【正文】 Company, Inc. Cost Accounting 32 Cost Accounting Definitions: ? Costs that do not vary directly with changes in output ? Costs that vary directly with changes in output ? Costs incurred directly in the production or delivery of a firm’s product or service. These costs can easily be identified with, or assigned to, a particular product ? Costs generally incurred by the firm outside of the production process. These costs cannot easily be identified with, or assigned to, a particular product Fixed Variable Direct Indirect vs. vs. Examples: ? Equipment depreciation ? Rent ? Advertising ? Raw materials ? Production labor ? Delivery costs ? Direct labor ? Dedicated equipment ? Raw materials ? SGamp。 Company, Inc. Cost Accounting 30 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。 Company, Inc. Cost Accounting 28 Cost Accounting Step 4: Calculate unit contribution Unit contribution = Price per unit Variable cost per unit = $13,500 tuition 3,200 room and board 500 text and supplies $9,800 Step 3: Calculate semivariable costs Classroom Faculty 10 students $30,000 $40,000 15 students $30,000 $60,000 20 students $60,000 $80,000 Then you must calculate semivariable costs and the unit contribution. Breakeven Exercise Answer (2 of 3) bc BOS Copyright169。 Company, Inc. Cost Accounting 26 Cost Accounting A dean of a business school is considering starting an executive program. She estimates the revenues and costs as follows: Question: How many students does the program need to break even? Costs: Revenue: Advertising Classroom rental (Each classroom can acmodate 15 students) Program administration Program director’s salary Faculty salaries (The program will be staffed with 1 faculty member for every 5 students) Guest lecturer Room and board per student Text and supplies per student Tuition per student $3,000 $13,500 $500 $30,000 per classroom $15,000 $20,000 $20,000 per faculty member $12,000 $3,200 Breakeven Exercise Background bc BOS Copyright169。 Company, Inc. Cost Accounting 24 Cost Accounting Cost Components Fixed vs. Variable Direct vs. Indirect Direct, because even though the products are made on the same machine, the hours spent working on each of the products are directly traceable Production floor labor Variable, because more production labor will be needed to handle the increase in volume Freight to customers Variable, because the freight cost clearly increases with the volume increase Direct, because weight and distance can be directly traced to individual products Interest expense to finance inventory Variable, because more inventory means more inventory financing and hence more interest expense Direct, because inventory is product specific Sales missions Variable, because sales missions are paid based on a percentage of sales Direct, because missions are based on individual product sales Electricity to run machines Variable, because it clearly varies with volume Indirect, because all products are made on the same machines Cost Allocation Exercise Detailed Answer (3 of 3) bc BOS Copyright169。 1998 Bain amp。 Company, Inc. Cost Accounting 21 Cost Accounting Cost Allocation Exercise Answer Most costs are fixed indirect or variable direct. Fixed Variable Direct Indirect ?Advertising ?Raw materials ?Production floor labor ?Freight to customer ?Interest expense to finance inventory ?Sales missions ?Equipment depreciation ?CEO’s salary ?Supervisory labor ?Rent ?Office supplies ?Goodwill amortization ?Sales people39。 Company, Inc. Cost Accounting 19 Cost Accounting ?All products are made using the same equipment and machinery ?Plant supervisors oversee production of all three products ?Equipment capacity exists to increase production by 50% ?Sales people sell all three products ?Sales people are paid a