterminedrateremovesfluctuations

inherentinmonthlyactualoverheadrates.Whiletheuseofactualoverheadratesremovestheneedtoaccount

forover-orunder-allocatedoverhead,thisisbecauseitreliesondatathatarenotknownuntilaftertheevent,so

itcannotbeusedinatimelyfashion.Noticethatinbothapproaches,itisnecessarytocalculateanoverheadrate,

asoverheadcostscannotbetraceddirectlytoproducts.

7.12Thedenominatorvolumeisthemeasureofcostdrivervolumeusedtocalculatethemanufacturingoverheadrate.

Themostcommonmeasureisthebudgetedvolumeofcostdriverforthecomingyear.Theoreticalcapacityis

themaximumlevelofproductionthattheplantcanrunat,withouteverstopping.Practicalcapacityassumesthe

businessoperatesatthemaximumlevelthatitsresourcesallowundernormal,efficientoperatingconditions.

Productcostswillbehigherusingpracticalcapacity,asthedenominatormeasureofcostdrivervolumewillbe

lower,resultinginhigheroverheadrates.Usingtheoreticalcapacityasthedenominatorwillresultinlower

overheadratesandproductcosts,buttherewillbehigherlevelsofunderappliedoverhead.

7.13Managementaccountantsallocateindirectcoststoresponsibilitycentrestohelpmanagersunderstandtheeffects

oftheirdecisions,toencourageparticularpatternsofresourceusageandtosupporttheproductcostingsystem.

Forexampleproductiondepartmentsmaysourceservicesfromsupportdepartmentsandwheretheseservicesare

suppliedfor'free'theremaybeatendencytoover-consumethem.Wheretheyarechargedtodepartments,the

departmentalmanagersareheldresponsibleforthesecostsandneedtobecarefulabouttheamountofthese

servicestheyconsume.Also,wheredepartmentaloverheadratesareusedforproductcosting,itisnecessaryto

allocatethecostsofsupportdepartmentstoproductiondepartments,tocalculatedepartmentaloverheadratesfor

theproductiondepartments.

TheproblemsencounteredinallocatingaproportionofcostsofthePrimeInfrastructureGroup(whichchanged

itsnametoBabcockandBrownInfrastructureonIJuly2005)toitsresponsibilitycentreofDalrympleBayCoal

Terminal(DBCT)relatedtothedisentanglementofoverheadsassociatedwithDBCT'soperationsfromthecosts

ofotheractivitieswithinthePrimegroup.TheamountofoverheadallocatedbyPrimetoDBCTaffectedthe

overheadcostperloadedtonnesoughttoberecoveredbyDBCTinthetotalpriceperloadedtonneofcoal

chargedtoterminalusers.Thetenninalusershavelittleoptionbuttousetheterminalfacilitybecauseofits

monopolisticnature.Thecompetitionauthority,toensurefairandreasonableaccessforterminalusers,needed

toapprovethetermsandconditionsofterminalaccess.ItsoughtanindependentreviewofPrime'smethodof

allocatingoverheadtoDBCT,whichfoundthatPrimehadnotreliablyestimatedtheamountofoverhead

relatingtoDBCT.This'Reallife'exampleillustratestheimpactthatoverheadcostallocationchoicescanhave,

notonlyonproductcostsandproductprices,butalsoindustrycompetitiveness.

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7.14Budgetedsupportdepartmentcostsshouldbeallocatedratherthanactualsupportdepartmentcosts.Ifactual

costswereallocated,theactivitiesofthedepartmentthatprovidestheservicescouldcompromisetheresultsof

thedepartmentthatusestheseservicesaswellastheirabilitytoplanactivities.Theincentiveforcostcontrolin

thedepartmentthatprovidestheservicesmaybereducediftheyjusttransferthoseexcessestothenext

department.Theallocationonthebasisofbudgetedfigureshighlightsthegoodorpoorresultsinthesourcing

department.

7.15Underthedirectmethodofsupportdepartmentcostallocation,allsupportdepartmentcostsareallocated

directlytotheproductiondepartments,andnoneofthesecostsareallocatedtoothersupportdepartments.Under

thestep-downmethod,asequenceisfirstestablishedforallocationofsupportdepartmentcosts.Thenthecosts

incurredinthefirstsupportdepartmentinthesequenceareallocatedamongallotherdepartmentsthatfollowin

thesequence,includingothersupportdepartments.Themethodproceedsinasimilarfashionthroughthe

sequenceofsupportdepartments,neverallocatingbacktoasupportdepartmentthathashaditscostsallocated.

Underthereciprocalservicesmethod,asystemofsimultaneousequationsisestablishedtoreflectthereciprocal

provisionofservicesamongsupportdepartments.Then,allofthesupportdepartments*costsareallocated

amongallofthedepartmentsthatusethevarioussupportdepartments'outputofservices.Thereciprocal

servicesmethodofsupportdepartmentcostallocationistheonlymethodthatfullyaccountsforthereciprocal

provisionofservicesamongdepartments.

7.16Asstatedinthepreviousanswer,underthereciprocalservicesmethodallofthesupportdepartmentsJcostsare

allocatedamongallofthedepartmentsthatusethevarioussupportdepartments'outputofservices.Itistheonly

methodthatfullyaccountsforthereciprocalprovisionofservicesamongdepartments.However,thisdegreeof

accuracymaynotbenecessaryforthepurposeandsometimesmakesverylittledifferencetotheresulting

costings.Thedegreeofinaccuracyofthereciprocalandstepdownmethodsdependsontheamountofoverhead

ineachcostpoolandthelevelofsupportprovidedbetweendepartments.Asthemethodofallocatingsupport

departmentcostsbecomesmoredetailedandsophisticatedthecostofmaintainingthesystemincreases.

7.17Thetermreciprocalservicesreferstotwoormoresupportdepartmentsprovidingsupportservicestoeachother.

Inauniversity,forexample,theITdepartmentprovidessupportservicestothehumanresource(HR)

departmentbutthehumanresourcedepartmentalsoprovidesHRsupporttotheITdepartment.InfactITgives

supporttoallotherdepartments(e.gmaintenance,grounds,studentadministration,facultyadministration,

library,security)andreceivessupportfrommanyofthem(maintenanceoffacilities,HR,security).

7,18Thecontributionmarginstatementisusedtohighlighttheseparationofvariableandfixedcosts.Thetotal

contributionmarginisequaltosalesrevenuelessthevariablecostofgoodssold(sometimescalledthevariable

manufacturingexpenses)andthevariablesellingandadministrativeexpenses.Thefixedexpensesdeducted

belowthecontributionmarginincludebothfixedmanufacturingoverheadandfixedsellingandadministrative

expenses.

Intheabsorptioncostingincomestatementthecostofgoodssoldexpensed,foreachmonth,includesvariable

manufacturingcostsandthepredeterminedfixedmanufacturingoverheadcostappliedtoproductssold.The

expensesdeductedafterthatarethesellingandadministrativeexpenses,whichincludebothfixedandvariable

components.

7,19Bothabsorptionandvariablecostingsystemsassigndirectmaterial,directlabourandvariablemanufacturing

overheadcoststoproductsinexactlythesameway,buttheydifferovertheirtreatmentoffixedmanufacturing

overhead.Absorptioncostingincludesfixedmanufacturingoverheadasapartofproductcost.Variablecosting

excludesfixedmanufacturingoverheadfromproductcostandexpensesitintheperiodinwhichitisincurred.

Thekeydistinctionbetweenvariableandabsorptioncostingisthetimingoffixedmanufacturingoverhead

becominganexpense.Eventually,fixedoverheadisexpensedunderbothproductcostingsystems.Under

variablecosting,fixedoverheadisexpensedimmediately,whenitisincurred.Underabsorptioncosting,fixed

overheadisinventoriedandnotexpenseduntiltheaccountingperiodduringwhichthemanufacturedgoodsare

sold.

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7.20Variableproductcostsareparticularlyusefulforshort-termdecisions,suchaswhethertomakeorbuya

component,andpricing-especiallywhenvariablesellingandadministrativecostsareincluded.Thefixedcosts

willbeincurredanywayandintheshorttermtheyshouldbedisregarded.Inmakingthesedecisions,thevariable

costsprovideagoodmeasureofthedifferentialcoststhatneedtobeassessed.Theinformationneededforshort-

termdecisionmakingisdiscussedinChapter19.

Undervariablecosting,profitisafunctionofsales.Theclassificationofcostsasfixedorvariablemakesit

simpletoprojecttheeffectsthatchangesinsaleshaveonprofit.Managersfindthisusefulfordecisionmaking.

Also,costvolumeprofitanalysis(whichwediscussinChapter18)requiresavariablecostingformat.

Plannedcostsmusttakeaccountofcostbehaviouriftheyaretoprovideareliablebasisforcontrol.Inaddition,

thelinkbetweensalesandprofitperformance,undervariablecosting,ensuresaperformancemeasurethat

managersunderstandeasily.

Fixedcostsareanimportantpartofthecostsofabusiness,especiallyinthemodernmanufacturingenvironment.

Variablecostingprovidesausefulperspectiveoftheimpactthatfixedcostshaveonprofitsbybringingthem

togetherandhighlightingthem,insteadofhavingthemscatteredthroughoutthestatement.

Absorptionproductcostsincludeunitisedfixedoverhead,whichcanresultinsuboptimaldecisions,especiallyas

fixedcostsarenotdifferentialcostsintheshortterm.However,inthem