【文章內(nèi)容簡(jiǎn)介】 r. ? How often are rates updated? – We update all the rates annually. Each year the rates are based on January 1st economics. ? Are rates/hour based on the region of the country? – No, we do not segment the rates by region, only by modity and skill level. 18 Activity Based Costing LABOR Labor Question Answers ? If Indirect labor is 55% of Direct Labor, does that mean there are .55 heads indirect for every direct head? – No. It means for every dollar spent on direct wages, there are $.55 dollars spent for indirect support. ? Isn’t MRO Labor still indirect labor? – YES, we have separated it from the unskilled and first line supervisor, because it is not proportional to direct labor. When you pare Ford’s indirect percentage to a suppliers, you should bine both the “indirect category” along with the the MRO Labor category. ? Where is Scrap pensated? – There are two types of scrap。(1) process scrap is determined by the estimator and applied in the estimate as an allowance, (2) enditem scrap, is a minimal amount applied to finished good, to pensate for destructive testing, damage in transit, etc. 19 ABC Activity Based Costing BURDEN PRESENTATION ( MANUFACTURING OVERHEAD ) 20 ABC Activity Based Costing Terminology。 ? “ PPI” Purchased Price Index, Bureau of Labor Statistics ? Lifetime Years Expected life of equipment ? Opportunity Cost Also referred to as Interest cost ? MRO (Maintenance, Repair Other) ? SGA (Sales, General Administration) ? RDE (Research, Development Engineering) ? Work Pattern 20 hrs/day, 237 days/year ? Technical Availability Expected Uptime of equipment ? Manning Type three levels – 1. Direct labor head associated with equipment – 2. No direct labor head, but requires indirect support (robots, automation) – 3. No direct labor or indirect labor required (conveyors) 21 Activity Based Costing BURDEN DEPRECIATION ? The means of pensating supplier for capital equipment used in the production of Ford parts. ? Ford does not assume total capacity, we pay for what we use. It is the suppliers responsibility to sell their available equipment time. (These costs are paid in SGA allowance). ? Ford utilizes the straight line method of depreciation over the entire useful life of the machine. This way the equipment is devalued by a constant amount. Many panies use accelerated depreciation for tax purposes. Tax accounting depreciation rules are not necessarily an equitable way to determine a fair price for a given product. ? Ford should never pay the entire cost of any capital equipment over the life of a program, unless the expected useful life of that capital is equal to or less than the life of the program. 22 Activity Based Costing BURDEN STRAIGHT LINE DEPRECIATION METHOD ? Formula。 (Initial Capital Value) + (Freight Installation) (Residual Value) (Lifetime hours) 20 hrs/day x 237 days/yr x 86% utilization x 10 yrs ? Assumptions。 Initial Capital Cost $500,000 Cost of Machine Freight Installation $ 50,000 10% default if not available Residual Value $ 25,000 5% default salvage value if not available Lifetime hours 40,760 hrs $500,000 + $50,000 $25,000 = $525,000 = $$.2147/min 40,760 40,760 23 Activity Based Costing BURDEN INTEREST ? Interest is intended to pensate suppliers for the opportunity cost incurred in owning assets used to produce parts for Ford and should approximate the return on invested capital for a low risk investment. ? The interest rate is applied to the cost of capital and included in the burden rate. Current 2023 interest calculation is %. It is Cost Optimization’s policy to NEVER allow a higher interest rate than that provided by the Special Studies section, burden analysis 24 Activity Based Costing BURDEN INTEREST CALCULATION FORMULA。 (Initial Investment x 50%) x (Interest amount) Annual Hours Assumption。 Initial investment $100,000 Interest amount % Equipment Utilization 90% ( $100,000 x .5) x .061 = $50,000 x .061 = $3,050 = $.715/hr = $.011 /min 20 x 237 x 90% 4266 4266 25 Activity Based Costing BURDEN INSURANCE ? This category represents the insurance for equipment capital only. The insurance for the building is included in the floorspace allocation. ? Insurance recovery cost is applied as a percent of capital. As the equipment value increases, so does the amount of insurance expense. ? FORMULA。 (Insurance Percentage) x (Replacement Value of Equipment) Annual Hours A