《xx资本财务分析》由会员分享，可在线阅读，更多相关《xx资本财务分析（32页珍藏版）》请在金锄头文库上搜索。
1、Author: Collins QianReviewer: Bob ArmacostbcCost AccountingMarch 1998Copyright 1998 Bain & Company, Inc. 天马行空官方博客：http:/ ；QQ:1318241189；QQ群：1755696321CU7030298IMBbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingImportance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed
2、vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda2CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingImportance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven
3、volumeKey takeawaysAgenda3CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingWhich products are profitable?What is the breakeven volume by product?Which products require cost reduction efforts?How should we price our products?Which customer segments are most profitable?It is critic
4、al to have accurate and complete cost data to make sound strategic and tactical management decisions.Why Allocate Costs?4CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingHistorically, only 20% of manufacturing costs were “shared” across product lines. Today, typically 50% of cost
5、s are “shared” across products. Shared costs might include rent, freight, and administrative costs.For simplicity, accounting tracks costs by function (e.g., materials, salaries, benefits) rather than by the activity devoted to product lines (e.g., maintenance of product A, freight for product B)For
6、 costs that are not easily assigned to individual product lines, companies normally select the most convenient way to assign them, not necessarily the best wayfor example, companies tend to allocate rent costs based on something that is easy to measure, such as direct labor dollars for each product
7、line. A better allocation method, however, might be the actual space resource demands of each product lineMost companies lack accurate cost data by product.Why Costs Are Often Not Allocated Correctly5CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingImportance of cost allocationCl
8、ient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda6CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingMiddle America Manufacturing, a Bain client, believed that all three of its product lines wer
9、e profitable.Return on sales:10.0%2.4%1.6%Sales:$250MM$100MM$75MMMiddle America Manufacturing - Estimated Profitability7CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingAfter a thorough evaluation, the Bain team found that $8.0MM in costs had been allocated incorrectly among the
10、three products.Middle America Manufacturing - Cost Allocation8CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingThe Bain team also determined that an additional $18.8MM in costs should be allocated to the three products.Middle America Manufacturing - Additional Costs9CU7122397ECAb
11、cBOS Copyright 1998 Bain & Company, Inc. Cost AccountingBains analysis indicated that both bicycles and walking mowers were unprofitable. Middle America then began to investigate whether to exit or fix these two businesses.Return on sales:7.2%(3.0%)(6.9%)Sales:$250MM$100MM$75MMMiddle America Manufac
12、turing - Actual Profitability10CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingImportance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda11CU7122397ECAbcBOS Copyright 19
13、98 Bain & Company, Inc. Cost AccountingDefinitions:Costs that do not vary directly with changes in outputCosts that vary directly with changes in outputCosts incurred directly in the production or delivery of a firms product or service. These costs can easily be identified with, or assigned to, a pa
14、rticular productCosts generally incurred by the firm outside of the production process. These costs cannot easily be identified with, or assigned to, a particular productAll costs can be broken down along two dimensions.FixedVariableDirectIndirectvs.vs.Examples:Equipment depreciation Rent Advertisin
15、gRaw materials Production labor Delivery costsDirect labor Dedicated equipment Raw materialsSG&A Office supplies Plant managerRule of thumb:If a particular cost changes when production increases or decreases, the cost is variable.If a particular cost “goes away” when a product is dropped from the pr
16、oduct line, the cost is direct.Types of Costs12CU7122397ECAbcBOS Copyright 1998 Bain & Company, Inc. Cost AccountingAll costs are variable over a very long time horizon (i.e., for very large increases in volume)Costs to run and maintain a computer system that tracks product orders are clearly fixed for a small change in volume, such as th
