use only with permission of susan crosson chapter 5 activity-based systems fall 2007 crosson
TRANSCRIPT
Use only with permission of Susan Crosson
Chapter 5Chapter 5Activity-Based Activity-Based
SystemsSystems
Fall 2007Crosson
Use only with permission of Susan Crosson
Learning Objectives:Comparing Cost-based and Activity-based Systems: Cost versus ValueBackflushing: Activity-based Cost Flows and Inventory AccountsJIT: Just-in-Time ConceptsActivity-based Management: Supply chain and Value chainABC: Cost Hierarchy and Bill of Activities
Use only with permission of Susan Crosson
Comparing Cost-based Comparing Cost-based and Activity-based and Activity-based
SystemsSystems
CostCost World WorldHow much does it cost?
ValueValue WorldWorldHow much value does it add?
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BB
+DM Purchased
+IDM Purchased
DM used (to WIP)
IDM used (to OH)
EB
BB
+DM
+DL
+OH
COGM
EB
BB
+COGM
COGS
EB
Material Inventory
Work in Process Inventory A Recap of Job Cost Cards
Finished Goods Inventory
Info. for the I/S’s COGM comes from this account!
Job Costing Cost World RECAP:
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BB
+DM Purchased
+IDM Purchased
DM used (to WIP)
IDM used (to OH)
EB
BB
+DM
+DL
+OH
Costs Transferred OUT to the Next Department
EB
BB
+COGM
COGS
EB
Material Inventory
Work in Process-Mixing
Finished Goods Inventory
Info. for the I/S’s COGM comes from this account!
Process Costing Cost World RECAP:
BB
+Transferred IN
+DM
+DL
+OH
COGM
EB
Work in Process-Baking & Packaging
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Inventory Accounts in the Value WorldInventory Accounts in the Value WorldCost of Goods Sold
Beginning Balance+DM purchased & used+DL used+OH used
End of period, count and backflush….Work in Process Ending BalanceAND Finished Goods Ending Balance
Actual Cost of Goods Sold
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What Do You Know?What Do You Know?
SE9E12E13P8
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JIT:JIT: Just-in-Time Concepts Just-in-Time Concepts Simple is better Quality in everything we do
– Products and services– Preventive maintenance
Continuous improvement Inventory wastes resources
– Purchase only as needed and many deliveries Eliminate non-value adding activities Produce only as needed
– Demand pull v. demand push– Quick setups
Multiskilled flexible workforce & workspace
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What Do You Know?What Do You Know?
E10E15
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Just-In-Time JITJust-In-Time JIT
Types of Time– Process– Inspect– Move – Queue– Store
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ABM: Activity-Based ABM: Activity-Based ManagementManagement
Supply chain/networkLook and listen to SE3.
Value chain
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ABC:ABC: Cost Hierarchy Cost Hierarchy
Cost Hierarchy of ActivitiesCost Hierarchy of ActivitiesUnitBatchProductFacility
Activity Cost Rates: SE5, SE6, E6, P6
ABC: Bill of ActivitiesABC: Bill of Activities
Review Problem
E7C4C8
Homework Homework
P5P5
BackflushingBackflushing