财务分析-costaccounting

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BOS Cost Accounting 8 Copyright© 1998 Bain & Company, Inc.
Cost Accounting
Middle America Manufacturing - Additional Costs
The Bain team also determined that an additional $18.8MM in costs should be allocated to the three products.
• 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?
$20 $18.0MM
$15
Product Line Profitability (Millions of Dollars)
$10
$5
$0
($5)
($10)
Riding mowers
Sales: Return on sales:
$250MM 7.2%
($3.0MM)
Bicycles $100MM (3.0%)
$20
$15
$10
$5
$0 Riding mowers
Sales: $250MM
Return on sales:
10.0%
$2.4MM
Bicycles $100MM
2.4%
$1.2MM
Walking mowers $75MM 1.6% bc
BOS Cost Accounting 7
Copyright© 1998 Bain & Company, ith changes in output
Examples:
• Equipment
depreciation
• Rent • Advertising
• Raw materials • Production labor • Delivery costs
• For simplicity, accounting tracks costs by function (e.g., materials, salaries, benefits) rather
than by the activity devoted to product lines (e.g., maintenance of product A, freight for product B)
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BOS Cost Accounting 4 Copyright© 1998 Bain & Company, Inc.
Cost Accounting
Why Costs Are Often Not Allocated Correctly
Most companies lack accurate cost data by product.
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Cost Accounting
Author: Collins Qian Reviewer: Bob Armacost
March 1998
Copyright© 1998 Bain & Company, Inc.
Cost Accounting
•Importance of cost allocation •Client example •Definitions
Cost (Millions of Dollars)
$10
$8
$8.0MM Walking mowers
Bicycles $6
$4 Riding mowers
$2
$0 Original allocation
$8.0MM Walking mowers
Bicycles
Riding mowers Revised allocation
–direct vs. indirect, fixed vs. variable –breakeven volume
•Exercises
–cost allocation –breakeven volume
•Key takeaways
Agenda
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BOS Cost Accounting 2 Copyright© 1998 Bain & Company, Inc.
Middle America Manufacturing, a Bain client, believed that all three of its product lines were profitable.
$30
$25
$25.0MM
Pretax Operating Profit (Millions of Dollars)
• Direct labor • Dedicated
equipment
• Raw materials
• Costs generally
incurred by the firm outside of the production process. These costs cannot easily be identified with, or assigned to, a particular product
• 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.
Cost (Millions of Dollars)
$20
$18.8MM
General administative expenses $15
Systems costs $10
$5 Inventory carrying costs
$0 Additional unallocated costs
$18.8MM Walking mowers
Bicycles
Riding mowers Additional costs reallocated
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BOS Cost Accounting 9 Copyright© 1998 Bain & Company, Inc.
Cost Accounting Middle America Manufacturing - Actual Profitability
Cost Accounting
All costs can be broken down along two dimensions.
Types of Costs
Definitions:
Fixed
vs. Variable
• Costs that do
not vary directly with changes in output
• For costs that are not easily assigned to individual product lines, companies normally select
the most convenient way to assign them, not necessarily the best way
Bain’s analysis indicated that both bicycles and walking mowers were unprofitable. Middle America then began to investigate whether to exit or fix these two businesses.
Cost Accounting
•Importance of cost allocation •Client example •Definitions
–direct vs. indirect, fixed vs. variable –breakeven volume
•Exercises
–cost allocation –breakeven volume
– for example, companies 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
•Exercises
–cost allocation –breakeven volume
•Key takeaways
Agenda
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BOS Cost Accounting 6 Copyright© 1998 Bain & Company, Inc.
Cost Accounting Middle America Manufacturing - Estimated Profitability
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BOS Cost Accounting 5 Copyright© 1998 Bain & Company, Inc.
Cost Accounting
•Importance of cost allocation •Client example •Definitions
–direct vs. indirect, fixed vs. variable –breakeven volume
•Key takeaways
Agenda
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BOS Cost Accounting 3 Copyright© 1998 Bain & Company, Inc.
Cost Accounting
Why Allocate Costs?
It is critical to have accurate and complete cost data to make sound strategic and tactical management decisions.
Rule of thumb:
If a particular cost changes when production increases or decreases,
the cost is variable.
Direct
vs.
Indirect
• 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
–direct vs. indirect, fixed vs. variable –breakeven volume
•Exercises
–cost allocation –breakeven volume
•Key takeaways
Agenda
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BOS Cost Accounting 11 Copyright© 1998 Bain & Company, Inc.
($5.2MM)
Walking mowers
$75MM (6.9%)
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BOS Cost Accounting 10
Copyright© 1998 Bain & Company, Inc.
Cost Accounting
•Importance of cost allocation •Client example •Definitions
Cost Accounting
Middle America Manufacturing - Cost Allocation
After a thorough evaluation, the Bain team found that $8.0MM in costs had been allocated incorrectly among the three products.