[管理学]管理会计英语课件04.ppt

Activity-Based Cost Systems Chapter 4 Simple Cost Accounting Systems: Ericson Ice Cream Company Example Ericson had been the low-cost producer of chocolate and vanilla ice cream, with profit margins exceeding 20% of sales Several years ago Ericson expanded their business by extending their product line into products with premium selling prices Ericson Ice Cream Company Example Five years ago strawberry ice cream was introduced The same basic production technology Could be sold at a price that was 3% higher than for blue and black pens Last year mocha-almond ice cream was added Could be sold at a 10% price premium The controller of Ericson was disappointed with the most recent quarter’s financial results Total Profitability by Product Management’s Concern The controller wondered whether the company should continue to deemphasize the chocolate and vanilla products and keep introducing new specialty premium flavors Ericson’s manufacturing manager commented on how the introduction of specialty flavors had changed the production environment Ericson’s Indirect Cost Allocation Because it was a small company and historically had produced only a narrow range of products, Ericson used a simple costing system All the plant’s indirect expenses were aggregated at the plant level and allocated to products based on each product’s direct labor cost Currently the cost system’s overhead burden rate was 300% of direct labor cost Before the new specialty products were introduced, the overhead rate was only 200% of direct labor cost Ericson’s Cost System Ericson’s management accountants designed the system years ago when: Production operations were mostly manual Total indirect costs were less than direct labor costs Cooper’s two products had similar production volumes and batch sizes Changes in the Production Environment Direct labor costs have decreased and indirect expenses have increased as a result of automation As specialty low-volume products were added, Ericson needed: More sche