Description College of Administration and Finance Sciences Assignment (2) Deadline: Saturday 04/05/2024 @ 23:59 Course Name: Cost

Description

College of Administration and Finance Sciences
Assignment (2)
Deadline: Saturday 04/05/2024 @ 23:59
Course Name: Cost Accounting
Student’s Name:
Course Code: ACCT 301
Student’s ID Number:
Semester: Second
CRN:
Academic Year: 1445 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 15)
Q1. What is the process of identifying activities in an organisation and assigning costs under the
Activity Based Costing (ABC) system? Elucidate. You will need to include the right numerical
examples to support your answer.
(2 Marks) (Chapter 7, Week 7)
Answer:
Q2. PPLC Company has two support departments, SD1 and SD2, and two operating
departments, OD1 and OD2. The company decided to use the direct method and allocate
variable SD1 dept. costs based on the number of transactions and fixed SD1 dept. costs based on
the number of employees. SD2 dept. variable costs will be allocated based on the number of
service requests, and fixed costs will be allocated based on the number of computers. The
following information is provided:
(4 Marks) (Chapter 8, Week 10)
Support Departments
Operating Departments
SD1
SD2
OD1
OD2
Total Department variable costs
18,000
19,000
51,000
35,000
Total department fixed costs
20,000
24,000
56,000
30,000
Number of transactions
30
40
200
100
Number of employees
14
18
35
30
Number of service requests
28
18
35
25
Number of computers
15
20
24
28
College of Administration and Finance Sciences
You are required to allocate variable and fixed costs using direct method.
Answer:
Q3. What are an organization’s “outsourcing decisions” and “constrained resource decisions?”
Provide a suitable numerical example of these decisions and explain how quantitative and
qualitative considerations support a company’s decision-making process.
(2 Marks) (Chapter 4, Week 9)
Note: Your answer must include suitable numerical examples. You are required to assume values
of your own, and they should not be copied from any sources.
Answer:
Q4. VBN plastic industry makes three plastic toys: T1, T2, and T3. The joint costs of the three
products in 2017 were SAR 120,000. The total number of units for each product and the selling
price per unit is given below:
(3 Marks) (Chapter 9, Week 11)
Product
Units
Selling Price per unit
T1
45,000
SAR 15
T2
26,000
SAR 14
T3
18,000
SAR 10
You are required to allocate the joint costs to each product using the physical volume method and sales
value at the split-off method.
Answer:
College of Administration and Finance Sciences
Q5. MN&M Corporation is preparing a budget for 2018. The company provides you with the
following details which will help you to prepare the budget:
(4 Marks) (Chapter 10, Week 12)
Budgeted selling price per unit
=
SAR 500 per unit
Total fixed costs
=
SAR 150,000
Variable costs
=
SAR 100 per unit
Required:
You are required to prepare a flexible budget for 1,000, 1,100, 1,200 and 1,300 units.
Answer:
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 10
Static and Flexible Budgets
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 1
Chapter 10: Static and Flexible Budgets
Learning objectives

Q1: How do budgets contribute to the strategic management
process?

Q2: What is a master budget and how is it prepared?

Q3: What are flexible budgets and how can they be used for
sensitivity analysis?

Q4: How are budget variances calculated and used as
performance measures?

Q5: How do behavioral tensions influence the budgeting process?

Q6: What approaches exist for addressing the problems of
traditional budgeting?
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Q1: Budgets & Strategic Management Process
• A budget is
• A formalized financial plan.
• A translation of an organization’s strategies.
• A method of communicating.
• A way to define areas of responsibility and
decision rights.
• The budget cycle is the series of
sequential steps followed to create and
use budgets.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Budgets & Strategic Management Process
• Budgeting process begins with the organizational
vision, core competencies, and risk appetite
• Organizational strategies designed to achieve the
vision will drive the capital expenditures and long
term financing plans
• Operating plans are then created in line with the
organizational strategies
• Actual results must be monitored, measured, and
analyzed compared to budgeted plans
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q1: Budgets & Levers of Control
Belief Systems
• Communicates
organizational
strategies and
goals
• Motivates
managers to
plan in
advance and
coordinate
activities
© John Wiley & Sons, 2011
Boundary
Systems
Interactive
Control Systems
Diagnostic
Control Systems
• Authorizes
employees to
engage in
planned
activities and
spend within
budget limits
• Ensures
sufficient cash
flow for
financial
viability
• Utilize
variances to
identify
opportunities
and threats to
the business
• Revaluate
strategies and
operating plans
as conditions
changes
• Assign
responsibility
and reward
employees for
achieving
budget targets
• Motivate
managers to
provide good
estimates and
use resources
appropriately
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q2: Master Budgets
• A master budget is
• A comprehensive plan for the upcoming
accounting period.
• Usually prepared for a one-year period.
• Is based on a series of budget assumptions.
• The master budget consists of several
subsidiary budgets, in two categories:
• Operating budgets.
• Financial budgets.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 6
Q2: Operating Budgets
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 7
Q2: Operating Budgets
The operating budget is created by preparing
the following individual budgets, in this order:
• Revenue budget
• Production budget
• Direct materials budget
• Direct labor budget
• Manufacturing overhead budget
• Inventory and cost of goods sold budget
• Support department budgets
• Budgeted income statement
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2: Financial Budgets
The financial budget is created by preparing
the following individual budgets, in this order:
• Capital budget
• Long-term financing budget
• Cash budget
• Budgeted balance sheet
• Budgeted statement of cash flows
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 9
Q2: Operating Budget Example
Stanley J, Inc., makes a tool used by auto mechanics that sells for
$68/unit. It expects to sell 6,000 units in April and 7,000 units in May.
Stanley J prefers to end each period with a finished goods inventory
equal to 10% of the next period’s sales in units and a direct materials
inventory equal to 20% of the direct materials required for the next
period’s production. The company never has any beginning or ending
work-in-process inventories. There were 400 units in finished goods
inventory on April 1. Prepare the revenue and production budgets for
April.
Production budget
Revenue budget
Budgeted sales in units in April
6,000 Budgeted sales in units in April
Budgeted selling price per unit
$68.00 Desired ending FG inventory
Budgeted revenues
$408,000 Total units required
Less: beginning FG inventory
Required production in units
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
6,000
700
6,700
(400)
6,300
Slide # 10
Q2: Operating Budget Example
Stanley J’s product uses 0.3 pounds of direct material per unit, at a cost
of $4/lb. There were 220 lbs. of direct material on hand on April 1.
Assume that budgeted production for May is 6,500 units. Prepare the
direct materials purchases and usage budget for April.
Direct materials budget
Required production in units
DM required per unit, in pounds
Total DM required, in pounds
Less: Beginning DM inventory
Plus: Desired ending DM inventory
Required DM purchases in pounds
Budgeted DM cost per pound
Budgeted cost of DM
6,300
0.3
1,890
(220)
390
2,060
$4.00
$8,240
Usage Budget = 1,890 pounds * $4 per pound = $7,560
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q2: Operating Budget Example
Stanley J’s product uses 0.2 hours of direct labor at a cost of $12/hr.
Prepare the direct labor budget for April.
Direct labor budget
Required production in units
DL required per unit, in hours
Total DL hours required
Budgeted cost per DL hour
Budgeted cost of DL
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
6,300
0.2
1,260
$12.00
$15,120
Slide # 12
Q2: Operating Budget Example
Stanley J’s budgeted fixed manufacturing overhead for April is $167,000,
and variable manufacturing overhead is budgeted at $6 per direct labor
hour. Prepare the manufacturing overhead budget for April.
Manufacturing overhead budget
Total DL hours required
Budgeted variable overhead per DL hour
Total budgeted variable overhead
Budgeted fixed overhead
Total budgeted overhead
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
1,260
$6.00
$7,560
$167,000
$174,560
Slide # 13
Q2: Operating Budget Example
Assume that Stanley J’s April 1 direct materials inventory had a cost of
$1,560. Prepare the April ending inventories budget for direct materials.
Ending inventories budgets
Budgeted cost of DM purchases
$8,240
Beginning DM inventory
$854
DM available for use
$9,094
Budgeted cost of desired ending DM inventory:
[6,500 units x 0.3 lbs/unit] x 20% x $4/lb
$1,560
Budgeted cost of DM to be used
$7,534
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q2: Operating Budget Example
Prepare the April ending inventories budget for finished goods.
Budgeted cost of DM to be used
Budgeted cost of DL
Total budgeted overhead
Total budgeted manufacturing costs
Required production in units
Budgeted manufacturing cost per unit
Budgeted ending FG inventory in units
Budgeted cost of ending FG inventory
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
$7,534
$15,120
$174,560
$197,214
6,300
$31.3037
700
$21,913
Slide # 15
Q2: Operating Budget Example
Assume that Stanley J’s April 1 finished goods inventory had a cost of
$12,146. Prepare the cost of goods sold budget for April.
Cost of goods sold budget
Beginning FG inventory
Total budgeted manufacturing costs
Cost of goods available for sale
Less: budgeted ending FG inventory
Budgeted cost of goods sold
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
$12,146
$197,214
$209,359
$21,913
$187,447
Slide # 16
Q2: Operating Budget Example
Stanley J’s budget for April includes $22,000 for administrative costs,
$34,000 for fixed distribution costs, $18,000 for research and
development, and $13,000 for fixed marketing costs. Additionally, the
budgeted variable costs for distribution are $0.75/unit sold and the
budgeted variable costs for marketing are 4% of sales revenue. Prepare
the support department budget for April.
Support department budget
Administration
$22,000
Distribution: Fixed costs
$34,000
Variable costs
$4,500 $38,500
Research & development
$18,000
Marketing: Fixed costs
$13,000
Variable costs
$16,320 $29,320
Total budgeted support department costs
$107,820
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q2: Operating Budget Example
Suppose that Stanley J’s income tax rate is 28%. Prepare the budgeted
income statement for April.
Budgeted income statement
Sales revenue
Cost of goods sold
Gross margin
Operating costs:
Administration
Distribution
Research & development
Marketing
Net income before taxes
Income taxes
Net income
© John Wiley & Sons, 2011
$408,000
$187,447
$220,553
$22,000
$38,500
$18,000
$29,320 $107,820
$112,733
$31,565
$81,168
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q4: Budget Variances
• Managers compare actual results to
budgeted results in order to
• Monitor operations, and
• Motivate appropriate performance.
• Differences between budgeted and
actual results are called budget
variances.
• Variances are stated in absolute value
terms, and labeled as Favorable or
Unfavorable.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 19
Q4: Budget Variances
• Reasons for budget variances are
investigated.
• The investigation may find:
• Inefficiencies in actual operations that can
be corrected.
• Efficiencies in actual operations that can be
replicated in other areas of the
organization.
• Uncontrollable outside factors that require
changes to the budgeting process.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 20
Q3: Static Budgets
• A budget prepared for a single level of
sales volume is called a static budget.
• Static budgets are prepared at the
beginning of the year.
• Differences between actual results and
the static budget are called static budget
variances.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q3: Flexible Budgets
• A budget prepared for a multiple levels of sales
volume is called a flexible budget.
• Flexible budgets are prepared at the beginning
of the year for planning purposes and at the end
of the year for performance evaluation.
• Flexible budgets are also used for sensitivity
analysis and to manage risk due to uncertainty.
• Differences between actual results and the
flexible budget are called flexible budget
variances.
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 22
Q3, Q4: Flexible Budget Example
Tina’s Trinkets is preparing a budget for 2006. The budgeted selling price
per unit is $10, and total fixed costs for 2006 are estimated to be $5,000.
Variable costs are budgeted at $3/unit. Prepare a flexible budget for the
volume levels 1,000, 1,100, and 1,200 units.
Sales in units
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income
© John Wiley & Sons, 2011
Volume Levels
1,000
1,100
1,200
$10,000 $11,000 $12,000
$3,000 $3,300 $3,600
$7,000 $7,700 $8,400
$5,000 $5,000 $5,000
$2,000 $2,700 $3,400
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 23
Q3, Q4: Static Budget Variances Example
Suppose that Tina’s 2006 static budget was for 1,100 units of sales. The
actual results are given below. Compute the static budget variances for
each row and discuss.
Static
Budget
Sales in units
1,100
Revenues
$11,000
$3,300
Variable costs
Contribution margin $7,700
Fixed costs
$5,000
$2,700
Operating income
© John Wiley & Sons, 2011
Static
Actual Budget
Results Variance
980
$9,604 $1,396 Unfavorable
$311 Favorable
$2,989
$6,615 $1,085 Unfavorable
$4,520
$480 Favorable
$605 Unfavorable
$2,095
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 24
Q3, Q4: Flexible Budget Variances Example
Compute the flexible budget variances for Tina and discuss the results.
Compare the flexible budget variances to the static budget variances on the
prior page.
Year-end
Flexible
Flexible Actual Budget
Budget Results Variance
Sales in units
980
980
Revenues
$9,800 $9,604
$196 Unfavorable
Variable costs
$2,940 $2,989
$49 Unfavorable
Contribution margin $6,860 $6,615
$245 Unfavorable
Fixed costs
$5,000 $4,520
$480 Favorable
Operating income
$1,860 $2,095
$235 Unfavorable
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 25
Q3, Q4: Performance Evaluation
• A static budget variance includes effects from
output volume.
• A flexible budget variance removes these
output volume effects.
• Other adjustments to the year-end flexible
budget may be made for a fair performance
evaluation, such as
• Input price changes outside the control of the
manager under evaluation
• Fixed cost increases outside the control of the
manager under evaluation
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 26
Q5: Behavior Tensions in Budgeting
• Budgets used to evaluate performance and
compensation can create behavioral tension
• Participative budgeting – when managers who are
responsible for the budgets prepare the budget
forecasts
– Can result in budgetary slack – when managers set
targets so low that goals can be met easily (and bonuses
achieved)
• Budget ratcheting – when top managers set targets
– If targets unachievable, this can result in employees
having little motivation to meet targets
• Organizations must watch for budget manipulation
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 27
Q6: Other Budgeting Approaches
• Zero based budgets are prepared without using
past information as justification.
• Rolling budgets are prepared frequently for
overlapping time periods and actual results may be
used to update the budget for the next period.
• Kaizen budgets plan cost reductions over time.
• Activity based budgets use more cost pools and
cost drivers.
• GPK and RCA budgets identify fixed and variable
cost functions at the resource center level.
• Beyond budgeting uses external benchmarks to
evaluate managers’ performance
© John Wiley & Sons, 2011
Chapter 10: Static and Flexible Budgets
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 28
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 9
JOINT PRODUCT AND BY-PRODUCT COSTING
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 1
Chapter 9: Joint Product and By-Product Costing
Learning objectives

Q1: What is a joint process, and what is the difference between a
by-product and a main product?

Q2: How are joint costs allocated?

Q3: What factors are considered in choosing a joint cost
allocation method?

Q4: What information is relevant for deciding whether to process a
joint product beyond the split-off point?

Q5: What methods are used to account for the sale of byproducts?

Q6: How does a sales mix affect joint cost allocation?

Q7: How do joint cost allocations affect decisions and
managerial incentives?
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Q1: Joint Processes and Costs
• A process that yields one or more products is
called a joint process.
• The products are called joint products.
• The costs of the process are called joint costs.
• The split-off point is the stage in the joint process
where the separate products become
identifiable.
• Joints costs are incurred prior to the split-off point.
• Costs incurred past split-off are separable costs.
• Joint products that have minimal sales value
compared to the main product are called byproducts.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Joint Processes and Costs
Sawdust
Bark
Joint costs
include DM,
DL &
Overhead.
© John Wiley & Sons, 2011
Planks
If sawdust sells for a
relatively minimal amount,
it is a byproduct.
The costs of
processing
planks further
are separable
costs.
Wall
paneling
Joint products
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q2: Methods of Allocating Joint Costs
• Physical output methods
• Can be used only when joint products are
measured the same way (e.g. pounds or feet).
• Market-based methods
• Sales value at split-off method
• Often used when all products sold at split-off.
• Net realizable value (NRV) method
• NRV = Final selling price – Separable costs.
• Constant gross margin (GM) NRV method
• The two NRV methods can be used when
some products are processed past split-off.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q2: Physical Volume Method Example
Pleasing Peaches grows peaches and processes three different peach
products that are sold to a canning company. The pounds produced for
each product, and the selling price per pound, is given below. The joint
costs of processing the 280,000 pounds of products were $70,000.
Allocate the joint costs to each product using the physical volume method.
Pounds
Product
Produced
Peach halves 160,000
Peach slices
80,000
Peach purée
40,000
280,000
© John Wiley & Sons, 2011
Selling Total Sales
Price per
Value at
Pound
Split-Off
$0.50
$80,000
$0.40
$32,000
$0.30
$12,000
$124,000
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Relative
Allocated
Weight Joint Costs
57.1%
$40,000
28.6%
$20,000
14.3%
$10,000
100.0%
$70,000
Slide # 6
Q2: Sales Value at Split-Off Method Example
Allocate the joint costs of $70,000 to each of Pleasing Peaches products
using the sales value at split-off method.
Product
Peach halves
Peach slices
Peach purée
© John Wiley & Sons, 2011
Pounds
Produced
160,000
80,000
40,000
280,000
Selling Total Sales
Price per
Value at
Pound
Split-Off
$0.50
$0.40
$0.30
$80,000
$32,000
$12,000
$124,000
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Relative
Sales
Allocated
Value Joint Costs
64.5%
25.8%
9.7%
100.0%
$45,161
$18,065
$6,774
$70,000
Slide # 7
Q2, 6: Compare the Physical Volume and
Sales Value at Split-Off Methods
Compute the gross margin for each product for each of the two allocation
methods. Discuss the differences between the two methods.
Allocated Joint
Costs
Total
Sales
Sales
Physical Value at
Value at Volume Split-Off
Product
Split-Off Method
Method
Peach halves $80,000 $40,000 $45,161
Peach slices
$32,000 $20,000 $18,065
Peach purée
$12,000 $10,000 $6,774
$124,000 $70,000 $70,000
© John Wiley & Sons, 2011
Gross Margin
Sales
Physical Value at
Volume Split-Off
Method
Method
$40,000 $34,839
$12,000 $13,935
$2,000 $5,226
$54,000 $54,000
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2, 6: Compare the Physical Volume and
Sales Value at Split-Off Methods
Compute the gross margin ratio (GM/Sales) for each product under both of
the methods and discuss.
Product
Peach halves
Peach slices
Peach purée
© John Wiley & Sons, 2011
Total
Sales
Value at
Split-Off
$80,000
$32,000
$12,000
$124,000
Gross Margin
Sales
Physical Value at
Volume
Split-Off
Method
Method
$40,000 $34,839
$12,000 $13,935
$2,000 $5,226
$54,000 $54,000
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Gross Margin Ratio
Sales
Physical Value at
Volume Split-Off
Method
Method
50.0%
43.5%
37.5%
43.5%
16.7%
43.5%
43.5%
43.5%
Slide # 9
Q2: Net Realizable Value (NRV) Method Example
Pleasing Peaches could process each of its three products beyond split off.
It could can the peach halves itself, make the peach slices into frozen
peach pie, and make juice out of the peach purée. The retail value of the
new products and the separable costs for the additional processing are
given below. Compute the joint costs allocated to each of the products
using the NRV method.
Final
Allocated
Sales Separable
Relative
Joint
Product
Value
Costs
NRV NRV
Costs
Canned peaches $180,000 $60,000 $120,000
64.2% $44,920
Peach pie
$120,000 $70,000
$50,000
26.7% $18,717
Peach juice
$50,000 $33,000
$17,000
9.1% $6,364
$350,000 $163,000 $187,000 100.0% $70,000
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 10
Q2: Constant GM NRV Method
• Under the constant GM NRV method, all products
are allocated joint costs to achieve the same gross
margin ratio (GM%).
• First compute overall gross margin and GM%:
GM = Revenue – Joint costs – Separable costs
GM% = GM/Sales
• Then compute the GM for each product:
GM = Final sales value x GM%
• All products end up with the same gross margin ratio;
for each product solve for allocated joint costs:
Final sales value – joint costs – separable costs = GM
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q2: Constant GM NRV Method Example
Compute the joint costs that Pleasing Peaches would allocate to each of
the products using the constant GM NRV method.
First compute the overall GM and GM ratio:
GM = $350,000 – $163,000 – $70,000 = $117,000
GM% = $117,000/$350,000 = 33.43%
Allocated
Final
Sales Separable
Joint Gross
Product
Value
Costs
Costs Margin
Canned peaches $180,000 $60,000
$59,829 $60,171
Peach pie
$120,000 $70,000
$9,886 $40,114
Peach juice
$50,000 $33,000
$286 $16,714
$350,000 $163,000
$70,000 $117,000
Gross
Margin
Ratio
33.4%
33.4%
33.4%
Values are rounded as appropriate.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 12
Q2, 6: Compare the NRV and
Constant GM NRV Methods
Compute the gross margin (GM) and the gross margin ratio (GM%) for each
product under NRV method. Compare this to the results of the constant
GM NRV method and discuss.
Product
Peach halves
Peach slices
Peach purée
Final
Sales
Value
$180,000
$120,000
$50,000
$350,000
Gross Margin
Gross Margin Ratio
Constant
Constant
NRV
GM NRV
NRV
GM NRV
Method
Method Method
Method
$75,080
$60,171
41.7%
33.4%
$31,283
$40,114
26.1%
33.4%
$10,636
$16,714
21.3%
33.4%
33.4%
$117,000 $117,000
33.4%
Values are rounded as appropriate.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 13
Q3: Choosing a Joint Cost Allocation Method
• Allocated joint costs should not be used in
decision making.
• Still, avoid a method that shows one product
to be unprofitable.
• Under the physical volume method, the
product with the greatest relative physical
volume is allocated the most joint costs,
regardless of product’s sales value.
• Both of the NRV methods allocate joint
costs based on the products’ “ability to
bear the cost”.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q4: Sell or Process Further Decisions
• Companies often can choose to sell a product
at the split-off point or to process it further.
• Compare the incremental revenue of
processing further to the product’s separable
costs.
• Incremental revenue of processing further
= Final sales value – Sales value at split-off
• Process further only when the incremental
revenue exceeds the separable costs.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 15
Q4: Sell or Process Further Example
Peg’s Plastic Products makes the molded plastic parts for three model car
kits, A, B & C from a joint production process. The joint costs of this
process are $150,000. In each case, Peg could decide to make the entire
kit rather than just the plastic parts. Information about the sales values and
separable costs for each kit is given below. Determine which kits Peg
should sell at the split-off point and which she should process further.
Kit
A
B
C
Final
Sales
SepIncreSales
Value at arable
mental
Value
Split-Off Costs Revenue
$200,000 $180,000 $25,000 $20,000
$120,000 $60,000 $40,000 $60,000
$80,000 $40,000 $10,000 $40,000
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
IncreSell at
mental Split-Off
Profit if
or
Process Process
Further Further?
($5,000) Sell
$20,000 Process
$30,000 Process
Slide # 16
Q5: Accounting for By-Products
• When by-products have no sales value, there
is no reason to account for them.
• Otherwise, there are two accounting methods
available:
• Recognize by-product value at time of
production
• Recognize by-product value at time of
by-product sale
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q5: Recognize By-Product Value
at Time of Production
• This method is also known as the offset approach or
the NRV approach.
• Joint cost of the main products is reduced by the
NRV of the by-products, even if by-products are not
yet sold.
• NRV of the by-products is kept in ending
inventory until sold.
• At sale of by-product, ending inventory is
reduced; there is no gain/loss on sale.
• This method allows managers to control by-products.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q5: By-Product Value Recognized
at Time of Production Example
SJ Enterprises produces a main product and one by-product in a joint
process. The joint costs totaled $480,000. The main product sells for
$10/unit and the by-product sells for $1/unit. Information about the
production and sales of the 2 products is given below. Use the NRV
method to compute the production cost per unit for the main product.
Information in Units of Each Product
Beginning ProdEnding
Inventory uction Sales Inventory
Main product
0 100,000 95,000
5,000
By-product
0 10,000 3,000
7,000
Production costs
$480,000
Less: NRV of by-product
10,000
Net joint product cost
$470,000
Net product cost per unit
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
$4.70
Slide # 19
Q5: By-Product Value Recognized
at Time of Production Example
Prepare an income statement for SJ Enterprises and compute the costs
attached to ending inventory using the NRV method, assuming that nonmanufacturing costs totaled $250,000.
Revenue: 95,000 units at $10/unit
$950,000
Cost of goods sold: 95,000 units at $4.70/unit 446,500
Gross margin
503,500
Less: nonmanufacturing expenses
250,000
Operating income
$253,500
Ending inventory:
Main product: 5,000 units at $4.70
By-product: 7,000 units at $1
Value of ending inventory for balance sheet
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
$23,500
7,000
$30,500
Slide # 20
Q5: Recognize By-Product Value
at Time of Sale
• This method is also known as the Realized Value
Approach or the RV Approach.
• Joint cost of the main products is not reduced by
the NRV of the by-products, regardless if byproducts are sold.
• NRV of the by-products is not kept in ending
inventory.
• At sale of by-product, either Other Income is
recorded or Cost of Goods Sold is reduced.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q5: By-Product Value Recognized
at Time of Sale Example
SJ Enterprises produces a main product and one by-product in a joint
process. The joint costs totaled $480,000. The main product sells for
$10/unit and the by-product sells for $1/unit. Information about the
production and sales of the 2 products is given below. Use the RV method
to compute the production cost per unit for the main product.
Information in Units of Each Product
Beginning ProdEnding
Inventory uction Sales Inventory
Main product
0 100,000 95,000
5,000
By-product
0 10,000 3,000
7,000
Production costs
Net product cost per unit
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
$480,000
$4.80
Slide # 22
Q5: By-Product Value Recognized
at Time of Sale Example
Prepare an income statement for SJ Enterprises and compute the costs
attached to ending inventory using the RV method, assuming that nonmanufacturing costs totaled $250,000. By-product sales is recorded as
other income.
Revenue: 95,000 units at $10/unit
$950,000
By-product sales: 3,000 units at $1/unit
3,000
Total revenue
953,000
Cost of goods sold: 95,000 units at $4.80/unit 456,000
Gross margin
497,000
Less: nonmanufacturing expenses
250,000
Operating income
$247,000
Ending inventory:
Main product: 5,000 units at $4.80
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
$24,000
Slide # 23
Q7: Decision Making & Joint Cost
• Joint cost information is required for
financial statement & tax return preparation
when production does not equal sales
(inventory and cost of goods sold).
• Allocated joint costs are irrelevant for most
decisions, especially regarding individual
products
• Joint cost information should not be
used to make product mix decisions.
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 24
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 7
Activity-Based Costing and
Management
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 1
Chapter 7: Activity-Based Costing and
Management
Learning objectives

Q1: What is activity-based costing (ABC)?

Q2: What are activities and how are they identified?

Q3: What process is used to assign costs in an ABC system?

Q4: What is activity-based management?

Q5: What are GPK and RCA?

Q6: How does information from ABC, GPK, and RCA affect
managers’ incentives and decisions?
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Q1: Activity-Based Costing (ABC)
• ABC is a method of cost system refinement.
• Indirect costs are divided into “sub-pools” of
costs of activities.
• Activity costs are then allocated to the final cost
objects using a cost allocation base (more
commonly called cost drivers in ABC).
• Activities are measurable, making it more likely
that cost drivers can be found so that a final cost
object will absorb indirect costs in proportion to
its use of the activity.
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Traditional Costing vs. ABC
Traditional costing systems:
Indirect
Costs
Indirect costs are
grouped into one (or a
small number) of cost
pools; a cost allocation
base assigns costs to
the individual products
© John Wiley & Sons, 2011
Product A
Direct Costs
Product B
Direct Costs
Product C
Direct Costs
The individual
products are
the final cost
objects.
Direct costs are
traced to the
individual
products.
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q1: Traditional Costing Systems
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q1: Traditional Costing vs. ABC
Activity-based costing systems:
Activity 1
Indirect
Costs
Activity 2
Product A
Direct Costs
Product B
Direct Costs
Product C
Direct Costs
Activity 3
Indirect costs are
assigned (traced &
allocated) to various
pools of activity costs.
© John Wiley & Sons, 2011
Activity costs are
allocated to
products
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
The individual products
are the final cost objects
& direct costs are traced
to the individual products.
Slide # 6
Q1: ABC Costing Systems
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 7
Q2: What are Activities and How are They
Identified?
The ABC cost hierarchy includes the following activities:
• organization-sustaining – associated with overall
organization
• facility-sustaining – associated with single manufacturing
plant or service facility
• customer-sustaining – associated with a single customer
• product-sustaining – associated with product lien or
single product
• batch-level – associated with each batch of product
• unit-level – associated with each unit produced
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2: ABC Cost Hierarchy Example
Some of the costs incurred by the Dewey Chargem law firm are listed
below. This firm specializes in immigration issues and family law. For each
cost, identify whether the cost most likely relates to a(n) (1) organiz-ationsustaining, (2) facility-sustaining, (3) customer-sustaining, (4) productsustaining, (5) batch-level, or (6) unit-level activity and explain your choice.
Cost
Cost Hierarchy Level
Bookkeeping software
Salary for partner in charge of family law
Office supplies
Subscription to family law update journal
Telephone charges for local calls
Long distance telephone charges
Window washing service
Salary of receptionist
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 9
Q3: What Process is Used to Assign Costs in an
ABC system?
1. Identify the relevant cost object.
2. Identify activities and group homogeneous
activities.
3. Assign costs to the activity cost pools.
4. Choose a cost driver for each activity cost
pool.
5. Calculate an allocation rate for each
activity cost pool.
6. Allocate activity costs to the final cost
object.
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 10
Q3: How Are Cost Drivers Selected for
Activities?
• For each activity, determine its place
in the ABC cost hierarchy.
• Look for drivers that have a good
cause-and-effect relationship with the
activities’ costs.
• Use a reasonable driver when there is
no cause-and-effect relationship.
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q3: ABC in Manufacturing Example
Alphabet Co. makes products A & B. Product A is a low-volume
specialty item and B is a high-volume item. Estimated factory- wide
overhead is $800,000, and the number of DL hours for the year is
estimated to be 50,000 hours. DL costs are $10/hour. Each product
uses 2 DL hours. Compute the traditional cost of each product if
Products A & B use $25 and $10 in direct materials, respectively.
First, compute the estimated overhead rate:
Estimated overhead rate = $800,000/50,000 hours = $16/hour.
Direct materials
Direct labor (2hrs @ $10)
Overhead (2 hrs @ $16)
© John Wiley & Sons, 2011
Product A
$25
20
32
$77
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Product B
$10
20
32
$62
Slide # 12
Q3: ABC in Manufacturing Example
Alphabet Co. is implementing an ABC system. It estimated the costs
and activity levels for the upcoming year shown below.
Estimated Estimated Activity Levels
Costs
Prod. A Prod. B
Total
Machine set-ups
$200,000 3,000 2,000 5,000
Inspections
140,000
500
300
800
Materials handling
80,000
400
400
800
Machining dep’t
320,000 12,000 28,000 40,000
Quality control dep’t
60,000
600
150
750
$800,000
Cost Driver
# set-ups
# inspections
# mat’l requistions
# machine hours
# tests
First, compute the estimated overhead rate for each activity:
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 13
Q3: ABC in Manufacturing Example
Estimated
Costs
Estimated Activity
Overhead Rate
$40
Machine set-ups
$200,000 5,000 set-ups
$40/setup
/setup
$175
Inspections
140,000
800 inspections
$175/inspection
/inspection
Materials handling
80,000
800 mat’l requistions $100
$100/requisition
/requisition
$8
Machining dep’t
320,000 40,000 machine hours
$8/mach
/machhrhr
$80
Quality control dep’t
60,000
750 tests
$80/test
/test
$800,000
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q3: ABC in Manufacturing Example
Alphabet recently completed a batch of 100 As and a batch of 100 Bs.
Direct material and labor costs were as budgeted. Information about each
batch’s use of the cost drivers is given below. Compute the overhead
allocated to each unit of A and B.
100 As 100 Bs
Machine set-ups
60
10
Inspections
10
2
Overhead allocated: 100 As 100 Bs
Materials handling
4
2
Machine set-ups
$2,400 $400
Machining dep’t
240
120
Inspections
1,750
350
Quality control dep’t
3
1
Materials handling
400
200
Machining dep’t
1,920
960
Quality control dep’t
240
80
Overhead for batch $6,710 $1,990
Overhead per unit
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
$67.10 $19.90
Slide # 15
Q3: ABC in Manufacturing Example
Compute the total cost of each product and compare it to the costs
computed under traditional costing.
Prod A Prod B
Direct material $25.00 $10.00
Direct labor
20.00 20.00
Overhead
67.10 19.90
$112.10 $49.90
Total
Traditional costing
assigned $77 to a unit of
Product A and $62 to a
unit of Product B.

The only difference between the two costing systems is that
Product A is assigned more overhead costs under ABC.

The additional overhead assigned to Product A reflects Product
A’s consumption of resources.
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 16
Q4: Activity-Based Management (ABM)
• ABM is the process of using ABC information to
evaluate opportunities for improvements in an
organization.
• Examples include managing & monitoring
• customer profitability
• product and process design
• environmental costs
• quality
• constrained resources
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q4: ABM & Customer Profitability
• Activities can be defined so that different costs of
servicing customers are accumulated.
• Examples include
• analyzing the types of bank transactions used
by various categories of customers
• comparing the costs of servicing insurance
contracts sold to married versus single
individuals
• comparing the costs of different distribution
channels
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q4: ABM & Product/Process Improvements
• Activities can be defined so that the costs of stages
of production or of a business process are
accumulated.
• Examples include
• determining the costs of non-value-added
activities so the most costly can be reduced or
eliminated
• changing the steps in the accounts payable
function to reduce the number of personnel
• determining the most costly stages of product
development so that the time to market is
reduced
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 19
Q4: ABM & Environmental Costs
• Activities can be defined so that types of
environmental costs are accumulated.
• Examples include
• capturing the costs of contingent liabilities for
waste disposal site remediation
• comparing the cost of recycling packaging to the
cost of disposal
• computing the costs of treating different kinds of
emissions
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 20
Q4: ABM & Quality Costs
• Activities can be defined so that categories of costs
of managing quality are accumulated.
• Common categories of quality costs are
• costs of prevention activities
• costs of appraisal activities
• costs of production activities
• costs of postsales activities
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q5: What are GPK and RCA?
• Costing approaches similar to ABC because they
involve multiple pools and multiple drivers
• GPK can be described as marginal planning and
cost accounting
– Each cost is traced to a cost center (smaller than a
department) which performs a single repetitive activity,
and is the responsibility of one manager)
– Output measures tracks the volume of resource use
– Costs are segregated into proportional (change with
volume in resource use) and fixed
– Practical capacity is used for estimated allocation rate
volumes
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 22
Q5: Capacity Definitions
• Theoretical capacity – maximum assuming
continuous, uninterrupted operations 365 days/year
• Practical capacity – typical operating conditions
• Budgeted capacity – expected volume for the
upcoming time period
• Idle/excess capacity – difference between activity
capacity used and one of the above measures of
capacity
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 23
Q5: What are GPK and RCA?
• Resource Consumption Accounting (RCA)
• Builds on GPK and ABC principles
• Each cost is assigned to a resource cost pool
– Labor and machinery are often placed in different cost
pools since they are different types of resources
– RCA involves a significantly larger number of cost pools
than traditional accounting
– Like GPK, segregates proportional and fixed costs
– Utilizes theoretical rather than practical capacity for
allocating fixed costs
• More likely to focus manager attention on reducing idle and nonproductive resource time
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 24
Q5: Benefits/Drawbacks to GPK/RCA
• Benefits
– Generates multi-level internal income statements useful
for short terms decisions because it focuses on marginal
cost
– Increases cause & effect awareness among managers
– Categorizes costs (and generates profit margin) at the
product, product group, division, and company level
– Avoids arbitrary allocations of fixed costs
• Drawbacks
– Can be costly to implement
– Can result in a large number of variances to analyze
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 25
Q5: Comparison of ABC, GPK, and RCA
ABC
GPK
RCA
Character of cost
accounting system
Full costing
Marginal costing
Full and marginal
costing
Location of data
Database separate
from general ledger
Comprehensive
accounting system
Comprehensive
accounting system
Primary decision
relevance
Mid- to long-term
Short-term
Short-, Mid-, and
Long term
Allocation of
overhead based on
Activities
Cost Centers
Resources and/or
activities
Cost Drivers
Activity –Based
Resource Output
related
Resource output or
activity related
Fixed cost
allocation rate
denominator
Actual, budgeted,
or practical
capacity
Budgeted or
practical capacity
Theoretical
capacity
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 26
Q6: Decision Making with ABC, GPK, and RCA
• Benefits
• more accurate and relevant product cost information
• employees focus attention on activities
• measurement of the costs of activities and business
processes
• identify non-value-added activities and reduce costs
• Costs
• systems can be difficult to design and maintain
• more information must be captured
• decision makers may not use the information
appropriately
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 27
Q6: Uncertainties in ABC and ABM
Implementation
• Judgment is required when determining
activities.
• Judgment is required when selecting cost
drivers.
• Denominator levels for cost drivers are
estimates.
• ABC information includes unitized fixed
costs, so decision makers must use ABC
information correctly.
© John Wiley & Sons, 2011
Chapter 7: Activity-Based Costing and Management
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 28
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 8
Measuring and Assigning Support
Department Costs
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 1
Chapter 8: Measuring and Assigning Support
Department Costs
Learning objectives







Q1: What are support departments, and why are their costs
allocated to other departments?
Q2: What process is used to allocate support department costs?
Q3: How is the direct method used to allocate support costs to
operating departments?
Q4: How is the step-down method used to allocate support costs
to operating departments?
Q5: How is the reciprocal method used to allocate support costs to
operating departments?
Q6: What is the difference between single- and dual-rate
allocations?
Q7: How do support cost allocations affect decisions and
managerial incentives?
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Q1: Support versus Operating Departments
• The operating departments of an organization
produce products or services that generate
revenue.
• The support departments of an organization
produce products or provide services to the
operating and other support departments.
• The support department costs are common
costs that are shared between two or more
other departments.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Reasons for Allocating Support
Department Costs
• External reporting
• Motivation
• appropriate consumption of support
department resources
• efficiency of support department
• monitor consumption of support
department services
• Decision making
• product pricing
• make or buy decisions
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q1: Support Department Allocation Process
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q2: Process for Allocating Support
Department Costs
1. Clarify allocation purpose
2. Identify cost pools
3. Assign costs to cost pools
4. Choose allocation bases for each cost pool
5. Choose allocation method; allocate support
department costs
6. Allocate updated operating department costs to
units of goods or services, if relevant
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 6
Q2: Process for Allocating Support
Department Costs
1. Clarify allocation purpose

if the purpose is to motivate the use of the services
of a newly formed department, perhaps no costs
should be allocated

if the purpose is to discourage operating department
managers from over-use of the services of support
departments, then a rate per unit of service might be
large and not based on actual costs

if the purpose is to determine the full cost of products
or services for long-term pricing decisions, then all
support costs should be allocated
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 7
Q2: Process for Allocating Support
Department Costs
2. Identify cost pools
• the purpose will determine whether both fixed
and variable support department costs
should be allocated
• the purpose will determine which costs
should be allocated
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2: Process for Allocating Support
Department Costs
3. Assign costs to cost pools
• some costs will be direct to the cost pool
(e.g. toner cartridge costs would be direct to
the “variable copying costs” cost pool)
• some costs will be indirect to the cost pool
(e.g. rent costs for an entire facility would be
indirect to the “information technology costs”
cost pool)
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 9
Q2: Process for Allocating Support
Department Costs
4. Choose allocation bases for each cost pool
• an allocation base with a good cause-andeffect relationship with the cost pool provides
a reasonable allocation rate
• users of support department services will
carefully monitor their consumption of the
allocation base
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 10
Q2: Process for Allocating Support
Department Costs
5. Choose allocation method and allocate support
department costs
• in this chapter we cover three allocation
methods
• each of these three methods could be
implemented using
• a single- or dual-rate approach (covered later)
• actual or budgeted costs and allocation bases
(covered later)
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q2: Process for Allocating Support
Department Costs
6. Allocate updated operating department costs to
units of goods or services, if relevant
• for some decisions, this may not be relevant
• for long-term pricing decisions, this is likely to
be relevant
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 12
Q3: The Direct Method of Allocating
Support Department Costs
• The direct method ignores the fact that
support departments use each others’
services.
• Each support department’s costs are
allocated only to operating departments.
• This method is the easiest
computationally and the easiest to
explain.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 13
Q3: The Direct Method Example
Philco Toys makes metal and plastic toys in separate departments. It has
two support departments, Accounting and Information Systems. Philco has
decided to allocate Accounting department costs based on the number of
employees in each department and Information Systems costs based on
the number of computers in each department. Given the information below,
use the direct method to allocate support department costs.
Support Dep’ts
Total department costs
Number of employees
Number of computers
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
(48,000)
Information Systems
Totals
© John Wiley & Sons, 2011
$0
27,789
20,211
$0
(72,000)
36,000
36,000
$0
$0
$449,789
$238,211
$688,000
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q3: The Direct Method Example
Plastic Products is allocated
Plastic and Metal Product share
22/(22+16) of Accounting
Info Systems costs equally
department costs, and Metal
because they have the same
Products is allocated
number of computers in each
16/(22+16). Notice that the
department. Notice that the
number of employees in the
number of computers in the
support departments is ignored
departments
is ignored
Support Dep’ts support
Operating
Departments
under the direct method.
under the direct method.
Total department costs
Number of employees
Number of computers
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
(48,000)
Information Systems
Totals
© John Wiley & Sons, 2011
$0
27,789
20,211
$0
(72,000)
36,000
36,000
$0
$0
$449,789
$238,211
$688,000
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 15
Q4: The Step-Down Method of Allocating
Support Department Costs
• The step-down method allocates some (but not all)
support department costs to other support
departments.
• The first support department’s costs are allocated
to all operating and support departments that use
its services.
• Each subsequent support department’s costs are
allocated to all operating and support departments
that use its services, except any support
department whose costs were already allocated.
• Allocation order must be determined.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 16
Q4: The Step-Down Method Example
Given the information for Philco, use the step-down method to allocate
support department costs. Allocate the costs of the support department that
provides the largest percentage of its services to the other support
department first.
First determine
allocation order:
Accounting provided 4/(4+22+16) = 4/42
= 9.5% of its services to Info Systems.
Information Systems provided 4/(4+3+3) = 4/10 = 40% of its
services to Accounting, so Information Systems goes first.
Support Dep’ts
Total department costs
Number of employees
Number of computers
© John Wiley & Sons, 2011
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q4: The Step-Down Method Example
Given the information for Philco, use the step-down method to allocate
support department costs.
Now perform the allocation:
Support Dep’ts
Total department costs
Number of employees
Number of computers
Operating Departments
Metal
Plastic
Info
AccTotal
Products
ounting Systems Products
$48,000 $72,000 $386,000 $182,000 $688,000
45
16
22
4
3
16
3
3
6
4
Allocate costs:
Accounting
(76,800)
(48,000)
Information Systems
28,800
$0
Totals
© John Wiley & Sons, 2011
44,463
27,789
32,337
20,211
$0
$0
(72,000)
21,600
21,600
21,600
$0
$0
$0
$435,389
$452,063
$223,811
$235,937
$659,200
$688,000
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q4: The Step-Down Method Example
Info Systems costs are allocated
to Accounting, Plastic, & Metal
based on each department’s
number of computers compared
to total non-Info Systems
Support Dep’ts
computers: 4+3+3=10.
Total department costs
Number of employees
Number of computers
Accounting costs are allocated
only to Plastic & Metal based on
each department’s number of
employees compared to total
non-Accounting and non-Info
Operatingemployees:
Departments
Systems
22+16=38
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
(76,800)
Information Systems
28,800
$0
Totals
44,463
32,337
$0
(72,000)
21,600
21,600
$0
$0
$452,063
$235,937
$688,000
Total costs allocated out of Accounting are now higher because of
the Info Systems costs allocated to Accounting.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 19
Q4: The Step-Down Method Example
(22/38) x $76,800
(4/10) x $72,000
(16/38) x $76,800
(3/10) x $72,000
Support Dep’ts
Total department costs
Number of employees
Number of computers
(3/10) x $72,000
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
(76,800)
Information Systems
28,800
$0
Totals
© John Wiley & Sons, 2011
44,463
32,337
$0
(72,000)
21,600
21,600
$0
$0
$452,063
$235,937
$688,000
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 20
Q5: The Reciprocal Method of Allocating
Support Department Costs
• The reciprocal method allocates all support
department costs to other support
departments.
• The first step is to compute the total costs of
each support department when its usage of
other support department services is taken
into consideration.
• Support department costs are then allocated
to all other operating and support
departments that consume its services.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q5: The Reciprocal Method Example
Given the information for Philco, use the reciprocal method to allocate
support department costs.
First determine total costs for each support department by writing an equation for its
costs (use A and IS as abbreviations).
A = $48,000 + [4/(4+3+3)] x IS; IS = $72,000 + [4/(4+22+16)] x A
Then solve: A = $48,000 + (4/10) x [$72,000 + (4/42) x A]
A = $48,000 + $28,800 + (16/420) x A]
(404/420) x A = $76,800
A = $76,800 x (420/404) = $79,842
IS = $72,000 + (4/42) x $79,842 = $79,604
Support Dep’ts
Total department costs
Number of employees
Number of computers
© John Wiley & Sons, 2011
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 22
Q5: The Reciprocal Method Example
Given the information for Philco, use the reciprocal method to allocate
support department costs.
Now perform the allocation:
Support Dep’ts
Total department costs
Number of employees
Number of computers
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
Information Systems
Totals
© John Wiley & Sons, 2011
(79,842)
7,604
41,822
(79,842)
7,604
41,822
31,842 (79,604)
(79,604)
23,881
31,842
23,881
$0
$0 $451,703
$451,703
$0
$0
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
30,416
30,416
23,881
23,881
$0
$0
$236,297
$236,297
$688,000
Slide # 23
Q5: The Reciprocal Method Example
These numbers are the
solutions to the
simultaneous equations.
(4/42) x $79,842
(22/42) x $79,842
(16/42) x $79,842
Support Dep’ts
Total department costs
Number of employees
Number of computers
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
Information Systems
Totals
© John Wiley & Sons, 2011
(79,842)
7,604
41,822
(79,842)
7,604
41,822
31,842 (79,604)
(79,604)
23,881
31,842
23,881
$0
$0 $451,703
$451,703
$0
$0
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
30,416
30,416
23,881
23,881
$0
$0
$236,297
$236,297
$688,000
Slide # 24
Q5: The Reciprocal Method Example
(4/10) x $79,604
(3/10) x $79,604
(3/10) x $79,604
Support Dep’ts
Total department costs
Number of employees
Number of computers
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
Total
$48,000 $72,000 $386,000 $182,000 $688,000
3
4
22
16
45
4
6
3
3
16
Allocate costs:
Accounting
Information Systems
Totals
© John Wiley & Sons, 2011
(79,842)
7,604
41,822
(79,842)
7,604
41,822
31,842 (79,604)
(79,604)
23,881
31,842
23,881
$0
$0 $451,703
$451,703
$0
$0
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
30,416
30,416
23,881
23,881
$0
$0
$236,297
$236,297
$688,000
Slide # 25
Q6: Single- versus Dual-Rate Allocation
• In single-rate allocation, each cost pool
includes fixed and variable costs.
• In dual-rate allocation, fixed and variable
costs are in separate cost pools.
• Both methods can be employed with the
direct, step-down, or reciprocal methods.
• The prior three examples used the singlerate allocation method.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 26
Q6: Single- versus Dual-Rate Example
Philco has decided to use the direct method and allocate variable
Accounting costs based on the number of transactions and fixed
Accounting costs based on the number of employees. The Info Systems
variable costs will be allocated based on the number of service requests
and fixed costs will be allocated based on the number of computers. The
required information is presented below.
Support Dep’ts
Total department variable costs
Total department fixed costs
Number of transactions
Number of employees
Number of service requests
Number of computers
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
$20,000 $22,000 $186,000 $100,000
$28,000 $50,000 $200,000
$82,000
20
32
140
86
3
4
22
16
18
5
12
8
4
6
3
3
Now perform the allocation…
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 27
Q6: Single- versus Dual-Rate Example
Total department variable costs
Total department fixed costs
Number of transactions
Number of employees
Number of service requests
Number of computers
Support Dep’ts
Operating Departments
AccInfo
Plastic
Metal
ounting Systems Products
Products
$20,000 $22,000 $186,000 $100,000
$28,000 $50,000 $200,000
$82,000
20
32
140
86
3
4
22
16
18
5
12
8
4
6
3
3
Allocate variable costs:
Accounting
(20,000)
12,389
7,611
(22,000)
13,200
8,800
$0
$211,589
$116,411
$0
(50,000)
$0
16,211
25,000
$241,211
11,789
25,000
$118,789
$0
$0
$452,800
$235,200
Information Systems
Total variable costs
Allocate fixed costs:
Accounting
Information Systems
Total fixed costs
Total fixed and variable costs
© John Wiley & Sons, 2011
$0
(28,000)
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 28
Q7: Decision Making with Support Costs
• Support costs need to be considered when
evaluating decisions such as make/buy, keep/drop,
special order, and constrained resource
• Necessary to isolate relevant support costs
– This may not be the same as the allocated support costs
– For example, outsourcing an operating department may
not result in a reduction in support department costs
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 29
Q7: Establishing Transfer Prices for
Support Departments
• Transfer prices should be set to motivate efficient
use of the support department resources
– If transfer price is set too high, user departments may
outsource the service
– If transfer price is set too low, user departments may
utilize the support department inefficiently
• The best transfer pricing approach is the
Opportunity Cost approach
– Each department is charged an amount that reflects the
value of any opportunities forgone by not using the
service for its next best alternative use.
– This is often difficult in practice so most companies use a
cost based or market based transfer pricing policy
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 30
Q7: Estimated versus Actual
Support Costs and Rates
A department’s allocation
of support department costs
=
the allocation
rate
x
the department’s
consumption
of the allocation base
Either of these could be estimated or actual.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 31
Q7: Estimated versus Actual
Support Costs and Rates
the allocation
rate
x
the department’s
consumption
of the allocation base
Using actual rates and actual consumption provides the
best measure of the cost of support services; it is the
most accurate but the least timely.
The purpose of the cost allocation will determine
whether actual or estimated rates, and actual or
estimated consumption, should be used.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 32
Q7: Estimated versus Actual
Support Costs and Rates
• Actual rates and consumption may be
required for some types of government
contracts.
• Most federal grants to educational institutions
allow the use of estimates.
• Using an actual rate means that support
service users are affected by
• inefficiencies of support department managers
• changes in the consumption of support services by other
users
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 33
Q7: Other Common Cost Allocation Methods
• Other cost allocation purposes may require the
allocation to
• be perceived as “fair”
• be based on the user’s “ability to bear” the cost
• Under the stand-alone method, a common cost is
allocated based on information about the users’
consumption of the cost.
• Under the incremental cost allocation method, a
“primary user” is allocated the bulk of the common
cost and the secondary user is allocated only the
increment in cost that it caused.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 34
Q7: Stand-Alone versus Incremental Cost
Allocation Methods Example
Leslie has a job interview with Big Co. next month in New York City. Her
plane ticket cost $300, and she will need to spend $125/night for 2 nights in
a hotel. She estimates that she will spend $50 in cab fares and $50 for
food. Big Co. has promised to reimburse her actual costs. After this trip
was arranged, Small Co., also located in New York City, called her for an
interview. If she interviews with Small Co. while she’s there, she will spend
an additional $125 for another night at a hotel, and another estimated $40
in cab fares and food. Think of at least two ways to allocate Leslie’s travel
costs using the stand-alone method. Discuss the merits of each.
1. Compute the total cost of the trip and divide it by 2, since
there are 2 interviews.
2. Compute the total cost of the trip and allocate 2/3 of it to
Big Co. and 1/3 to Small Co. since she is spending 2 of
the 3 nights in NYC for the Big Co. interview.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 35
Q7: Stand-Alone versus Incremental Cost
Allocation Methods Example
Perform the calculations for your two versions of the cost allocation under
the stand-alone method. Then allocate the travel costs using the
incremental cost allocation method. Which is more appropriate? Why?
Estimated total costs:
Plane ticket
Hotel
Cab fares & food
Total
If shared equally, then this is
$300 $407.50 for each company; if
375 Big Co. is allocated 2/3 of the
140 cost then $543.33 is allocated
$815
to Big Co. and $271.67 is
allocated to Small Co.
Under the incremental cost allocation method, Big Co. is most
likely to be considered the primary user. Since Leslie’s budgeted
travel costs were $300 + $250 + $50 + $50 = $650 before she
was offered the Small Co. interview, Big Co. is allocated $650
and Small Co. is allocated $815 – $650 = $165.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 36
Q7: Fixed Price versus Cost-Based Contracts
• Under fixed price contracts, vendors provide
products or services for a specified price.
• Under cost-based contracts, the price is
computed based on the actual cost of the
products or services.
• may be necessary for research & new product development
• vendors are not motivated to control costs
• vendors may be motivated to inappropriately allocate
common costs
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 37
Appendix 8A: Excel Solver
and the Reciprocal Method
• Solving the simultaneous equations required for
the reciprocal method can be tedious when
there are 3 or more support departments.
• Excel Solver can be used to solve these
equations.
• Refer to Appendix 4A for help with using
Excel Solver.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 38
Appendix 8A: Excel Solver
and the Reciprocal Method
• Set up a “change cell” for each support
department’s total costs.
• The target function is the sum of the change
cells.
• The simultaneous equations are entered as
constraints; one constraint per equation.
© John Wiley & Sons, 2011
Chapter 8: Measuring and Assigning Support Department Costs
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 39

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Description ‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment-3 Strategic Management (MGT 401) Due Date: 4th May 2024 @ 23:59 Course Name: Strategic Management Student’s Name: Course Code: MGT401 Student’s ID Number: Semester:

Description College of Administration and Finance Sciences Form No 4- Internship Report Cover Page Student`s name: Student`s ID #: Training

Description College of Administration and Finance Sciences Form No 4- Internship Report Cover Page Student`s name: Student`s ID #: Training Organization: Trainee Department: Field Instructor Name: Field Instructor Signature: Course Title: CRN: Internship Start Date: Internship End Date: Academic Year/Semester: For Instructor’s Use only Instructor’s Name: Total Training Hours /280

Description College of Administration and Finance Sciences Form No 4- Internship Report Cover Page Student`s name: Student`s ID #: Training

Description College of Administration and Finance Sciences Form No 4- Internship Report Cover Page Student`s name: Student`s ID #: Training Organization: Trainee Department: Field Instructor Name: Field Instructor Signature: Course Title: CRN: Internship Start Date: Internship End Date: Academic Year/Semester: For Instructor’s Use only Instructor’s Name: Total Training Hours /280

Description Abdulmajed Mentorship plays a crucial role in the personal and professional development of healthcare caregivers, contributing to

Description Abdulmajed Mentorship plays a crucial role in the personal and professional development of healthcare caregivers, contributing to enhanced clinical skills, emotional well-being, confidence, and job satisfaction. By providing guidance, support, and opportunities for growth, mentorship facilitates the transfer of knowledge, experience, and best practices from experienced professionals to their

Description SAAD ALSITAMI M 14 COLLAPSE Mentorship is crucial in the personal and professional development of healthcare caregivers, playing a

Description SAAD ALSITAMI M 14 COLLAPSE Mentorship is crucial in the personal and professional development of healthcare caregivers, playing a significant role in enhancing clinical skills, emotional well-being, confidence, and job satisfaction. Below are specific examples of how mentorship contributes positively to healthcare professionals and the broader healthcare environment. Enhancement

Description Writing the final training report according to the attached instructions  Major: E-commerce,  Below you will find the directed tasks that

Description Writing the final training report according to the attached instructions  Major: E-commerce,  Below you will find the directed tasks that I perform in this training, and you can add some that are related to the Major. Collaborating with sellers to gather accurate and comprehensive product information, including descriptions, specifications,