Pertemuan 6 Mappa Panglima Banding

2 COST DRIVER: Definition Is a factor that causes, “drives,” an activity’s costs. LO 4

3 EXAMPLE: Cost Drivers LO 4 Machine hours Computer time Labor hours, cost Items produced, sold Pounds of material handled Clients served Pages typed Flight hours Machine setups Number of surgeries Purchase orders Scrap/rework orders Quality inspections Hours of testing time # of parts in product # of different clients Miles driven Which cost drivers listed below would a law firm use? EXHIBIT 3.3

4 EXAMPLE: Cost Drivers LO 4 Machine hours Computer time Labor hours, cost Items produced, sold Pounds of material handled Clients served Pages typed Flight hours Machine setups Number of surgeries Purchase orders Scrap/rework orders Quality inspections Hours of testing time # of parts in product # of different clients Miles driven Which cost drivers listed below would a law firm use? EXHIBIT 3.3

5 How do managers decide which cost driver to use? Typically, managers choose a cost driver that causes the cost. LO 4

The Activity Base (Cost Driver) A measure of what causes the incurrence of a variable cost Units produced Miles driven Machine hours Labor hours

Cost Flows in a Manufacturing Organization

Cost Flows Retail Organization Service Organization

Cost concept for planning & decision making

Planning Establish Goals. Specify How Goals Will Be Achieved. Specify How Goals Will Be Achieved. Develop Budgets.

Decision Making Decision making involves making a selection among competing alternatives. Decision making involves making a selection among competing alternatives. What should we be selling? What should we be selling? Who should we be serving? Who should we be serving? How should we execute? How should we execute?

Cost concept for management & operational control

Controlling The control function gathers feedback to ensure that plans are being followed. The control function gathers feedback to ensure that plans are being followed. Feedback in the form of performance reports that compare actual results with the budget are an essential part of the control function.

Problem 1

Problem 2 Deerbound Manufacturing transferred $3,000,000 of raw materials into production during the most recent year. Direct labor and factory overhead for the period totaled $2,000,000. Beginning work in process was $670,000 and ending work in process was $850,000. Finished goods inventory decreased by $50,000. If gross pro t was $1,000,000, how much was sales for the period?

Problem 3