某咨询财务分析costaccounting.pptxVIP

Author: Collins QianReviewer: Bob Armacost bcCost AccountingMarch 1998Copyright? 1998 Bain Company, Inc. 1 Importance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda2 Importance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda3 Which 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 critical to have accurate and complete cost data to make sound strategic and tactical management decisions.Why Allocate Costs?4 Historically, only 20% of manufacturing costs were “shared〞 across product lines. Today, typically 50% of costs 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 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 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 Correctly5 Importance of cost allocationClient exampleDefinitionsdirect vs. indirect, fixed vs. variablebreakeven volumeExercisescost allocationbreakeven volumeKey takeawaysAgenda6 Middle America Manufacturing, a Bain client, believed that all three of its product lines were profitable.Return on sales:10.0%2.4%1