Activity Based Costing

Presentasi berjudul: "Activity Based Costing"— Transcript presentasi:

1 Activity Based Costing

2 Historically, companies (such as television and automobile manufacturers) produced a limited variety of products. Indirect (or overhead) costs were a relatively small percentage of total costs. Using simple costing systems to allocate costs broadly was easy, inexpensive, and reasonably accurate. However, as product diversity and indirect costs have increased, broad averaging has resulted in greater inaccuracy of product costs. For example, the use of a single, plant-wide manufacturing overhead rate to allocate costs to products often produces unreliable cost data.

3 Undercosting & Overcosting Problem
The following example illustrates how averaging can result in inaccurate and misleading cost data. Consider the cost of a restaurant bill for four colleagues who meet monthly to discuss business developments. Each diner orders separate the type. The restaurant bill for the most recent meeting is as follows Appetizer Main Course Dessert Cigarette Total Asep 100,000 150,000 30,000 52,000 332,000 Yayat 200,000 26,000 326,000 Pupung 50,000 $100,000 $400,000 $230,000 $78,000 $808,000 Average $269,333 Product undercosting  product consumes a high level of resources but is reported to have a low cost per unit (Asep & Yayat’s dinner). Product overcosting product consumes a low level of resources but is reported to have a high cost per unit (Pupung’s dinner).

4 What are the strategic consequences of product undercosting and overcosting?
Think of a company that uses cost information about its products to guide pricing decisions Undercosted products will be underpriced and may even lead to sales that actually result in losses—sales bring in less revenue than the cost of resources they use. Overcosted products lead to overpricing, causing these products to lose market share to competitors producing similar products. Worse still, product undercosting and overcosting causes managers to focus on the wrong products, drawing attention to overcosted products whose costs may in fact be perfectly reasonable and ignoring undercosted products that in fact consume large amounts of resources.

5 Activity-Based Costing Systems
Activity-based costing (ABC) refines a costing system by identifying individual activities as the fundamental cost objects

6 Product Level Batch Level Output Unit Level
Cost Hierarchies A cost hierarchy categorizes various activity cost pools on the basis of the different types of cost drivers, or cost- allocation bases, or different degrees of difficulty in determining cause-and-effect (or benefits-received) relationships. ABC systems commonly use a cost hierarchy with four levels—output unit-level costs, batch-level costs, product- sustaining costs, and facility- sustaining costs—to identify cost-allocation bases that are cost drivers of the activity cost pools. Facility Level Product Level Batch Level Output Unit Level

7 Cost Hierarchies Output unit-level costs are the costs of activities performed on each individual unit of a product or service. Machine operations costs (such as the cost of energy, machine depreciation, and repair) related to the activity of running the machines are output unit- level costs. They are output unit-level costs because, over time, the cost of this activity increases with additional units of output produced (or machine-hours used). Example  Company uses molding machine-hours—an output-unit level cost-allocation base—to allocate machine operations costs to products

8 Cost Hierarchies Batch-level costs are the costs of activities related to a group of units of a product or service rather than each individual unit of product or service. In manufacturing example, setup costs are batch-level costs because, over time, the cost of this setup activity increases with setup-hours needed to produce batches (groups) of product

9 Cost Hierarchies Product-sustaining costs (service-sustaining costs) are the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced Facility-sustaining costs are the costs of activities that cannot be traced to individual products or services but that support the organization as a whole. In the Plastim example, the general administration costs (including top management compensation, rent, and building security) are facility- sustaining costs. It is usually difficult to find a good cause and- effect relationship between these costs and the cost-allocation base. This lack of a cause-and-effect relationship causes some companies not to allocate these costs to products and instead to deduct them as a separate lump-sum amount from operating income.

10 Activity Based Costing Expense-Activity-Dependence (EAD) Activity-Product-Dependence (APD) Matrix
Gecevska, Valentina, and Zoran Anisic. "Using of activity based costing (ABC) in small and medium companies." Annals of the Faculty of Engineering Hunedoara 4.2 (2006):

11 Resource costs refer to the ingredients required in a production process, such as labor and materials, which cannot be directly assigned to particular products, and are often described as overhead (OH) The second step indicates resource and activity drivers, both of which are generally selected based on three criteria: they are easy to identify, simple to use, and uncomplicated; they have a direct relationship to indirect costs; and they generate an advantage for understanding the behavior of costs, and influence the changing of cost In the third step, resource costs are allocated according to the resource consumption coefficients of the resource drivers, and are calculated in proportions (in which the sum of the proportion in each driver=1).

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17 The ratios presented were obtained by using the three procedures:
Actual data, Systematic appraisal (AHP), Educated guesses. When data was available the ratios were determined according to the first stage cost driver. For instance, Tools Inc. tracked the miles consumed by the activities material receiving and handling and product shipment (miles is the first stage cost driver for “Transport”). The records showed that 40,000 miles and 60,000 miles were consumed by material receiving and handling and product shipment, respectively. Accordingly, the ratios for the expense category “Transport” were 0.4 and 0.6.

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22 Quiz/Assignment/Practices
Activity Based Costing

23 Aktivitas Total Biaya Quantity Ordering $62,400 624 pemesanan Delivery $100,800 1,260 pengiriman Shelf-stocking $69,120 3,456 jam kerja Kasir $122,880 614,400 per item terjual Soft Drinks Makanan Segar Makanan Kemasan Pendapatan $317,400 $840,240 $483,960 Harga Pokok Penjualan (COGS) $240,000 $600,000 $360,000 Biaya Retur $4,800 Jumlah pemesanan ke supplier (unit) 144 unit 336 unit Jumlah yang dikirim (unit) 120 pengiriman 876 pengiriman 264 pengiriman Jumlah Jam terkait aktivitas shelfing (jam) 216 jam 2,160 jam 1,080 jam Jumlah produk yang terjual 50,400 unit 441,600 unit 122,400 unit

24 Allocation Based on COGS
Alokasi biaya operasional dihitung berdasarkan proporsi COGS dari tiap lini produk *Biaya operasional Soft drinks $240,000 ÷ 1,200,000 x $360,000 =$72,000 **Biaya Operasional Makanan Segar $240,000 ÷ 1,200,000 x $360,000 = $180,000 ***Biaya Operasional Makanan Kemasan $240,000 ÷ 1,200,000 x $360,000 = $108,000 Biaya Retur dari customer $4,800 Biaya Pemesanan $62,400 Biaya delivery/pengiriman $100,800 Biaya Shelf-stocking $69,120 Biaya kasir $122,880 Biaya Operasional Toko $360,000 Soft Drinks Fresh Foods Makanan Kemasan Total Pendapatan $317,400 840,240 $483,960 $1,641,600 Harga Pokok Penjualan $240,000 $600,000 $360,000 $1,200,000 Biaya Operasional $72,000* $180,000** $108,000*** Total Biaya $312,000 $780,000 $468,000 $1,560,000 Operating Income $5,400 $60,240 $15,960 $81,600 Operating Profit Margin 1.70% 7.17% 3.30% 4.97%

25 ABC Allocation Aktivitas Cost Hierarchy Total Cost Quantity
Alokasi Biaya Ordering Batch-Level $62,400 624 pemesanan $100 per pemesanan Delivery $100,800 1260 pengiriman $80 per pengiriman Shelf-stocking Output Unit Level $69,120 3456 jam kerja $20 per jam kerja Kasir $122,880 614,400 per item terjual $0.20 Soft Drinks Fresh Foods Makanan Kemasan Biaya Retur $4,800 Jumlah pemesanan ke supplier (unit) 144 336 Jumlah Unit yang dikirim (unit) 120 876 264 Jumlah Jam terkait aktivitas shelfing (jam) 216 2,160 1,080 Jumlah yang terjual 50,400 441,600 122,400 Soft Drinks Fresh Foods Makanan Kemasan Biaya Retur dari customer $4,800 Biaya Pemesanan $14,400 $33,600 Biaya delivery/pengiriman $9,600 $70,080 $21,120 Biaya Shelf-stocking $4,320 $43,200 $21,600 Biaya kasir $10,080 $88,320 $24,480 Biaya Operasional Toko $235,200 $ 81,600 @$100 @$80 @$20 @$0.2

26 Comparison Allocation based on COGS Soft Drinks Fresh Foods
Makanan Kemasan Total Pendapatan $317,400 840,240 $483,960 $1,641,600 Harga Pokok Penjualan $240,000 $600,000 $360,000 $1,200,000 Biaya Operasional 72,000 180,000 108,000 Total Biaya $312,000 $780,000 $468,000 $1,560,000 Operating Income $5,400 $60,240 $15,960 $81,600 Operating Profit Margin 1.70% 7.17% 3.30% 4.97% Activity Based Costing Soft Drinks Fresh Foods Makanan Kemasan Total Pendapatan $317,400 840,240 $483,960 $1,641,600 Harga Pokok Penjualan $240,000 $600,000 $360,000 $1,200,000 Biaya Operasional 43,200 235,200 81,600 Total Biaya $283,200 $835,200 $441,600 $1,560,000 Operating Income $34,200 $5,040 $42,360 $81,600 Operating Profit Margin 10.78% 0.60% 8.75% 4.97%

27 ASSIGNMENT Proyek A Proyek B Jumlah Jam kerja Konsultan (jam) 104 jam
Proyek A Proyek B Jumlah Jam kerja Konsultan (jam) 104 jam 96 jam Gaji Konsultan = $70 per jam kerja Total Biaya Overhead utk proyek A & B = $21,000 Overhead Rate sebelum menggunakan sistem ABC = $21,000÷(104+96jam)  $105 per jam kerja Setelah dilakukan analisis lebih lanjut, sebagian biaya overhead (senilai $14,000 dari $21,000) dapat dikategorikan menjadi biaya langsung sbb: Aktivitas Proyek A Proyek B Total Desk Research $1,600 $3,400 $5,000 Penggunaan Komputer $500 $1300 $1,800 Akomodasi & Perjalanan $600 $4400 Telepon $200 $1000 $1,200 Photocopy $250 $750 $1,000 $3,150 $10,850 $14,000 Tunjukkan perbedaan biaya untuk masing-masing proyek sebelum perusahaan menggunakan pendekatan ABC! Jika calon klien memberikan budget sebesar $20,000 untuk proyek A dan $20,000 untuk proyek B, manakah proyek yang harus dijadikan prioritas berdasarkan profitabilitasnya?