Manerial accounting 11e garrison noreen brewer chap015

65 18 0
  • Loading ...
1/65 trang

Thông tin tài liệu

Ngày đăng: 30/11/2016, 11:08

11th Edition Chapter 15 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Service Department Costing: An Activity Approach Chapter Fifteen McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Reasons for Allocating Service Department Costs To To encourage encourage operating operating departments departments to to wisely wisely use use service service department department resources resources To To provide provide operating operating departments departments with with more more complete complete cost cost data data for for making making decisions decisions To To help help measure measure the the profitability profitability of of operating operating departments departments To To create create incentive incentive for for service service departments departments to to operate operate efficiently efficiently To To value value inventory inventory for for external external financial financial reporting reporting purposes purposes To To include include all all overhead overhead in in the the cost cost base base when when cost-plus cost-plus pricing pricing is is used used McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Selecting Allocation Bases The The allocation allocation bases bases used used should should “drive” “drive” the the cost cost being being allocated allocated For For example, example, when when allocating allocating costs costs of of the the employee employee cafeteria, cafeteria, the the number number of of meals meals served served would would be be aa good good choice choice for for the the allocation allocation base base Service Departments McGraw-Hill/Irwin $ Operating Departments Copyright © 2006, The McGraw-Hill Companies, Inc Selecting Allocation Bases AAservice servicedepartment’s department’scosts costsmay maybe be allocated allocatedusing usingmore morethan thanone onebase base For For example, example,aaportion portionof ofthe thehuman humanresource resourcedepartment department costs costsmight mightbe beallocated allocatedbased basedon onthe thenumber number of ofemployees employees in ineach each operating operatingdepartment department and andanother anotherportion portionmight might be be allocated allocatedbased basedon onhours hours spent spent in intraining trainingemployees employeesin in each eachoperating operatingdepartment department Service Departments McGraw-Hill/Irwin $ Operating Departments Copyright © 2006, The McGraw-Hill Companies, Inc Examples of Allocation Bases Service Department Laundry Airport Ground Services Cafeteria Medical Facilities Materials Handling Information Technology Custodial Services Cost Accounting Power Human Resources Receiving, Shipping, and Stores Factory Administration Maintenance McGraw-Hill/Irwin Exh 15-1 Allocation Bases Pounds of laundry Number of flights Number of meals Cases handled; number of employees; hours worked Hours of service; volume handled Number of personal computers; applications installed Square footage occupied Labor hours; customers served KWH used; capacity of machines Number of employees; training hours Units handled; number of requisitions; space occupied Total labor hours Machine hours Copyright © 2006, The McGraw-Hill Companies, Inc Interdepartmental Services Problem Problem Allocating Allocating costs costs when when service service departments departments provide provide services services to to each each other other Solutions Direct Method Step Method Reciprocal Method McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Direct Method Interactions between service departments are ignored and all costs are allocated directly to operating departments McGraw-Hill/Irwin Service Department (Cafeteria) Operating Department (Machining) Service Department (Custodial) Operating Department (Assembly) Copyright © 2006, The McGraw-Hill Companies, Inc Direct Method Example Departmental costs before allocation Number of employees Square feet occupied McGraw-Hill/Irwin Service Departments Operating Departments Cafeteria Custodial Machining Assembly $ 360,000 15 5,000 $ 90,000 10 2,000 $ 400,000 20 25,000 $ 700,000 30 50,000 Service Department Allocation Base Cafeteria Custodial Number of employees Square feet occupied Copyright © 2006, The McGraw-Hill Companies, Inc Direct Method Example Service Departments Operating Departments Cafeteria Custodial Machining Assembly Departmental costs before allocation $ 360,000 $ 90,000 $ 400,000 $ 700,000 Cafeteria allocation ? ? ? ? ? ? ? ? ? Custodial allocation Total after allocation McGraw-Hill/Irwin ? Copyright © 2006, The McGraw-Hill Companies, Inc Quick Check  How How much much ambulance ambulance service service cost cost will will be be allocated allocated to to Mercy Mercy Hospital Hospital at at the the end end of of the the year? year? a a $114,000 $114,000 b b $118,800 $118,800 c c $110,400 $110,400 d d $121,200 $121,200 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Quick Check  Mercy Northside Variable cost allocation: $4.20 × 16,000 miles $ 67,200 $4.20 × 17,500 miles 73,500 How much ambulance service be How much ambulance service cost cost$ will will be Fixed cost allocation allocated to at allocated to Mercy Mercy Hospital Hospital54,000 at the the end end of of the the 45% of $120,000 year? year? 55% of $120,000 66,000 Total allocated cost $ 121,200 $ 139,500 a $114,000 a $114,000 b b $118,800 $118,800 c c $110,400 $110,400 d d $121,200 $121,200 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Effect of Allocations on Operating Departments Once Once service service department department cost cost allocations allocations are are completed, completed, they they are are included included in in operating operating departments’: departments’: Performance Performance evaluations evaluations McGraw-Hill/Irwin Profitability Profitability determination determination Overhead Overhead rate rate computations computations Copyright © 2006, The McGraw-Hill Companies, Inc Effect of Allocations on Operating Departments Service Department (Cafeteria) Service Department (Accounting) Service Department (Personnel) McGraw-Hill/Irwin First Stage Allocations Service department costs are allocated to operating departments Operating Department (Machining) Operating Department (Assembly) The Products Copyright © 2006, The McGraw-Hill Companies, Inc Effect of Allocations on Operating Departments Service Department (Cafeteria) Service Department (Accounting) Service Department (Personnel) McGraw-Hill/Irwin Second Stage Allocations Operating department overhead costs and allocated service department costs are applied to products Operating Department (Machining) Operating Department (Assembly) The Products Copyright © 2006, The McGraw-Hill Companies, Inc Allocation Pitfalls to Avoid Pitfall Allocating fixed costs using a variable allocation base McGraw-Hill/Irwin Result Fixed costs allocated to one department are heavily influenced by what happens in other departments Copyright © 2006, The McGraw-Hill Companies, Inc Kolby Products: An Example Kolby Kolby Products Products has has two two sales sales territories, territories, the the Eastern Eastern Territory Territory and and the the Western Western Territory Territory Both Both sales sales territories territories are are serviced serviced by by one one auto auto service service center center whose whose costs costs are are all all fixed fixed Contrary Contrary to to good good practice, practice, Kolby Kolby allocates allocates the the fixed fixed service service center center costs costs to to the the sales sales territories territories on on the the basis basis of of actual actual miles miles driven driven (a (a variable variable base) base) McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Kolby Products: An Example Year $ 120,000 Year $ 120,000 Miles driven Western sales territory Eastern sales territory 1,500,000 1,500,000 1,500,000 900,000 Total miles driven 3,000,000 2,400,000 Auto service center costs (all fixed) Allocation rate per mile $ 0.04 $ 0.05 $120,000 ÷ 3,000,000 miles $120,000 ÷ 2,400,000 miles McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Kolby Products: First–year Allocations Western sales territory 1,500,000 miles @ $0.04 per mile $ Eastern sales territory 1,500,000 miles @ $0.04 per mile Total cost allocated 60,000 60,000 $ 120,000 The two sales territories share the service center’s costs equally because the miles driven in each territory are equal McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Kolby Products: Second–year Allocation Western sales territory 1,500,000 miles @ $0.05 per mile Eastern sales territory 900,000 miles @ $0.05 per mile Total cost allocated $ 75,000 45,000 $ 120,000 Western territory has the same number of miles as last year, but $15,000 more cost allocated because Eastern’s miles declined in year McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Allocation Pitfalls to Avoid Pitfall Using sales dollars as an allocation base Result Sales of one department influence the service department costs allocated to other departments McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Clothier Inc – An Example Clothier Clothier Inc., Inc., aa men’s men’s clothing clothing store store has has one one service service department department and and three three sales sales departments, departments, Suits, Suits, Shoes, Shoes, and and Accessories Accessories Service Service department department costs costs total total $60,000 $60,000 for for both both years years in in the the example example Contrary Contrary to to good good practice, practice, Clothier Clothier allocates allocates the the service service department department costs costs based based on on sales sales McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Clothier Inc – First-year Allocation $260,000 ÷ $400,000 65% of $60,000 In In the the next next year, year, the the manager manager of of the the Suit Suit Department Department increased increased sales sales by by $100,000 $100,000 Sales Sales in in the the other other departments departments are are unchanged unchanged Let’s Let’s allocate allocate the the $60,000 $60,000 service service department department cost cost for for the the second second year year given given the the sales sales increase increase McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Clothier Inc – Second-year Allocation $360,000 ÷ $500,000 72% of $60,000 IfIf you you were were the the suit suit department department manager, manager, would would you you be be happy happy with with the the increased increased service service department department costs costs allocated allocated to to your your department? department? McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc End of Chapter 15 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc [...]... from from Administration Administration to to Accounting? Accounting? a a $$ 36,000 36,000 b b $144,000 $144,000 c c $180,000 $180,000 d d $$ 27,000 27,000 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Quick Check  How How much much cost cost will will be be allocated allocated from from Administration Administration to to Accounting? Accounting? a a $$ 36,000 36,000 b b $144,000... combined to to the the Accounting Accounting Department? Department? a a $35,250 $35,250 b b $49,072 $49,072 c c $18,000 $18,000 d d $26,333 $26,333 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Quick Check  How How much much total total cost cost will will be be allocated allocated from from ADMIN ADMIN and and BACS BACS combined combined to to the the Accounting Accounting Department?... $ $ $ 239,500 Accounting Accounting Department? a a $$ 52,500 52,500 b b $135,000 $135,000 c c $270,000 $270,000 d d $$ 49,500 49,500 $90,000 × McGraw-Hill/Irwin $ 1,120,500 18 = $13,500 18 + 102 Copyright © 2006, The McGraw-Hill Companies, Inc Quick Check Data Service Departments Departmental costs before allocation Number of employees Number of PCs Operating Departments ADMIN BACS Accounting Others... from ADMIN ADMIN and and BACS BACS combined combined to to the the Accounting Accounting Department? Department? a a $$ 52,500 52,500 b b $135,000 $135,000 c c $270,000 $270,000 d d $$ 49,500 49,500 McGraw-Hill/Irwin Copyright © 2006, The McGraw-Hill Companies, Inc Service Departments Quick Check Operating Departments ADMIN BACS Accounting Others Departmental costs before allocation $ 180,000 $ 90,000... allocated allocated from from Administration Administration to to Accounting? Accounting? a a $$ 36,000 36,000 b b $144,000 $144,000 Service Departments Operating Departments c c $180,000 $180,000 ADMIN BACS Accounting Others d $$ 27,000 d 27,000 Departmental costs before allocation ADMIN allocation $ 180,000 (180,000) $ 90,000 $ 190,000 36,000 $ 900,000 144,000 20 $180,000 × = $36,000 20 + 80 McGraw-Hill/Irwin... The McGraw-Hill Companies, Inc Quick Check Data for Direct and Step Methods Service Departments Departmental costs before allocation Number of employees Number of PCs Operating Departments ADMIN BACS Accounting Others $ 180,000 15 12 $ 90,000 5 20 $ 190,000 20 18 $ 900,000 80 102 The direct method of allocation is used Allocation bases: Business school administration costs (ADMIN): Number of employees... and BACS BACS combined combined to to the the Accounting Accounting Department? Department? a a $35,250 $35,250 b b $49,072 $49,072 c c $18,000 $18,000 Service Departments Operating Departments d BACS Accounting Others d $26,333 $26,333 ADMIN Departmental costs before allocation ADMIN allocation BACS allocation Total after allocation McGraw-Hill/Irwin $ 180,000 (180,000) - $ 90,000 8,571 (98,571) $
- Xem thêm -

Xem thêm: Manerial accounting 11e garrison noreen brewer chap015 , Manerial accounting 11e garrison noreen brewer chap015 , Manerial accounting 11e garrison noreen brewer chap015

Gợi ý tài liệu liên quan cho bạn

Nạp tiền Tải lên
Đăng ký
Đăng nhập