W413 - Activity Based Costing

Transcription

1 W413 - Activity Based Costing Pre-requisites: None Accurate information is crucial for decision-making in the business environment. Stanpak's Activity Based Costing can provide you with a more complete picture of the profits and costs of doing business. Attend this session to learn how to integrate this feature with the general ledger. Jack Scheuer Implementation Services Wednesday, 1:15 p.m. 2 Session Objectives What is activity based cost accounting? What new information does it give me? Why should I consider it? How do I gather and load the data I need to get this information? How do I utilize the information that can now be provided?

2 The Benefits of Using Activity Based Cost Accounting 3 Better evaluation of profitability Determination of what the contribution is to the bottom line Opportunities to classify customers Analysis of orders, trucks, shipping on a more realistic basis 4 Net Profit Activity Based Cost Accounting will provide a new determination of profitability Gross Profit at the order level Sales less Salesperson s cost Used for commission calculations Net Profit at the order level Sales less Actual Cost Less commission amount Less factors at the level of Dollars per each order Dollars per each line item Dollars per $100 of cost on the order

3 5 Return on Investment Opportunity Net profit provides a new way of looking at profitability By order By customer By salesperson Net profit shows what is contributing to the bottom line Net profit allows a more effective analytical approach to managing the operation 6 Financial/Cost Accounting Financial Accounting Assign a fair share of each cost to the applicable account Produce financial statements Cost Accounting Control purposes Assign controllable costs to responsibility centers Planning purposes Determine cost implications of alternative courses of action the opportunity to do some What If evaluations

4 7 Cost Accounting Typically used in a manufacturing operation Raw Materials the starting point Work in Process accumulated costs Inventory the end point Our concern is the distribution operation Selling costs General and administrative costs Financial (non-operating costs) 8 Analysis of Expenses Functions of a distributor Administration Office Sales service Sales Storage Handling Delivery Commissions

5 9 Expense Example - Rent Warehouse charge to storage Truck docks charge to delivery Order staging area charge to handling Warehouse office charge to office 10 Programs to Be Used G-1 G/L Master File Maintenance GCL Chart of Accounts Listing GMM G/L Master File Maintenance GAM Allocating Journal Maintenance GAL Allocating Journal Listing G-2 Journal Processing GAP Allocating Journal Processing GAJ Allocating Journal Register

6 11 Allocation of Expenses Every expense account must relate to a function Expense accounts covering multiple possibilities need to have sub-accounts Chart of accounts Print chart of accounts (GCL) Add sub-accounts where applicable (GMM) Decide what functions relate to each expense entry Enter the function codes (GMM) 12 Salaries and Wages Account

7 Chart Of Accounts Salaries Admin Function # Chart of Accounts Sub-Accounts Account Number Account Name Utilities Utilities Office Utilities Storage Utilities Handling Utilities - Delivery Function Number

8 15 Allocation to Sub-Accounts 16 Data Capture Starting point is the general ledger and the definition of functions for all expense accounts Month end inventory update (MIU) provides invoice and line item count G/L expense analysis (GEA) provides invoice processing costs System file configuration (ZM) allows invoice costs to be loaded for subsequent processing

9 17 Month End Inventory Update (MIU) 18 General Ledger Expense Analysis (GEA)

10 19 General Ledger Expense Analysis Report Analytical report to capture the expenses by function General Ledger Expense Analysis Report 20 System File Maintenance (ZM)

11 21 Proforma (OPF) 22 Proforma (OPF)

12 23 Break Even Warehouse Sales MINIMUM MARGINS FOR BREAK-EVEN ORDERS (Inventory Sales) TOTAL PRODUCT COST PER ORDER # of Lines $50 $100 $250 $500 $750 $1,000 $2,000 $3,000 $5,000 Warehouse % 29.1% 23.9% 22.0% 21.4% 21.0% 20.5% 20.4% 20.2% Flat Rate $ % 31.8% 25.2% 22.7% 21.8% 21.4% 20.7% 20.5% 20.3% Line Rate $ % 34.3% 26.4% 23.4% 22.3% 21.7% 20.9% 20.6% 20.4% Rate/$1 $ % 36.6% 27.6% 24.0% 22.7% 22.1% 21.1% 20.7% 20.4% % 38.7% 28.7% 24.6% 23.2% 22.4% 21.2% 20.8% 20.5% % 40.7% 29.8% 25.3% 23.6% 22.7% 21.4% 21.0% 20.6% % 42.6% 30.9% 25.9% 24.0% 23.1% 21.6% 21.1% 20.7% % 44.4% 32.0% 26.5% 24.4% 23.4% 21.7% 21.2% 20.7% % 46.1% 33.0% 27.1% 24.9% 23.7% 21.9% 21.3% 20.8% % 47.6% 33.9% 27.7% 25.3% 24.0% 22.1% 21.4% 20.9% MINIMUM G-P DOLLARS FOR BREAK-EVEN ORDERS (Inventory Sales) TOTAL PRODUCT COST PER ORDER # of Lines $50 $100 $250 $500 $750 $1,000 $2,000 $3,000 $5,000 Warehouse 1 $29 $41 $79 $141 $204 $267 $517 $768 $1,269 Flat Rate $ $34 $47 $84 $147 $209 $272 $523 $773 $1,274 Line Rate $ $40 $52 $90 $152 $215 $278 $528 $779 $1,280 Rate/$1 $ $45 $58 $95 $158 $221 $283 $534 $784 $1,285 5 $51 $63 $101 $163 $226 $289 $539 $790 $1,291 6 $56 $69 $106 $169 $232 $294 $545 $795 $1,296 7 $62 $74 $112 $175 $237 $300 $550 $801 $1,302 8 $67 $80 $117 $180 $243 $305 $556 $806 $1,307 9 $73 $85 $123 $186 $248 $311 $561 $812 $1, $78 $91 $128 $191 $254 $316 $567 $817 $1,318 Note: Above figures assume commission rate of 25%. Break Even Direct Sales 24 MINIMUM MARGINS FOR BREAK-EVEN ORDERS (Direct Sales) TOTAL PRODUCT COST PER ORDER # of Lines $50 $100 $250 $500 $750 $1,000 $2,500 $5,000 $10,000 Direct % 24.1% 20.8% 19.6% 19.2% 19.0% 18.7% 18.6% 18.5% Flat Rate $ % 26.8% 22.0% 20.3% 19.7% 19.4% 18.8% 18.6% 18.5% Line Rate $ % 29.4% 23.2% 20.9% 20.1% 19.7% 18.9% 18.7% 18.6% Rate/$1 $ % 31.8% 24.4% 21.5% 20.5% 20.0% 19.1% 18.8% 18.6% % 34.1% 25.5% 22.1% 20.9% 20.3% 19.2% 18.8% 18.6% % 36.2% 26.6% 22.7% 21.4% 20.6% 19.3% 18.9% 18.7% % 38.2% 27.7% 23.3% 21.8% 21.0% 19.5% 19.0% 18.7% % 40.0% 28.7% 23.9% 22.2% 21.3% 19.6% 19.0% 18.7% % 41.8% 29.7% 24.5% 22.6% 21.6% 19.7% 19.1% 18.8% % 43.4% 30.7% 25.0% 23.0% 21.9% 19.8% 19.1% 18.8% MINIMUM G-P DOLLARS FOR BREAK-EVEN ORDERS (Direct Sales) TOTAL PRODUCT COST PER ORDER # of Lines $50 $100 $250 $500 $750 $1,000 $2,500 $5,000 $10,000 Direct 1 $20 $32 $66 $122 $179 $235 $574 $1,139 $2,269 Flat Rate $ $25 $37 $71 $127 $184 $240 $579 $1,144 $2,274 Line Rate $ $30 $42 $76 $132 $189 $245 $584 $1,149 $2,279 Rate/$100 $ $35 $47 $81 $137 $194 $250 $589 $1,154 $2,284 5 $40 $52 $86 $142 $199 $255 $594 $1,159 $2,289 6 $45 $57 $91 $147 $204 $260 $599 $1,164 $2,294 7 $50 $62 $96 $152 $209 $265 $604 $1,169 $2,299 8 $55 $67 $101 $157 $214 $270 $609 $1,174 $2,304 9 $60 $72 $106 $162 $219 $275 $614 $1,179 $2, $65 $77 $111 $167 $224 $280 $619 $1,184 $2,314 Note: Above figures assume commission rate of 30%.

13 25 QICLOOK - TRKPROF 26 Truck Profit Report

14 27 QICLOOK - NETPROF 28 QICLOOK - NETRANK

15 29 QICLOOK Report Customer Ranking 30 CRC Customer Rank Calculator

16 31 CRC Customer Rank Calculator 32 QICLOOK Rank by Net Profit

17 33 QICLOOK Rank by Net Profit 34 Additional Resources National Paper Trade Association (NPTA) guide to profitable management Session W719 Stanpak File Structures Session T717 Using QICLOOK with Microsoft EXCEL Web Site Stanpak Documentation Rel 6.01 General Procedures Manual Stanpak Solutions Database Your current software OLDOC On-line Documentation Support personnel are available to discuss this feature

18 35 Suggested Action Plan Take a good hard look at your G/L Chart of Accounts and consider expanding it to handle the various expense accounts Follow through with assignments of the appropriate functions to the expenses As needed, set up some allocation tools Let the system do the work for you and get a better handle on your bottom line profitablity 36 Summary Where to get the data needed for Activity Based Cost Accounting Where the system displays the information What you might do to more effectively utilize the net profit information

19 37 Thank You for Attending W413 Activity Based Costing Jack Scheuer Please submit the Session Feedback Form To receive NASBA credits, please be sure to complete the Session Feedback Form and sign the class roster in the back of the room

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21 Session Feedback Form Summit 2007 Las Vegas, NV Please take a moment to evaluate this session and offer feedback. Activant uses your input to understand your needs and to determine future Summit sessions. Session Name: Session Number: Presenter s Name: How important is this topic to your job/company? Not Important Important Please rate the educational value you received from this session Low Value High Value 1. What software are you currently using? 2. How long have you personally used this software? 3. Describe the effectiveness of your instructor. 4. What is your overall evaluation of this session? 5. What could have been done to improve this session? 6. What sessions would you like to see presented at future conferences? 7. What issues will be critical to your business in the next months? Check here if you would like CPE credits. To receive credits, be sure to sign your name at the bottom of this form and sign the roster in the session room. Answering the following questions is OPTIONAL (but required for CPE Credits). Yes No Did this session meet your expectations, based on the description/objectives in the registration materials? Were the pre-requisite requirements stated in the course description appropriate? Did the session materials contribute to achieving the learning objectives? Did the equipment (screen, microphone, projector, etc.) in the room enhance the instruction? Was the time allotted for the session appropriate for the topic? Name: Company: