(本科）会计专业英语chapter 10教学课件.pptx

《(本科）会计专业英语chapter 10教学课件.pptx》由会员分享，可在线阅读，更多相关《(本科）会计专业英语chapter 10教学课件.pptx（32页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、Chapter 10 Cost Behavior Analysis1Learning ObjectivespDistinguish product costs and period costs.p Understand the difference between variable costs and fixed cost.pUnderstand the difference between direct and indirect costs.pUse high-low analysis to separate the fixed and variable elements of total

2、costs,pExplain the structure of linear functions and equations.pCalculate profit or loss by using variable costing and absorption costing2Mini Case Do you like donuts?And what is the cost of producing a donut?The Tasty donuts,Inc.operates a chain of 10 donut shops in the city of Toronto,Ontario.Each

3、 shop sells a variety of donuts,muffins,and sweet rolls as well as various beverages.Beverages,such as coffee and fruit juices,are prepared in each donut shop,but all of the companys donuts and baked nee products are made in a centrally located bakery.The company leases several small delivery trucks

4、 to transport the bakery items to its donut shops.Use of a central bakery is more cost-efficient.Identify:(1)What cost does above mini case include?(2)How to classify these costs?Outline of The ChapterpTopic 1:Cost ClassificationpTopic 2:Cost Behavior pTopic 3:Variable Costing and Absorption Costing

5、4Topic 1:Cost Classification p1.General Cost ClassificationsManufacturing CostDirect material:is all of the physical items built into a product.It is rolled into the total cost of goods produced,which is then subdivided into the cost of goods sold and ending inventory.Direct labor:is production or s

6、ervices labor that is assigned to a specific product,cost center,or work order.Manufacturing overhead:includes items such as indirect materials;indirect labor and repairs on production equipment;heat and light,property taxes,depreciation,and insurance on manufracturing facilities.5Topic 1:Cost Class

7、ification p1.General Cost ClassificationsNonmanufacturing Costs Nonmanufacturing costs are often divided into two categories:selling costs and administrative costs.Selling costs include all costs that are incurred to secure customer orders and get the finished product to the customer.Examples of sel

8、ling costs include advertising,shipping,sales travel,sales commissions,sales salaries,and costs of finished goods warehouses.6Topic 1:Cost Classification p2.Product Costs and Period CostsProduct Cost Product cost refers to the costs used to create a product.These costs include direct labor,direct ma

9、terials,consumable production supplies,and factory overhead.The calculation is:(Total direct labor+Total direct materials+Consumable supplies+Total allocated overhead)/Total number of units=Product unit cost7Topic 1:Cost Classification p2.Product Costs and Period CostsPeriod Cost A period cost is mo

10、re closely associated with the passage of time than with a transactional event.Since a period cost is essentially always charged to expense at once,it may more appropriately be called a period expense.This type of cost is not included within the cost of goods sold on the income statement.Instead,it

11、is typically included within the selling and administrative expenses section of the income statement.8Topic 1:Cost Classification p3.Cost Classifications for Predicting Cost BehaviorVariable Cost Variable cost is a cost that varies in relation to changes in the volume of activity.Direct materialsCom

12、missionsBillable laborPiece rate laborCredit card fees9Topic 1:Cost Classificationp 3.Cost Classifications for Predicting Cost BehaviorVariable Cost Variable cost is a cost that varies in relation to changes in the volume of activity.To calculate total variable costs,the formula is:Total quantity of

13、 units produced Variable cost per unit=Total variable costDirect materialsCommissionsBillable laborPiece rate laborCredit card fees10Topic 1:Cost Classificationp 3.Cost Classifications for Predicting Cost BehaviorFixed Cost A fixed cost is a cost that does not vary in the short term,irrespective of

14、changes in production or sales levels,or other measures of activity.Examples of fixed costs are:AmortizationDepreciationInsurance11Topic 1:Cost Classificationp 4.Cost Classification for Assigning Costs to Cost ObjectsrDirect Cost A direct cost is a cost that can be clearly associated with specific a

15、ctivities or products.AmortizationIndirect Cost Indirect costs are costs that are not directly associated with a single activity,event,or other cost object.12Topic 1:Cost Classificationp 5.Cost Classifications for Decision MarkingDifferential Cost and Revenue Differential cost is the difference betw

16、een the cost of two alternative decisions,or of a change in output levels.The concept is used when there are multiple possible options to pursue,and a choice must be made to select one option and drop the others.Differential revenue is the difference in sales that will be generated by two different

17、courses of action.The concept is commonly used when evaluating which of two(or more)investments to make in a business.Opportunity Cost Opportunity cost is the cost of not selecting the next best choice when investing resources in an activity.Sunk Cost A sunk cost is a cost that an entity has incurre

18、d,and which it can no longer recover by any means13Topic 2:Cost Behavior p1.Variable CostExample Tasty donuts direct material cost is a variable cost.Exhibit 10-1 displays a graph of tasty donuts direct-material cost.As the graph shows,total variable cost increases in proportion to the activity leve

19、l(or cost driver).When activity triples,for example,from 50,000 dozen items to 150,000 dozen items,total direct-material costs will triple from$55,000 to$165,000.However,the variable cost per unit remains the same as activity changes.The total direct-material cost incurred per dozen items sold is co

20、nstant at$1.1 per dozen.14Topic 2:Cost Behaviorp 1.Variable CostExample The exhibit 10-2 illustrates this point.The variable cost per unit also is represented in the graph in panel 1 of exhibit 10-l as the slope of the cost line.Exhibit10-1 Graph of Total Direct-Material Cost15Slop is variable cost

21、per unit of activity,$1.10 per dozen bakery items$165,000$110,00$55,00000$50,0000$100,000 0$150,0000Topic 2:Cost Behaviorp1.Variable CostExample Exhibit10-2 Tabulation of Direct-Material Cost16Activity(or cost direct)Direct-Material Cost per Dozen Bakery Items SoldTotal Direct-Material Cost50,000$1.

22、10$55,000100,0001.10110,000150,0001.10165,000Topic 2:Cost Behavior p2.Fixed Cost Example X Company example above,if the number of chairs produced doubles,the depreciation of the factory building do not change.Say the depreciation is$50,000 for one month,and the relevant range is from 0 to 5,000 chai

23、rs,then the depreciation charge per chair for different units will be as follows:17Number of chairs producedumber of chairs producedDepreciation charge per chairepreciation charge per chair1 1$50$50，00000010105 5，0000001001005005001 0001 00050502 0002 0002525Topic 2:Cost Behavior p2.Fixed Cost Examp

24、le Fixed cost can be represented by a linear equation as below:F=total variable cost In our example for X Company,the relationship that describes the total depreciation of factory building is F=$50,000The graph of fixed cost is also a straight line,it doesnt change with volume or activity.18Topic 2:

25、Cost Behavior p2.Fixed Cost Example Exhibit 10-3 illustrates fixed cost behavior:19Total fixed costLevel of activityCost Topic 2:Cost Behavior p3.Mixed Cost Example We also use the example of tasty donuts.The cost of operating delivery trucks is a semi-variable cost for tasty donuts,Inc.These costs

26、are graphed in exhibit 10-4.As the graph shows,the companys delivery-truck costs have two components.The fixed-cost component is$3,000 per month,which is the monthly rental payment paid under the lease contract for the delivery trucks.The monthly rental payment is constant,regardless of the level of

27、 activity(or cost driver).The variable-cost component consists of the costs of gasoline,oil,routine maintenance,and tires.20Topic 2:Cost Behavior p3.Mixed Cost Example These costs vary with activity,since greater activity levels result in more deliveries.The distance between the fixed-cost line(dash

28、ed line)and the total-cost line in exhibit10-4 is the amount of variable cost.For example,at an activity level of 100,000 dozen bakery items,the total variable-cost component is$10,000.21Topic 2:Cost Behavior p3.Mixed Cost Example Exhibit10-4 Cost analysis 22Total cost of Operating delivery trucksAc

29、tivity,or cost driver(dozens of bakery itemssold per month)Slope is variable costPer unit of activity,$.10 per dozen bakery itemsVariable cost Component Total cost lineFixed cost component50,000100,000150,000$3,000$10,000$20,000Topic 2:Cost Behaviorp4.Mixed Cost Separation The High-low Method In the

30、 high-low method the semi variable-cost approximation is computed using exactly two data points.The high and low activity levels are chosen from the available data set.Follow the steps below to estimate the fixed and variable elements of semi-variable costs:Review records of costs in previous period

31、s:Select the period with the highest activity level;Select the period with the lowest activity level.23Topic 2:Cost Behaviorp4.Mixed Cost Separation The High-low Method Determine the following:Total cost at high activity level;Total cost at low activity level;Total units at high activity level;Total

32、 units at low activity levelCalculate the following:24Total cost at high activity level total cost at level activity levelTotal unit at high activity level total unit at level activity levelVariable cost =per unitTopic 2:Cost Behaviorp4.Mixed Cost Separation Scatter Graph Method One of the clearest

33、ways of presenting the relationship between two variables is by plotting a linear equation as a straight line on a graph.A graph has a horizontal axis,the x axis;and a vertical axis,the y axis.The x axis is used to represent the independent variable and the y axis is used to represent the dependent

34、variable.If calendar time is one variable,it is always treated as the independent variable.25Topic 2:Cost Behaviorp4.Mixed Cost Separation Regress Analysis Method Least-Squares Regress Method In the least-squares regression method,the cost line is positioned so as to minimize the sum of the squared

35、deviations between the cost line and the data points.The cost line fit to the data using least-squares regression is called a least-squares regression line(or simply a regression line)26Topic 2:Cost Behaviorp4.Mixed Cost Separation Regress Analysis Method Least-Squares Regress Method Y=a+b XY is the

36、 dependent variable whose value depends on the value of x;X is the independent variable whose value helps to determine the corresponding value of y;a is a constant;that is,a fixed amount;b is also a constant,being the coefficient of x(that is,the number by which the value of x should be multiplied t

37、o derive the value of y).27Topic 3:Variable Costing and Absorption Costingp1.Variable Costing Variable costing is an alternative method of costing to absorption costing.In variable costing,only variable costs are charged as a cost of sale and a contribution is calculated(sales revenue minus variable

38、 cost of sales).The principles of variable costing are as follows:Period fixed costs are the sameSimilarlyProfit measurement should therefore be based on an analysis of total contribution.When a unit of product is made,the extra costs incurred in its manufacture are the variable production costs.28T

39、opic 3:Variable Costing and Absorption Costingp2.Absorption Costing Absorption costing is defined as a method for accumulating the costs associated with a production process and apportioning them to individual products.This type of costing is required by the accounting standards to create an invento

40、ry valuation that is stated in an organizations balance sheet.Period fixed costs are the same.The steps required to absorption costing are:Assign costs to cost poolsCalculate usageAssign costs 29Topic 3:Variable Costing and Absorption Costingp3.Differences between two method Variable costing applies

41、 only those costs to inventory that were incurred when each individual unit was produced,while absorption costing applies all production costs to all units produced.This results in the following differences between the two methods:Cost application.Only the variable cost is applied to inventory under

42、 marginal costing,while fixed overhead costs are also applied under absorption costingMeasurement.The measurement of profits under marginal costing uses the contribution margin(which excludes applied overhead),while the gross margin(which includes applied overhead)is used under absorption costing.30

43、Topic 3:Variable Costing and Absorption Costingp3.Differences between two method Overhead costs.Overhead costs are charged to expense in the period under marginal costing,whereas they are applied to products under the absorption costing method(which may defer expense recognition to a later period)Pu

44、rpose.Absorption costing is required by the applicable accounting frameworks for financial reporting purposes,so that factory overhead will be included in the inventory asset.Variable costing is not allowed for financial reporting purposes,so its use is restricted to internal management reports.31The End32