【正文】 Author: Collins Qian Reviewer: Bob Armacost bc Cost Accounting March 1998 Copyright169。 1998 Bain amp。 Company, Inc. bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 2 Cost Accounting ?Importance of cost allocation ?Client example ?Definitions –direct vs. indirect, fixed vs. variable –breakeven volume ?Exercises –cost allocation –breakeven volume ?Key takeaways Agenda bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 3 Cost Accounting ?Importance of cost allocation ?Client example ?Definitions –direct vs. indirect, fixed vs. variable –breakeven volume ?Exercises –cost allocation –breakeven volume ?Key takeaways Agenda bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 4 Cost Accounting ?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 plete cost data to make sound strategic and tactical management decisions. Why Allocate Costs? bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 5 Cost Accounting ?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 (., materials, salaries, benefits) rather than by the activity devoted to product lines (., maintenance of product A, freight for product B) ?For costs that are not easily assigned to individual product lines, panies normally select the most convenient way to assign them, not necessarily the best way –for example, panies 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 line Most panies lack accurate cost data by product. Why Costs Are Often Not Allocated Correctly bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 6 Cost Accounting ?Importance of cost allocation ?Client example ?Definitions –direct vs. indirect, fixed vs. variable –breakeven volume ?Exercises –cost allocation –breakeven volume ?Key takeaways Agenda bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 7 Cost Accounting Ri d in g mo w e r s B i cy cle s W a l kin g mo w e r s$ 2 5 .0M M$ 2 .4M M$ 1 .2M M$0$5$ 1 0$ 1 5$ 2 0$ 2 5$ 3 0Pretax Operating Profit (Millions of Dollars)Middle America Manufacturing, a Bain client, believed that all three of its product lines were profitable. Return on sales: % % % Sales: $250MM $100MM $75MM Middle America Manufacturing Estimated Profitability bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 8 Cost Accounting W al k i n g m ow e rsB ic y c l e sR id i n g m o w e r sW a l k i n g m o w e r sB ic y c l e sR id i n g m o w e r sO r ig in a l a l l o c a tio n R e v i s e d a l l o c a tio n$ 8 . 0 M M $ 8 . 0 M M$0$2$4$6$8$ 1 0Cost (Millions of Dollars)After a thorough evaluation, the Bain team found that $ in costs had been allocated incorrectly among the three products. Middle America Manufacturing Cost Allocation bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 9 Cost Accounting G e n e r a la d m i n is ta tiv e e x p e n s e sS y s t e m s c o s tsI n ve n to r y c a r r y in g c o s tsW a l k i n g m o w e r sB ic y c l e sR id i n g m o w e r sA d d itio n a l u n a l l o c a te d c o s ts A d d itio n a l c o s t s r e a l l o c a te d$ 1 8 . 8 M M $ 1 8 . 8 M M$0$5$ 1 0$ 1 5$ 2 0Cost (Millions of Dollars)The Bain team also determined that an additional $ in costs should be allocated to the three products. Middle America Manufacturing Additional Costs bc BOS Copyright169。 1998 Bain amp