Managerial Accounting

Eighth Edition

Weygandt Kimmel Kieso

Chapter 4

Activity-Based Costing
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Garis Besar Bab
Tujuan Pembelajaran
L O 1 Diskusikan perbedaan antara penetapan biaya
tradisional dan penetapan biaya berdasarkan
aktivitas.
L O 2 Menerapkan penetapan biaya berdasarkan
aktivitas pada produsen.
L O 3 Jelaskan manfaat dan keterbatasan penetapan
biaya berdasarkan aktivitas.
L O 4 Menerapkan penetapan biaya berbasis aktivitas
untuk industri jasa.
Copyright ©2018 John Wiley & Sons, Inc. 2
Penetapan Biaya Berbasis vs. Aktivitas Tradisional

TUJUAN BELAJAR 1
Diskusikan perbedaan antara penetapan biaya tradisional dan
penetapan biaya berdasarkan aktivitas.
Sistem Biaya Tradisional
Mengalokasikan biaya overhead menggunakan tingkat
yang telah ditentukan.
Biaya pesanan pekerjaan: biaya tenaga kerja langsung
mungkin merupakan basis kegiatan yang relevan.
Biaya proses: jam mesin mungkin merupakan basis
aktivitas yang relevan.

LO 1 Copyright ©2018 John Wiley & Sons, Inc. 3

 Ilustrasi Sistem Biaya Tradisional
Atlas Company memproduksi dua produk kebugaran perut — Ab
Bench dan Ab Coaster. Biaya bahan langsung per unit adalah $ 40
untuk Ab Bench dan $ 30 untuk Ab Coaster. Biaya tenaga kerja
langsung adalah $ 12 per unit untuk setiap produk. Kedua produk
memerlukan satu jam kerja langsung per unit, dialokasikan biaya
overhead $ 30 per unit.

LO 1 Copyright ©2018 John Wiley & Sons, Inc. 4

 Perlunya Pendekatan Baru
• Perubahan yang luar biasa dalam industri manufaktur
dan jasa.
• Mengurangi jumlah penggunaan tenaga kerja
langsung.
• Peningkatan signifikan dalam total biaya overhead.
• Tidak tepat untuk menggunakan tarif overhead pabrik
yang telah ditentukan sebelumnya ketika kurangnya
korelasi ada.
• Proses pembuatan yang kompleks mungkin
memerlukan banyak basis alokasi (Biaya Berbasis
Aktivitas).
LO 1 Copyright ©2018 John Wiley & Sons, Inc. 5
 Penetapan Biaya Berbasis Aktivitas (1 dari 4)
• Pendekatan untuk mengalokasikan biaya overhead.
o Mengalokasikan overhead ke beberapa kumpulan biaya
aktivitas.
o Menetapkan kumpulan biaya aktivitas untuk produk atau
layanan melalui driver biaya.
Konsep Kunci
Aktivitas. Segala peristiwa, tindakan, transaksi, atau urutan kerja
yang menimbulkan biaya saat memproduksi suatu produk atau
melakukan suatu layanan.
Pool biaya kegiatan. Biaya overhead dikaitkan dengan aktivitas
yang berbeda (mis., Memesan bahan atau menyiapkan mesin).
Sopir biaya. Setiap faktor atau aktivitas yang memiliki hubungan
sebab-akibat langsung dengan sumber daya yang dikonsumsi.
LO 1 Copyright ©2018 John Wiley & Sons, Inc. 6
 Penetapan Biaya Berbasis Aktivitas
(Empat Langkah)
1. Mengidentifikasi dan mengklasifikasikan kegiatan yang terlibat
dalam pembuatan produk tertentu dan menetapkan biaya
overhead untuk kumpulan biaya.
2. Identifikasi pemicu biaya yang memiliki korelasi kuat dengan
biaya yang diakumulasikan dalam setiap kumpulan biaya.
3. Hitung tarif overhead berbasis aktivitas untuk setiap kelompok
biaya.
4. Alokasikan biaya overhead untuk produk yang menggunakan
tarif overhead yang ditentukan untuk setiap kelompok biaya.

LO 1 Copyright ©2018 John Wiley & Sons, Inc. 7

 Penetapan Biaya Berbasis Aktivitas (2 dari 4)

• ABC mengalokasikan overhead dalam proses dua tahap:

o Tahap 1: Biaya overhead ditetapkan ke kumpulan biaya
aktivitas (Langkah 1).
o Tahap 2: Mengalokasikan overhead yang ditugaskan ke
kumpulan biaya aktivitas untuk produk, menggunakan driver
biaya (Langkah 2-4).
• Semakin kompleks operasi pembuatan suatu produk,
semakin banyak aktivitas dan pendorong biaya yang
mungkin terjadi.

LO 1 Copyright ©2018 John Wiley & Sons, Inc. 8

 Penetapan Biaya Berbasis Aktivitas (3 dari 4)

Langkah 1: Identifikasi
kelompok biaya kegiatan
dan alokasikan biaya
untuk kelompok tersebut

Langkah 2: Identifikasi
pendorong biaya dan
perkirakan total
penggunaan

Langkah 3: Hitung tarif

overhead berbasis aktivitas

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 Penetapan Biaya Berbasis Aktivitas (4 dari 4)

Langkah 4: Tetapkan
biaya overhead untuk
produk berdasarkan
penggunaan driver
biaya

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 Lakukan! 1: Sistem Penentuan Biaya
Tunjukkan apakah pernyataan berikut ini benar atau salah.
1. Sistem penetapan biaya tradisional mengalokasikan overhead
dengan menggunakan beberapa tarif overhead.
2. Bahan langsung dan biaya tenaga kerja langsung lebih mudah
dilacak ke produk daripada overhead.
3. Ketika proses manufaktur menjadi lebih otomatis, lebih banyak
perusahaan telah memilih untuk mengalokasikan overhead
berdasarkan biaya tenaga kerja langsung.
4. Dalam penetapan biaya berbasis aktivitas, aktivitas adalah
peristiwa, tindakan, transaksi, atau urutan kerja apa pun yang
menimbulkan biaya saat memproduksi suatu produk.

Solution 1. False 2. True 3. False 4. True

LO 1 Copyright ©2018 John Wiley & Sons, Inc. 11
ABC and Manufactures

LEARNING OBJECTIVE 2

Apply activity-based costing to a manufacturer.

Involves the following four steps.

1. Identify and classify activities involved in the manufacture
of specific products and assign overhead to cost pools.
2. Identify the cost driver that has a strong correlation to the
costs accumulated in each cost pool.
3. Compute the activity-based overhead rate for each cost
pool.
4. Allocate overhead costs to products, using overhead rates
determined for each cost pool.
LO 2 Copyright ©2018 John Wiley & Sons, Inc. 12
 Identify and Classify Activities and
Allocate Overhead to Cost Pools
(Step 1)
Overhead costs are assigned directly to the appropriate activity cost
pool.

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 Identify Cost Drivers (Step 2)
Cost driver must accurately measure the actual consumption of
the activity by the various products.
Illustration 4.7: Cost drivers that Atlas Company identifies and
their total expected use per activity cost pool.
Estimated Use of Cost
Activity Cost Pools Cost Drivers Drivers per Activity
Manufacturing Machine hours 50,000 machine hours
Setups Number of setups 2,000 setups
Purchase ordering Number of purchase orders 2,500 purchase orders
Product development Products developed 2 products developed
Facility management Square footage 25,000 square feet

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 14

 Compute Activity-Based Overhead
Rates (Step 3)
Next, the company computes an activity-based overhead rate per
cost driver.
EstimatedOverheadper Activity
= Activity - BasedOverhead Rate
Expected Useof Cost Driversper Activity

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 15

 Allocate Overhead Costs to Products
(Step 4) (1 of 3)
In allocating overhead costs, it is necessary to know the expected use of
cost drivers for each product. Because of its low volume and higher
number of components, the Ab Coaster requires more setups and purchase
orders than the Ab Bench.
Expected Use of Expected Use of
Cost Drivers per Cost Drivers per
Expected Use of Cost Product for Ab Product for Ab
Activity Cost Pools Cost Drivers Drivers per Activity Bench Coaster
Manufacturing Machine hours 50,000 machine hours 30,000 20,000
Setups Number of setups 2,000 setups 500 1,500
Purchase ordering Number of purchase Table is accessible to 750 1,750
orders screenreaders
Product Products developed 2 Products developed 1 1
development
Property and plant Square feet 25,000 Square feet 10,000 15,000

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 16

 Allocate Overhead Costs to Products
(Step 4) (2 of 3)
To allocate overhead costs, Atlas multiplies the activity-based
overhead rates per cost driver (Ill. 4-9) by the number of cost drivers
expected to be used per product (Ill. 4-10).

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 17

 Allocate Overhead Costs to Products
(Step 4) (3 of 3)
To allocate overhead costs, Atlas multiplies the activity-based
overhead rates per cost driver (Ill. 4-9) by the number of cost
drivers expected to be used per product (Ill. 4-10).

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 18

 Comparing Unit Costs

• Likely consequence of differences in assigning overhead.

o Overpricing the Ab Bench and possibly losing market share
to competitors.
o Sacrificing profitability by underpricing the Ab Coaster.

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 19

 Do It! 2: Apply ABC to Manufacturer
(1 of 4)

Casey Company has five activity cost pools and two products. It
expects to produce 200,000 units of its automobile scissors jack and
80,000 units of its truck hydraulic jack. Having identified its
activity cost pools and the cost drivers for each cost pool, Casey
Company accumulated the following data relative to those activity
cost pools and cost drivers.

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 20

 Do It! 2: Apply ABC to Manufacturer
(2 of 4)

Casey Company has five activity cost pools and two products. It expects
to produce 200,000 units of its automobile scissors jack and 80,000 units
of its truck hydraulic jack. Having identified its activity cost pools and the
cost drivers for each cost pool, Casey Company accumulated the
following data relative to those activity cost pools and cost drivers.
Using the data provided,
a. Prepare a schedule showing the computations of the activity-based overhead
rates per cost driver.
b. Prepare a schedule assigning each activity’s overhead cost to the two products.
c. Compute the overhead cost per unit for each product.
d. Comment on the comparative overhead cost per unit.

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 21

 Do It! 2: Apply ABC to Manufacturer
(3 of 4)

a. Prepare a schedule showing the computations of the activity-based

overhead rates per cost driver.

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 22

 Do It! 2: Apply ABC to Manufacturer
(4 of 4)

b. Prepare a schedule assigning each activity’s overhead cost to the two

products.

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 Do It! 2: Apply ABC to Manufacturer
c. Compute the overhead cost per unit for each product.

Scissor Jack Hydraulic Jack

Total costs assigned
$2,560,000 double ruled $2,560, 000 $2, 740, 000
S2,740,000 double ruled

Total units produced

2,00,000 double ruled
200, 000 80,000 double ruled
80, 000
Overhead cost per unit
$12.80 double ruled
$12.80 $34.25 double ruled
$34.25

d. Comment on the comparative overhead cost per unit

These data show that the total overhead assigned to 80,000 hydraulic jacks
exceeds the overhead assigned to 200,000 scissors jacks. The overhead cost per
hydraulic jack is $34.25. It is only $12.80 per scissors jack.

LO 2 Copyright ©2018 John Wiley & Sons, Inc. 24

 ABC Benefits and Limitations

LEARNING OBJECTIVE 3
Explain the benefits and limitations of activity-based
costing.

ABC has three primary benefits:

1. More cost pools, therefore more accurate product
costing.
2. Enhanced control over overhead costs.
3. Better management decisions.

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 25

 The Advantage of Multiple Cost
Pools (1 of 9)
• Multiple cost pools
o Used instead of one plantwide pool and a single cost
driver.
o Numerous activity cost pools with more relevant cost
drivers.
• Costs allocated on basis of cost drivers used to produce
each product.

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 The Advantage of Multiple Cost
Pools (2 of 9)

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 27

 The Advantage of Multiple Cost Pools
(3 of 9)

Classification of Activity Levels

• Unit-level
o Performed for each unit of production.
• Example: Assembly of cell phones
• Batch level
• Product level
• Facility level

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 28

 The Advantage of Multiple Cost
Pools (4 of 9)
Classification of Activity Levels
• Unit-level
• Batch level
o Performed every time a company produces another batch
of a product.
• Example: Batch of ice cream
• Product level
• Facility level

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 29

 The Advantage of Multiple Cost Pools
(5 of 9)

Classification of Activity Levels

• Unit-level
• Batch level
• Product level
o Performed every time a company produces a new type of
product.
• Example: Time spent testing a new drug by a
pharmaceutical company
• Facility level
LO 3 Copyright ©2018 John Wiley & Sons, Inc. 30
 The Advantage of Multiple Cost
Pools (6 of 9)
Classification of Activity Levels
• Unit-level
• Batch level
• Product level
• Facility level
o Required to support or sustain an entire production
process.
• Example: A hospital

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 The Advantage of Multiple Cost
Pools (7 of 9)
Classification of Activity Levels
Four Levels Types of Activities Examples of Cost
Drivers
Unit-Level Activities
a man drilling a wooden piece
Machine-related Machine hours
Drilling, cutting,
milling, trimming,
pressing
Labor-related Direct labor hours or cost
Assembling, painting,
sanding, sewing

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 32

 The Advantage of Multiple Cost Pools
(8 of 9)

Classification of Activity Levels

Four Levels Types of Activities Examples of Cost Drivers
man holding equipments
man holding equipments man holding equipments

Product-Level Activities Product design Number of product designs

a woman holding a paper in front of a building
Engineering changes Number of changes

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 33

 The Advantage of Multiple Cost Pools
(9 of 9)

Classification of Activity Levels

Four Levels Types of Activities Examples of Cost Drivers
Facility-Level Activities Plant management salaries Number of employees
a man and a woman standing on top of a building
named cutting edge apparel company. The man says,
there. This baby should keep the building cool; types of
Plant depreciation managed
activities, plant management salaries Property taxes Utilities Square footage
Square footage
Square footage

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 34

 The Advantage of Enhanced Cost
Control (1 of 2)
Value-Added Activities
• Increase the perceived value of a product or service to
customers, such as:

Manufacturing Company Service Company

• Engineering design • Performing surgery
• Machining • Legal research
• Assembly • Delivering packages
• Painting

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 The Advantage of Enhanced Cost
Control (2 of 2)
Non-Value-Added Activities
• Adds cost to, or increases the time spent on, a
product/service without increasing its perceived value, such
as:
Manufacturing Company Service Company
• Storage of inventory • Taking appointments
• Moving inventory • Reception
• Inspections • Bookkeeping and billing
• Fixing defective goods • Traveling
• Ordering supplies
• Advertising
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 Advantage of Better Management
Decisions
Activity-based management (ABM), management tool that
focuses on reducing costs and improving processes and
decision-making.
Managers use ABC via ABM
• for both strategic and operational decisions or perspectives.
• to help managers evaluate employees, departments, and
business units.
• to establish performance standards, as well as benchmark
against other companies.

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 Limitations and Knowing When to Use
AB C
Limitations
• Expensive to use.
• More complex than traditional systems.
• Arbitrary allocations remain.

When to Use
1. Product lines differ in volume and manufacturing complexity.
2. Product lines are numerous and diverse.
3. Overhead costs constitute a significant portion of total costs.
4. Manufacturing process or the number of products has changed
significantly.
5. Production or marketing managers are ignoring data.
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 Do It! 3: Classify Activity Levels
Morgan Toy Company manufactures six primary product lines in its Morganville
plant. As a result of an activity analysis, the accounting department has identified
eight activity cost pools. Each of the toy products is produced in large batches,
with the whole plant devoted to one product at a time. Classify each of the
following activities as either unit-level, batch-level, product-level, or facility-level:

a. Engineering design a. Product-level

b. Machine setup b. Batch-level
c. Toy design c. Product-level
d. Interviews of prospective employees d. Facility-level
e. Inspections after each setup e. Batch-level
f. Polishing parts f. Unit-level
g. Assembling parts g. Unit-level
h. Health and safety h. Facility-level

LO 3 Copyright ©2018 John Wiley & Sons, Inc. 39

 ABC and Service Industries

LEARNING OBJECTIVE 4

Apply activity-based costing to service industries.

Overall objective: Identify key activities that generate costs and keep track of
how many of those activities are completed for each service performed.
• General approach is to identify activities, cost pools, and cost
drivers.
• Labeling of activities as value-added or non-value-added.
• Sometimes, a larger proportion of overhead costs are company-
wide costs that cannot be directly traced to specific services
provided by the company.

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 Traditional Costing Example (1 of 2)
The public accounting firm of Check and Doublecheck prepares the
following condensed annual budget.

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 Traditional Costing Example (2 of 2)
Assume that Check and Doublecheck records $140,000 of actual
direct professional labor cost during its audit of Plano Molding
Company, which was billed an audit fee of $260,000. Under
traditional costing, using 50% as the rate for applying overhead to
the job, Check and Doublecheck would compute applied overhead
and operating income as shown.

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 Activity-Based Costing Example (1 of 3)
Check and Doublecheck distributes its estimated annual overhead
costs of $600,000 to three activity cost pools.

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 Activity-Based Costing Example (2 of 3)
Assigning overhead in a service industry.

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 Activity-Based Costing Example (3 of 3)
Under activity-based costing, Check and Doublecheck assigns
overhead costs of $57,200 as compared to $70,000 under traditional
costing.

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 Do It! 4: Apply ABC to Service
Company (1 of 2)
We Carry It, Inc. is a trucking company. It provides local, short-haul, and long-
haul services. The company has developed the following the cost pools
Estimated Expected Use of Cost Drivers
Activity Cost pools Cost Drivers Overhead Per Activity
Loading and unloading Number of pieces $ 70,000 100,000 pieces
Travel Miles driven 250,000 500,000 miles
Logistics Hours 60,000 2,000 hours

(a) Computer the activity-based overhead rates for each pool

Estimated Expected Use of Cost Activity- Based
Activity Cost pools Overhead ÷ Drivers Per Activity = Overhead Rate
Loading and unloading $ 70,000 ÷ 100,000 pieces = $0.70 per piece
Travel 250,000 ÷ 500,000 miles = $0.50 per mile
Logistics 60,000 ÷ 2,000 hours = $30 per hour

LO 4 Copyright ©2018 John Wiley & Sons, Inc. 46

 Do It! 4: Apply ABC to Service
Company (2 of 2)
We Carry It, Inc. is a trucking company. It provides local, short-haul, and long-
haul services. The company has developed the following the cost pools
Estimated Expected Use of Cost Activity- Based
Activity Cost pools Overhead ÷ Drivers Per Activity = Overhead Rate
Loading and unloading $ 70,000 ÷ 100,000 pieces = $0.70 per piece
Travel 250,000 ÷ 500,000 miles = $0.50 per mile
Logistics 60,000 ÷ 2,000 hours = $30 per hour

(b) Determine the overhead allocated to Job A 1027 which has 150 pieces,
require 200 miles of driving, and 0.75 hours of logistics

(150 × $0.70) + (200 × $0.50) + (0.75 × $30) = $227.50

LO 4 Copyright ©2018 John Wiley & Sons, Inc. 47

 Appendix 4A: Just-in-Time
Processing

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 Just-in-Time Processing (1 of 2)
Objective of JIT Processing
• To eliminate all manufacturing inventories.

Elements of JIT Processing

• Dependable suppliers.
• Multiskilled work force.
• Total quality control system.

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 Just-in-Time Processing (2 of 2)
Benefits of JIT Processing
• Significant reduction or elimination of manufacturing
inventories.
• Enhanced product quality.
• Reduction or elimination of rework costs and inventory
storage costs.
• Production cost savings from the improved flow of goods
through the processes.

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Copyright
Copyright © 2018 John Wiley & Sons, Inc.
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from the use of the information contained herein.

Copyright ©2018 John Wiley & Sons, Inc. 51