Transcript Building Resource Consumption Accounting Expertise

RCA Discussion:
The Concept of Responsiveness
Larry R. White, CMA, CFM, CPA, CGFM
Executive Director
Resource Consumption Accounting Institute
1
Resource Consumption Accounting
• RCA Inherits Core Principles from German
Cost Management (GPK)
– GPK is a Well Developed Standard Costing
System
– Principles Applied in Practice since the Late
1940’s
– Implemented by 3,000+ Companies
• RCA Creates an Integrated Economic
Model of Operations for Decision Making
– Enterprise Optimization
– Principle Based
– Superior Marginal Analytics
Capacity
Analysis and
Management
Process
Analysis and
Management
RCA
Resource
view
Advantages
GPK
CapacityFocused
Process view
Advantages
ABC
ActivityFocused
2
Managerial Costing Conceptual Framework
3
IMA Managerial Costing Conceptual Framework Task Force
Modeling Concepts
Modeling Concepts
Qualitative Characteristics
4
IMA Managerial Costing Conceptual Framework Task Force
Information Use Concepts
Information Use Concepts
Qualitative Characteristics
5
IMA Managerial Costing Conceptual Framework Task Force
Reponsiveness
• The correlation between a particular
managerial objective’s output quantity and
the input quantities required to produce that
output
– It facilitates accurate marginal cost information,
– It provides insights into the nature of cause and
effect relationships, and
– It enables the costing of managerial objectives
at all levels throughout the organization.
6
Related Traditional Concepts
• Variable and Fixed Costs
• Step Fixed Costs
– Capacity Concept blended in
• RCA:
– Proportional Input output relationships
– Fixed Input output relationships
– Resource Quantities/Capacity Modeled first
7
Variability
8
Responsiveness
9
Responsiveness
Depreciation
F
Electricity
P
Depreciation
F
Floor Space
F
Depreciation
F
Supplies
P&F
Supplies
P&F
Supplies
P&F
Labor
P&F
Labor
P&F
Labor
P&F
Supervisor
F
Supervisor
Machine 1
Product 1
Product 2
Product 3
F
Machine 2
0.2
0.2
0.3
Fixed Rate per Machine Hr
0.2
0.1
0.4
Supervisor
F
Packaging
0.1
0.1
0.2
10
Proportional Rate per Machine Hr
RCA Information
Plant Maintenance Resource Pool
Output Measure: Maintenance Labor Hour
Output Quantity: 20,000 Hours
Primary Costs
Fixed
Proportional
Technician Wages
$
-
$
600,000
Supervisor Salary
$
80,000
$
General Material
$
12,000
$
Depreciation: Shop Equipment
$
50,000
$
$
142,000
$
700,000
$
6,000
$
24,000
$
$
1,100
500
$
$
10,000
$
7,600
$
34,000
$
149,600
$
734,000
100,000
-
Secondary Costs
Resource Pool
Output
Utilities
MW-Hrs
Activity/Process
Driver
HR: Benefits Adjustments
Purchase: Gen Materials
# Adjusts
# PO's
Fixed Qty Prop Qty
40
160
Fixed Qty Prop Qty
22
10
0
200
Total Resource Pool Costs
Unit Cost Rates (/20,000 Hrs)
7.48
36.70
11
www.RCAInstitute.org
[email protected]
757 288 6082
12
RCA Storyboard
S: Ancillary
Production
Equipment
S: Plant
Engineering and
Maintenance
S: Administration
Human Resources
& Accounting
HR
RP: Dryer
(Hours)
Capacity: 100
Output Qty: 100
RP: Chiller
(Hours)
Capacity: 50,000
Output Qty: 50,000
RP: Plant Maintenance
(Maint. Labor)
Capacity: 30,000
Output Qty: 30,000
RP: Admin Labor
(Labor hours)
Capacity: 17,000
Output Qty: 17,000
Legend
Acctg
S-Support
P- Production
Admin
P: Extrusion Line
RP: Extrusion Labor
(Labor hours)
Capacity; 32,000
Output Qty: 30,000
RP: Extrusion Machine1
(Machine hours)
Capacity; 17,520
Output Qty: 10,000
Department
S: Quality
Assurance
RP: QA Labor
(Labor hours)
Capacity: 14,000
Output Qty: 14,000
QA
Test
Resource Pool
Abbreviated RP
Activity
Eval
Defect
Manufacturing Costs
Product Support Cost
Budgeted Products
Product P & L’s
Common Fixed Costs
13