Matakuliah : <<AKUNTANSI BIAYA II>>
Tahun
: <<2009>>
ACTIVITY BASED COSTING
Pertemuan 12 dan 13
LEARNING OBJECTIVE
• Define activity-based costing and activity-based
management and distinguish them from traditional analysis
of costs.
•Identify the circumstance in which activity-based costing
gives more credible result than traditional product costing.
•Identify the different levels of costs and drivers in activitybased costing and give examples of each.
•Calculate product costs using activity-based costing and
reconcile them with a traditional system’s product costs.
•Identify the strategic importance of activity-based costing in
pricing and product-line decisions.
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Meanings
• Activity-Based Costing-ABC was defined as a costing
system in which multiple overhead cost pools are
allocated using based that include one or more nonvolume-related factors. ABC represents a more thorough
application of cost tracing. Traditional product costing
traces only direct material and direct labor to each unit of
output. In contrast, ABC recognizes that many other
costs are in fact traceable- not to units of output, but to
the activities required to produce output.
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Level of Costs and Drivers
• In ABC, the bases used to allocate overhead costs are
called drivers.
• A resource driver is a base to allocate the cost of a
resource to the different activities using that resources.
• An activity driver is a base used to allocate the cost to
an activity to products, customers, or another final cost
objects. The word final refers to the last step in cost
allocation.
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Relation between ….
• ABC recognizes activities, activity cost, and activity
drivers at different levels of aggregation within a
production environment.
• The four levels commonly identified are the unit, batch,
product and plant.
• A unit is a subset of a batch
• A batch is a subset of total output
• A product is a subset of total out of a plant
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UNIT LEVEL
• Unit level cost are the costs that inevitably increase
whenever a unit is produced. They are the only costs
that always can be assigned accurately in proportion to
volume. For example : all costs that can be computed by
unit ; electrically powered machinery, heating cost,
inspection cost, etc.
• Unit-level drivers are measures of activities that vary with
the number of units produced and sold. Traditional
system : proportional to volume, but ABC not always.
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BACTH LEVEL
Batch level cost are costs caused by the number of
batches produced and sold. Example of batch-level cost
Include setup costs and most material handling costs.
If materials are ordered from a supplier for a particular
batch, the part of materials procurement.
Batch-level drivers are measures of activities that vary with
the number of batches produced and sold.
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PRODUCT LEVEL
Product level cost are costs incurred to support the number
of different products produced. They are not necessary
influenced by the production and sale of one more batch
or one more unit.
Product-level drivers are measures of activities that vary
with the number different products produced and sold.
Example: design changes, design hours, etc.
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PLANT LEVEL
Plant level cost are costs of sustaining capacity at a
production site. Example : rent, depreciation, property
taxes, and insurance on the factory building.
Floor space occupied is referred to often as plant-level
driver for assigning plant-level costs. However, this
stretches the idea of a driver, because it is rare that the
total floor space devoted to each product or unit can be
identified.
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Comparison of ABC-Traditional Costing
•
•
•
•
•
•
ABC Costing:
Activity cost system
Heterogeneity cost
Driver—activity– product
Calculation of cost :
TWO STEPS
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•
•
•
•
•
Traditional Costing :
Unit cost system
Homogeneity cost
Unit—product
Calculation of cost :
ONE OR TWO STEPS
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Strengths and Weaknesses of ABC
• Strengths :
• Weaknesses :
• Credible Information
• More superior
• To help determining long
term decision
• Can show non-value-added
activities
• It’s loss that can not be
avoidable.
• Can’t be used for external
users
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Stages of applying ABC
•
•
•
•
•
Identify and define activity pool and driver
Based on using drivers, enter the cost to activity pool
Compute activity tariff
Based on activity tariff, applying the cost to cost objects
Arranging Management Reports
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Activity-Based Management-ABM
Activity-Base Management is the use of information
obtained from ABC to make improvements in a firm. ABC
information can help management position the firm to take
better advantage of its strengths.
For obtaining a maximum performance, ABC needs a lot of
supporting from management. The ABC implementation
that be supported by management, is called Activity-Based
Management.
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4 ways for managing activity
Activity reduction : reducing the time or effort required to
perform the activity.
Activity elimination : eliminating the activity entirely
Activity selection : selecting the low-cost alternative from a
set of design alternatives.
Activity sharing: making changes that permit the sharing of
activities with other products to yield economics of scale.
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CONCLUSION
• Activity accounting recognizes that units of product are
not the only important cost objects for which
management needs reliable cost information.
• In complex organization, relatively little cost may be
directly traceable to units of output.
• Larger amounts of cost may be traceable to the activities
needed to produce batches of product, or to activities
that sustain the firm’s ability to produce batches
products.
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