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10 -1
Activity- and Activity- and Strategy-Based Strategy-Based Responsibility Responsibility
AccountingAccounting
现代责任会计现代责任会计
CHAPTERCHAPTER
10 -2
1. Define responsibility accounting, and describe four types of responsibility centers.
2. Compare and contrast functional-based, activity-based, and strategic-based responsibility accounting systems.
3. Discuss methods of evaluating and rewarding managerial performance.
4. Explain process value analysis.5. Describe activity performance measurement.
ObjectivesObjectivesObjectivesObjectives
10 -3
Responsibility accounting is a system that measures the results of each responsibility
center according to the information managers need to operate their centers.
Responsibility accounting is a system that measures the results of each responsibility
center according to the information managers need to operate their centers.
1. Responsibility Accounting
1. Responsibility Accounting
394
10 -4
1) Types of Responsibility Centers1) Types of Responsibility Centers
Cost center成本中心 : A responsibility center in which a manager is responsible only for costs.
Revenue center收入中心 : A responsibility center in which a manager is responsible only for sales.
10 -5
ACCOUNTING INFORMATION USED TO MEASURE ACCOUNTING INFORMATION USED TO MEASURE PERFORMANCEPERFORMANCE
CapitalCapital Cost Sales Investment Other Cost Sales Investment Other
Cost center x
Revenue center Direct cost xonly
Profit center x x
Investment center x x x x
394
10 -6
Types of Responsibility CentersTypes of Responsibility Centers
Profit center利润中心 : A responsibility center in which a manager is responsible for both revenues and costs.
Investment center投资中心 : A responsibility center in which a manager is responsible for revenues, costs, and investments.
10 -7
Return on InvestmentReturn on Investment
ROI = Operating income
Average operating assets
Beginning net book value + Ending net book value
2
2) Investment center performance measuring: 397
10 -8
Margin and TurnoverMargin and TurnoverMargin and TurnoverMargin and Turnover
ROI = Margin x Turnover
Operating IncomeSales
SalesAverage operating assets
10 -9
1. It encourages managers to focus on the relationship among sales, expenses, and investments.
2. It encourages managers to focus on cost efficiency.
3. It encourages managers to focus on operating asset efficiency.
Advantages of ROIAdvantages of ROI
10 -10
1) It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm.
2) It encourages managers to focus on the short run at the expense of the long run.
Disadvantages of ROIDisadvantages of ROI
10 -11
Economic value added (EVA) is after-tax operating profit minus the total annual cost of capital.
EVA = After-tax operating income – (Weighted average cost of capital * Total capital employed)
EVA = After-tax operating income – (Weighted average cost of capital * Total capital employed)
10 -12
There are two steps involved in computing cost of capital:
1. Determine the weighted average cost of capital (a percentage figure)
2. Determine the total dollar amount of capital employed
10 -13 例 :Weighted Average Cost of Capital
Amount Percent x After-Tax Cost = Weighted Cost
Bonds $2,000,000 0.25 0.009(1 –0.4) = .054 0.0135
Equity 6,000,000 0.75 0.06 + 0.06 = .120 0.0900
Total $8,000,000 0.1035
Thus, the company’s weighted average is 10.35%.
Thus, the company’s weighted average is 10.35%.
10 -14
A number of companies have discovered that EVA helps to encourage the right kind of behavior from their divisions 分部 in a way that emphasis on operating income alone cannot. The underlying reason is EVA’s reliance on the true cost of capital.
Behavioral Aspects of EVA
10 -15
Behavioral Aspects of EVAIn many companies, the responsibility for investment decisions rests with corporate management. As a result, the cost of capital is considered a corporate expense. If a division builds inventories and investment, the cost of financing that investment is passed along to the overall income statement and does not show up as a reduction from the division’s operating income.
10 -16
对于两个责任中心而言The value of a transferred good is revenue to the selling division and cost to the buying division. This value is called transfer pricing.
4)Transfer Pricing4)Transfer Pricing 转移定价转移定价4)Transfer Pricing4)Transfer Pricing 转移定价转移定价
10 -17
(1) divisional performance measures 分部业绩
(2) firm-wide profits 公司整体利润
(3) divisional autonomy 分部自主权
Transfer PricingTransfer PricingTransfer PricingTransfer Pricing
Transfer pricing affects both transferring divisions and the firm as a whole through its impact on--
10 -18
The Transfer Pricing Illustration
Tyson Manufacturers produces small appliances. The Small Parts Division produces parts used by the Small Motors Division. The parts also are sold to other manufacturers and
wholesalers.
10 -19
The Transfer Pricing Illustration
The Small Motors Division is operating at 70 percent
capacity. A request is received for 100,000 units of a certain
model at $30 per unit. A component for this motor can be supplied by the Small Parts Division. The transfer price is
$8 despite the Small Parts Division only experiencing a
cost of $5 per unit.
10 -20
The Transfer Pricing Illustration
Using the $8 transfer price, the total cost is $31 per unit,
calculated as follows:
Direct materials $10Transferred-in component 8Direct labor 2Variable overhead 1Fixed overhead 10 Total cost $31
Direct materials $10Transferred-in component 8Direct labor 2Variable overhead 1Fixed overhead 10 Total cost $31
10 -21
The Transfer Pricing Illustration
The Small Motors Division is operating at 70 percent capacity,
so the $10 fixed cost is not relevant. Recalculating the cost--
The Small Motors Division can pay the Small Parts Division $8 per unit and still make a substantial
contribution to the overall profitability of the Division.
Direct materials $10Transferred-in component 8Direct labor 2Variable overhead 1Total cost $21
Direct materials $10Transferred-in component 8Direct labor 2Variable overhead 1Total cost $21
10 -22
Negotiated Transfer PricesNegotiated Transfer Prices
When imperfections exist in competitive markets for the
intermediate product, market price may no longer be suitable.
When imperfections exist in competitive markets for the
intermediate product, market price may no longer be suitable.
10 -23
Negotiated Transfer PricesNegotiated Transfer Prices
In this case, negotiated transfer prices may be a practical
alternative. Opportunity costs can be used to define the boundaries
of the negotiation set.
In this case, negotiated transfer prices may be a practical
alternative. Opportunity costs can be used to define the boundaries
of the negotiation set.
10 -24
Disadvantages of Negotiated Transfer Prices
Disadvantages of Negotiated Transfer Prices
1. A division manager who has private information may take advantage of another divisional manager.
2. Performance measures may be distorted by the negotiated skills of managers.
3. Negotiation can consume considerable time and resources.
10 -25
Despite the disadvantages, negotiated price transfer prices
offer some hope of complying with the three criteria of goal
congruence, autonomy, and accurate performance evaluation.
Despite the disadvantages, negotiated price transfer prices
offer some hope of complying with the three criteria of goal
congruence, autonomy, and accurate performance evaluation.
10 -26
以 Opportunity Cost Approach确定以 Opportunity Cost Approach确定
This approach identifies the minimum and maximum price that a selling division would be willing to accept and the maximum price that a buying division would be willing to pay.
The minimum transfer price is the transfer price that would leave the selling division no worse off if the goods were sold to an internal division than if the
good were sold to an external party (floor).
The minimum transfer price is the transfer price that would leave the selling division no worse off if the goods were sold to an internal division than if the
good were sold to an external party (floor).
The maximum transfer price is the transfer price that would leave the buying division no worse off if an
input were purchased from an internal division than if the good were purchased externally (ceiling).
The maximum transfer price is the transfer price that would leave the buying division no worse off if an
input were purchased from an internal division than if the good were purchased externally (ceiling).
2. Responsibility Accounting model2. Responsibility Accounting model
Assigning responsibility 划分职责 Establishing performance measures or
benchmarks 建立考核基准 Evaluating performance 评价业绩 Assigning rewards 给予奖励
The responsibility accounting model is defined by four essential elements:
pp.282~3
10 -28
Functional-based 基于功能的
Activity-based 基于作业的 Strategic-based 基于策略的
Types of Responsibility Accounting
Types of Responsibility Accounting
Management accounting offers the following three types of responsibility accounting systems.
10 -29
A functional-based responsibility accounting system assigns responsibility to organizational units( 组织单元 ) and expresses( 描述 ) performance measures( 业绩考核 ) in financial terms( 以数据的方式 ).
1) Functional-Based Responsibility Accounting System
1) Functional-Based Responsibility Accounting System
It was developed when most firms were operating in relatively stable( 稳定的 ) environments.
10 -30
Responsibility is Responsibility is DefinedDefined
Individual in Charge 责任人
Operating Efficiency
Financial Outcomes
Unit Budgets
Static Standards
Standard Costing
Currently Attainable Stds.
Financial EfficiencyActual vs. Standard
Controllable CostsFinancial Measures
Performance Measures Performance Measures are Establishedare Established
Performance is Performance is MeasuredMeasured
Individuals are Individuals are Rewarded Based on Rewarded Based on
Financial PerformanceFinancial PerformanceProfit Sharing
分成
Promotions 晋升 Bonuses 花红
Salary Increases 加薪
Organizational Unit
Elements of Functional-Based Responsibility Accounting
10 -31
Why would managers not provide good service? There are three reasons:
1. They may have low ability
2. They may prefer not to work as hard as needed
3. They may prefer to spend company resources on perquisites
Incentive Pay for ManagersIncentive Pay for ManagersIncentive Pay for ManagersIncentive Pay for Managers
10 -32
Incentive Pay for ManagersIncentive Pay for ManagersIncentive Pay for ManagersIncentive Pay for Managers
Perquisites are a type of fringe benefit given to managers over and above a salary.
A nice office
Use of a company car or jet
Expense accounts
Paid country club memberships
10 -33
An activity-based responsibility accounting system assigns responsibility to processes and uses both financial and nonfinancial measures of performance. (含非财务指标考核 )
2) Activity-Based Responsibility Accounting System
2) Activity-Based Responsibility Accounting System
It is the responsibility accounting system developed for those firms operating in continuous improvement environments
( 持续发展的环境 ).
10 -34
Responsibility is Defined
Team
Value Chain
Optimal
Process Oriented 以过程为导向
Dynamic
Value-Added
Time Reductions
Cost Reductions
Quality Improvement
Trend Measures
Performance Measures are Established
Performance is Performance is MeasuredMeasured
Individuals are Rewarded Individuals are Rewarded Based on Multidimensional Based on Multidimensional
PerformancePerformanceGain-
Sharing
Promotions Bonuses
Salary Increases
Financial
ProcessElements of an Activity-Based Responsibility Accounting System (p285 )
10 -35
3 ) Strategy-Based Responsibility Accounting System
3 ) Strategy-Based Responsibility Accounting System
A strategic-based responsibility accounting system (Balanced Scorecard) translates the mission and strategy of an organization into operational objectives and measures for four different perspectives:
The financial perspective
The customer perspective
The process perspective
The infrastructure (learning and growth) perspective
Responsibility Is Responsibility Is DefinedDefined
Financial
Process
Communica-tion Strategy
Alignment of Objectives
Balanced Measures
Link to Strategy
Financial Measures
Process Measures
Customer Measures
Infrastructure Measures
Performance Measures Performance Measures Are EstablishedAre Established
Performance Is Performance Is MeasuredMeasured
Individuals Are Rewarded Individuals Are Rewarded Based on Multidimensional Based on Multidimensional
PerformancePerformanceGain-
Sharing
Promotions Bonuses
Salary Increases
Infrastructure
Customer
288Elements of an Activity-Based Responsibility Accounting System
10 -37
Activity-based management (ABM) is a systemwide, integrated approach that focuses management’s attention
on activities with the objective of improving customer value and the profit achieved by providing this value.
3. Activity-Based Management (ABM)
3. Activity-Based Management (ABM)
Activity-based management encompasses both product costing and process value analysis.
10 -38
Cost Dimension
Activity-Based Management 二维模型
ResourcesResources
Process DimensionProcess Dimension
Driver Driver AnalysisAnalysis
Why?Why?
PerformancPerformance Analysise Analysis
How well?How well?
Products Products and and
CustomersCustomers
ActivitiesActivities
What?What?
10 -39
Process value analysis is fundamental to activity-based responsibility accounting, focuses on accountability for
activities rather than costs, and emphasizes the maximization of systemwide performance instead of
individual performance.
1) Process Value Analysis1) Process Value Analysis1) Process Value Analysis1) Process Value Analysis
Process value analysis is concerned with:
Driver analysis
Activity analysis
Activity performance measurement
10 -40
2) Activity Analysis2) Activity Analysis2) Activity Analysis2) Activity Analysis
Activity analysis is the process of identifying, describing, and evaluating the activities an organization performs.
Activity analysis should produce four outcomes:
What activities are done.
How many people perform the activities.
The time and resources are required to perform the activities.
An assessment of the value of the activities to the organization.
10 -41
Those activities necessary to remain in business are called
value-added activities.
Those activities necessary to remain in business are called
value-added activities.
Value-Value-Added Added
ActivitiesActivities
Value-Value-Added Added
ActivitiesActivities
10 -42
Activities needed to comply with the reporting
requirements, such as the SEC, are value-added by a
mandate.
Activities needed to comply with the reporting
requirements, such as the SEC, are value-added by a
mandate.
Value-Value-Added Added
ActivitiesActivities
Value-Value-Added Added
ActivitiesActivities
10 -43
A discretionary activity is classified as value-added provided it simultaneously satisfies three conditions:
Value-Value-Added Added
ActivitiesActivities
Value-Value-Added Added
ActivitiesActivities
The activity produces a change of state.
The change of state was not achievable by preceding activities.
The activity enables other activities to be performed.
10 -44
All activities other than those essential to remain in business
are referred to as nonvalue-added activities.
All activities other than those essential to remain in business
are referred to as nonvalue-added activities.
NonvalueNonvalue-Added -Added
ActivitiesActivities
NonvalueNonvalue-Added -Added
ActivitiesActivities
10 -45
Nonvalue-Nonvalue-Added Added
ActivitiesActivities
Nonvalue-Nonvalue-Added Added
ActivitiesActivities
Scheduling 工序安排 Moving 移动 Waiting 等候 Inspecting 检验 Storing 贮存
10 -46
Activity Analysis
Activity elimination
Activity selection
Activity reduction
Activity sharing
Activity Analysis Can Reduce Costs in Four Ways:
10 -47
Efficiency
Quality
Time
Measures of Activity Performance
Measures of Activity Performance
10 -48
Measures of Activity Performance
Financial measures of activity efficiency include:
• Value and nonvalue-added activity cost reports
• Trends in activity cost reports
• Kaizen standard setting
• Benchmarking
• Life-cycle costing
10 -49
Value- and Nonvalue-Added Cost Reporting
Activity Activity Driver SQ AQ SP
Welding Welding hours 10,000 8,000 $40
Rework Rework hours 0 10,000 9
Setups Setup hours 0 6,000 60
Inspection Number of inspections 0 4,000 15
Value-added standards call for their elimination
10 -50
Value- and Nonvalue-Added Cost Reporting
Activity Activity Driver SQ AQ SP
Welding Welding hours 10,000 8,000 $40
Rework Rework hours 0 10,000 9
Setups Setup hours 0 6,000 60
Inspection Number of inspections 0 4,000 15
Value-added standards call for their elimination
10 -51
Value-added costs = SQ x SP
Nonvalue-added costs = (AQ – SQ)SP
Where SQ = The value-added output level of an activity
SP = The standard price per unit of activity output measure
AQ = The actual quantity used of flexible resources or the practical activity capacity acquired for committed resources
Formulas
10 -52
Welding $400,000 $ - 80,000 $320,000
Rework 0 90,000 90,000
Setups 0 360,000 360,000
Inspection 0 60,000 60,000
Total $400,000 $430,000 $830,000
Value- and Nonvalue-Added Cost Report
Value-Added Nonvalue- ActualValue-Added Nonvalue- Actual Activity Costs Added Costs CostsActivity Costs Added Costs Costs
10 -53
Welding -$80,000 $ 50,000 $ 30,000
Rework 90,000 70,000 20,000
Setups 360,000 200,000 160,000
Inspection 60,000 35,000 25,000
Total $430,000 $355,000 $235,000
Nonvalue-Added CostsNonvalue-Added Costs Activity 2003 2004 ChangeActivity 2003 2004 Change
Trend Report: Nonvalue-Added Costs
10 -54
The EndThe EndThe EndThe End
Chapter ThirteenChapter Thirteen