Miglioramenti dei processi https://www.manager.it/default.asp?page=A_contabilita.html

1. Product Margins
Standard
Stanchions
Compass
Housing
Sales 13,600$ 650$
Costs
Direct materials (2,110) (13)
Direct labor (1,850) (50)
Manufacturing overhead (10,000) (200)
Product margin (360)$ 387$
TraditionalTraditional Cost Accounting SystemCost Accounting System
Predetermined manufacturing
overhead rate
$1,000,000
20,000 MH
= $50/MH=
400 units x 0.5 MH/unit x $50/MH = $10,000400 units x 0.5 MH/unit x $50/MH = $10,000400 units x 0.5 MH/unit x $50/MH = $10,000400 units x 0.5 MH/unit x $50/MH = $10,000

2. Difference Between ABC and
Traditional Product Costs
Batch-level or product-Batch-level or product-
level costs willlevel costs will
ordinarily shiftordinarily shift
overhead costs fromoverhead costs from
high-volumehigh-volume
products producedproducts produced
in large batches toin large batches to
low-volume productslow-volume products
produced in smallproduced in small
batches.batches.
Batch-level or product-Batch-level or product-
level costs willlevel costs will
ordinarily shiftordinarily shift
overhead costs fromoverhead costs from
high-volumehigh-volume
products producedproducts produced
in large batches toin large batches to
low-volume productslow-volume products
produced in smallproduced in small
batches.batches.
Under ABC bothUnder ABC both
manufacturing andmanufacturing and
nonmanufacturingnonmanufacturing
costs may becosts may be
assigned to products.assigned to products.
Organization-Organization-
sustaining costs andsustaining costs and
the costs of idlethe costs of idle
capacity are notcapacity are not
assigned to products.assigned to products.
Under ABC bothUnder ABC both
manufacturing andmanufacturing and
nonmanufacturingnonmanufacturing
costs may becosts may be
assigned to products.assigned to products.
Organization-Organization-
sustaining costs andsustaining costs and
the costs of idlethe costs of idle
capacity are notcapacity are not
assigned to products.assigned to products.

3. Targeting Process Improvement
Activity-based costing can be
used to identify areas that would
benefit from process
improvements.
Activity-based costing can be
used to identify areas that would
benefit from process
improvements.
The theory of constraints
approach is a powerful tool for
targeting the area in an
organization whose improvement
will yield the greatest benefits.
The theory of constraints
approach is a powerful tool for
targeting the area in an
organization whose improvement
will yield the greatest benefits.

4. Activity-Based Costing and
External Reporting
Most companies do not use ABC for external reporting because . . .Most companies do not use ABC for external reporting because . . .
1.1. External reports are less detailed than internalExternal reports are less detailed than internal
reports.reports.
2.2. It may be difficult to make changes to the company’sIt may be difficult to make changes to the company’s
accounting system.accounting system.
3.3. ABC does not conform to GAAP.ABC does not conform to GAAP.
4.4. Auditors may be suspect of the subjective allocationAuditors may be suspect of the subjective allocation
process based on interviews with employees.process based on interviews with employees.

5. Limitations of ABC
ABC systems are aABC systems are a
major project requiringmajor project requiring
substantial resources.substantial resources.
The benefits ofThe benefits of
increased accuracyincreased accuracy
must outweigh thesemust outweigh these
additional costs.additional costs.
ABC systems are aABC systems are a
major project requiringmajor project requiring
substantial resources.substantial resources.
The benefits ofThe benefits of
increased accuracyincreased accuracy
must outweigh thesemust outweigh these
additional costs.additional costs.
ABC producesABC produces
numbers, like productnumbers, like product
margins, that are atmargins, that are at
odds with numbersodds with numbers
produced by traditionalproduced by traditional
costing system. Somecosting system. Some
managers find itmanagers find it
difficult to adjust to thisdifficult to adjust to this
change.change.
ABC producesABC produces
numbers, like productnumbers, like product
margins, that are atmargins, that are at
odds with numbersodds with numbers
produced by traditionalproduced by traditional
costing system. Somecosting system. Some
managers find itmanagers find it
difficult to adjust to thisdifficult to adjust to this
change.change.
ABC data can be misinterpreted and mustABC data can be misinterpreted and must
be used with care when making decisions.be used with care when making decisions.
ABC data can be misinterpreted and mustABC data can be misinterpreted and must
be used with care when making decisions.be used with care when making decisions.

6. Limitations of ABC
ABC systems are aABC systems are a
major project requiringmajor project requiring
substantial resources.substantial resources.
The benefits ofThe benefits of
increased accuracyincreased accuracy
must outweigh thesemust outweigh these
additional costs.additional costs.
ABC systems are aABC systems are a
major project requiringmajor project requiring
substantial resources.substantial resources.
The benefits ofThe benefits of
increased accuracyincreased accuracy
must outweigh thesemust outweigh these
additional costs.additional costs.
ABC producesABC produces
numbers, like productnumbers, like product
margins, that are atmargins, that are at
odds with numbersodds with numbers
produced by traditionalproduced by traditional
costing system. Somecosting system. Some
managers find itmanagers find it
difficult to adjust to thisdifficult to adjust to this
change.change.
ABC producesABC produces
numbers, like productnumbers, like product
margins, that are atmargins, that are at
odds with numbersodds with numbers
produced by traditionalproduced by traditional
costing system. Somecosting system. Some
managers find itmanagers find it
difficult to adjust to thisdifficult to adjust to this
change.change.
ABC data can be misinterpreted and mustABC data can be misinterpreted and must
be used with care when making decisions.be used with care when making decisions.
ABC data can be misinterpreted and mustABC data can be misinterpreted and must
be used with care when making decisions.be used with care when making decisions.