【正文】 ng issues ? Sources of variations in types of ABC include whether –actual (past) or budgeted costs are analysed –the implementation is a oneoff project or an ongoing system –cost objects, other than products, are included Other activitybased costing issues ? Implications of excess capacity –ABC estimates the cost of resources used to perform activities to produce and sell products, which may not always equal the cost of resources supplied –need to account for the costs of unused capacity when budgeted costs have been used to generate activitybased product costs Other activitybased costing issues ? Behavioural issues –change can be perceived as threatening ?ABC may require changes in data collected and collection and analysis procedures –?bottomup? change management may give some degree of ownership of any changes caused by ABC –management must be seen as mitted to the change process Limitations of activitybased costing ? If a high level of facilitylevel costs are allocated to products, this can lead to an arbitrary element of product cost ? Unitised batch, product and facilitylevel costs can lead to product costs that are of limited use for decision making ? The cost of updating an ABC system can be very high, but this is needed to avoid producing outdated, irrelevant information Activitybased costing in service anisations ? ABC can be difficult to implement in service firms, because –high levels of facility costs cause problems with costing services –individual activities are difficult to identify because they are nonrepetitive –a nonrepetitive production environment makes it difficult to identify service outputs Activitybased management (ABM) ? Process of using information from activitybased costing to analyse activities, cost drivers and performance so that customer value and profitability are improved ? Customer value –the features of a product which customers are willing to pay Using ABM to reduce costs ? Identify the major opportunities for cost reduction ? Determine the real causes of these costs ? Develop a program to eliminate the causes, and, therefore, the costs ? Introduce performance measures to monitor the effectiveness of cost reduction efforts Identifying the major opportunities for cost reduction ? Valueadded activities –essential to the customer, or business ? Nonvalueadded activities –can be eliminated without detriment to either the customers or the business ValueAdded Costs ? A valueadded cost is a cost that customers perceive as adding value, or utility, to a product or service . for a puter: –Adequate memory –Preloaded software –Reliability –Easytouse keyboards Nonvalueadded costs ? A nonvalueadded cost is a cost that customers do not perceive as adding value, or utility, to a product or service. –Cost of expediting –Rework –Repair –Material inspection –Idle time ActivityBased Management ? ABM can be used for ? Product pricing and mix decisions ? Cost reduction and process improvement decisions ? Design decisions Product Pricing and Mix Decisions ? ABC gives management insight into the cost structures for making and selling a diverse range of products. ? It provides more accurate product cost information and more detailed information on costs of activities and the drivers of those costs. Cost Reduction and Process Improvement Decisions ? Manufacturing and distribution personnel use ABC systems to focus on cost reduction efforts. ? Managers set costreduction targets in terms of reducing the cost per unit of the costallocation base. Design Decisions ? Management can identify and evaluate new designs to improve performance by evaluating how product and process designs affect activities and costs. ? Companies can work with their customers to evaluate the costs and prices of alternative design choices. JustInTime Production Systems ? Justintime (JIT) production systems take a “demand pull” approach in which goods are only manufactured when needed to satisfy customer orders. ? Demand triggers each step of the production process, starting with customer demand for a finished product at the end of the process, to the demand for direct materials at the beginning of the process. Major Features of a JIT System ? The five major features of a JIT system are: ? Organizing production in manufacturing cells ? Hiring and retaining multiskilled workers ? Emphasizing total quality management ? Reducing manufacturing lead time and setup time ? Building strong supplier relationships Key features of JIT production 1. A ?pull? method of coordinating production which uses kanbans. ?Kanban? is the Japanese term for card or visible record. Nothing is manufactured at any stage until its need is signalled from the subsequent stage, via a kanban. 2. Simplified production processes. Nonvalueadded activities are identified and removed. Key features of JIT production 3. Purchase of materials, and manufacture of subassemblies and products in small lots Batch sizes tend to be small and inventory levels are low. 4. Quick and inexpensive setups of production machinery. To produce in small batches setup times must be reduced. Key features of JIT production 5. Highquality levels for raw materials, ponents and finished products 6. Effective preventative maintenance of equipment 7. Flexible work teams Many firms have moved from rigid assembly lines towards workbased team made up of multiskilled employees. Costs of JIT ? Substantial investment is needed to change the production facilities so as to minimise nonvalueadded activities ? An increase in the risk of inventory shortage