# 会计代写|中级管理会计代写Intermediate Management Accounting代考|ACCG6011

## 会计代写|中级管理会计代写Intermediate Management Accounting代考|The problem of overheads

In Chapter 4 we considered the traditional approach to job costing (that is, deriving the full cost of a unit of output where each unit of output differs from the others). We may recall that this approach involves collecting the direct costs for each job. These are the costs that can be clearly linked to, and measured in respect of, the particular job. The indirect costs (overheads), which cannot be linked to products in the same way, are allocated, or apportioned, to product cost centres and then charged to individual jobs using appropriate overhead recovery rates.

In the past, this approach has worked reasonably well, largely because overhead recovery rates (that is, rates at which overheads are absorbed by jobs) were typically much lower for each direct labour hour than the wage rate paid to direct workers. We have now, however, reached the position where overheads are often far more significant. It is not unusual for overhead recovery rates to be between five and ten times the hourly wage rate. Where production is dominated by direct labour that is paid, say, $£ 15$ an hour, it may be of no great consequence to assign overheads using an overhead recovery rate of, say, $£ 1$ an hour. It becomes much more so, however, where the overhead recovery rate is, say, $£ 75$ an hour. This can result in very arbitrary product costing. Even a small change in the amount of direct labour worked can have a huge effect on the total cost calculated for a job. This is not because direct labour is highly paid, but rather because of the effect of direct labour hours on the overhead cost loading. In modern manufacturing, direct labour often plays a small part in the production process and overhead costs have little connection to direct labour hours spent on each job. Thus, where a direct labour overhead rate is still being used, it will only add to the arbitrary nature of product costing.

Once the various support activities have been identified, along with their costs and the factors that drive these costs, $A B C$ requires three steps:
1 Establishing an overhead cost pool for each support activity. There will be just one cost pool for each separate cost driver. The cost pools are broadly equivalent to cost centres in the traditional approach as will be discussed shortly.
2 Assigning the total cost associated with each support activity to the relevant cost pool.
3 Charging the units of output with the total cost within each pool using the relevant cost driver.

Step 3, above, involves dividing the amount in each cost pool by the estimated total usage of the cost driver to derive a cost per unit of the cost driver. This unit cost figure is then multiplied by the number of units of the cost driver used by a particular unit of output, to determine the amount of overhead cost to be attached to it (or absorbed by it). Example $5.2$ should make this process clear.

From the table we can see there are two types of cost driver: activity drivers and resource drivers. The first measures the frequency, or intensity, with which an activity is performed (such as the number of purchase orders) and the second measures the amount of resources consumed to carry out the activity (such as maintenance staff hours).

When identifying relevant cost drivers, a trade-off may need to be made between the level of accuracy required and the costs of collecting the information. Take the example of a large manufacturer making many different products, with each product having several support activities. Here, there may be a vast number of cause-and-effect links between the products and the various support activities. It may, therefore, be possible to identify dozens of cost drivers. The more sophisticated the costing system, however, the more expensive it is to operate. It may be decided, therefore, to limit the number of cost drivers by using the same cost driver for a group of support activities relating to a particular unit of output.
The key steps in the ABC process are shown in diagrammatic form in Figure 5.1.

# 管理会计代考

## 会计代写|中级管理会计代写Intermediate Management Accounting代考|The problem of overheads

1 为每个支持活动建立一个间接费用池。每个单独的成本动因只有一个成本池。成本池大致相当于传统方法中的成本中心，稍后将讨论。
2 将与每个支持活动相关的总成本分配到相关成本池。
3 使用相关成本动因以每个池内的总成本对产出单位收费。

ABC 过程的关键步骤如图 5.1 所示。

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