planning & control - luiss guido carlidocenti.luiss.it/.../2016/...control-abc-monnalisa.pdf ·...

Prof. Cristiano Busco - Dott. Fabrizio Granà

Activity-based Costing (+ Monnalisa case)

Planning & Control

The challenge of allocating indirect costs (overheads)

Direct Cost of a Cost ObjectCost that is related to the particularcost object and that can be traced toit in an economically feasible way.

Indirect Cost (Overhead) of a Cost ObjectCost that cannot be traced to the costobject in an economically feasible wayand need to be allocated to it.

Ford T (1910s) VS. VW Golf V (2004)

A comparison…

Ford T (1910s)

The Ford T

• Characteristics

– Only 1 Colour: Black!

– Few specifications

– Few and simple

components

– Simple (linear)

production process

– No support service

provided

VW Golf V (2004)

The VW Golf V

• Characteristics:

– Many specifications

– Many models

– Many sophisticated

components

– Very complex

production process

– Very complex

support service

…From a single product to a complex project…

…

…

http://www.quattroruote.it/auto/MondoAuto/attualita/immaginebig_articolo.cfm?codiceimg=52764&codedicola=46686&codice=39973&codarticolo=39973&tornaa=/auto/MondoAuto/attualita/visualizza_articolo.cfm

http://www.quattroruote.it/auto/MondoAuto/attualita/immaginebig_articolo.cfm?codiceimg=52764&codedicola=46686&codice=39973&codarticolo=39973&tornaa=/auto/MondoAuto/attualita/visualizza_articolo.cfm

Two different production systems…

Characteristics Yesterday... ...Today

•Production Process

•Product Lines

•Cost Structure

•Price Setting

•Product Life Cycle

• Simple, linear, rigid

• Very few

• > Direct

(production) costs

•Cost-based (int.)

•Long

•Complex, and flexible

•Many

• > Indirect (support)

costs

•Marked-based (ext.)

•Short

What generates cost?

• ...Today

– Great relevance of

indirect and

– fixed costs

Yesterday...

• Great relevance of

direct and

• variable costs

Volume

– Number of products

– Amount of volume-related

production factors

Activities

– Unit-level

– Batch-related

– Product-sustaining

– Facility-sustaining

Indirect Cost (Overhead) Allocation:

Traditional vs. Activity-Based Costing system

Cost Allocation - Traditional Costing Systems

12

FUNCTIONS (structures)….

Functional-departmental

view…

“Who” is consuming resources?

“Which” department?

SalesPurchasing Production

Cost Allocation - Traditional Costing Systems

Indirect Cost (Overhead) Allocation:

Traditional vs. Activity-Based Costing system

Cost Assignment - Activity Based Costing systems

SalesPurchasing

Production

Production

Process 4

Process 1

Process 2

Process 3

Ou

tpu

t

PROCESSES view

(activities)….

“Which” processes are consuming resources?

“What” activities are performed?

Cost Assignment - Activity Based Costing systems

Introduction to Activity-based costing

Traditional cost systems are the answer to the question:

“Who is consuming resources within the organization?

Which department? – reflects a functional/hierarchical

view…”

ABC requires a new kind of thinking !!!

What activities are being performed

through the usage of organizational resources?

How much does it cost to perform

organizational activities and business processes?

How much of each activity is required for the organization’s

products, services and customers?

Costing using ABC: key steps

Step 1 - Define the activities (understand organizational processes!)

Step 2 - Cost the activities (from resources expenses… to activities

expenses – how much does it cost to perform an activity)

Step 3 - Determine ‘cost drivers’ - i.e. what causes the costs to be

incurred (i.e., invoice costs driven by number of invoices;

set-up costs driven by number of production runs; testing

costs driven by number of machine hours used)

Step 4 - Calculate the ‘cost driver rate’ (e.g. set-up costs at £158

per production run) – this gives you the cost of performing

a specific activity!

Step 5 - Apply the cost driver rate to cost products or services

(according to the usage/consumption of the cost driver)

ABC Example

Activities

Machine set ups

Production

Quality control

Processing sales orders

STEP 1 – DEFINE THE ACTIVITIESProduct A (200 units)

Product B (400 units)

ABC Example

Activities Activity Cost

Machine set ups 4,300

Production 9,500

Quality control 4,000

Processing sales orders 2,000

Total costs 19,800

STEP 2 – COST THE ACTIVITIESProduct A (200 units)


ABC Example

Activities Activity Cost Cost driver

Machine set ups 4,300 Number of machine set ups

Production 9,500 Machine hours

Quality control 4,000 Number of quality inspections

Processing sales orders 2,000 Number of sales order processed

Product A (200 units)


STEP 3 – DETERMINE THE COST DRIVERS

ABC Example

Activities Activity

Cost €

Cost driver Total volume Cost driver

rate (€)

Machine

set ups

4,300 Number of machine set ups 20 215

Production 9,500 Machine hours 200 47.5

Quality

control

4,000 Number of quality

inspections

10 400

Processing

sales

orders

2,000 Number of sales order

processed

20 100

STEP 4 – DETERMINE THE COST DRIVER RATESProduct A (200 units)


ABC Example

Cost driver Cost driver

rate (€)

Product

A

Product

B

Cost of

product A

Cost of

product B

Number of

machine set

ups

215 16 4 3,440 860

Machine hours 47.5 70 130 3,325 6,175

Number of

quality

inspections

400 8 2 3,200 800

Number of

sales order

processed

100 10 10 1,000 1,000

Total 10,965 8,835

Unit cost 10,965/200 8,835/400

STEP 5 – APPLY THE COST DRIVER RATES TO

COST THE PRODUCTS

Product A (200 units)


23

Cost Study – Monnalisa(costing and performance measurement)

Case study – Monnalisa

Medium-sized Italian company operating in the fashion industry

Founded in 1968 Monnalisa designs and sells garments and

accessories for children (high quality segment of the market)

60 employees; turnover of approx . 41 Million euros

1

119

8

7

65432

1210

Designers/

Stylists

CFO /

Accountants

Production

managers

Sales /

MarketersBoard /

General Manager

Accounting

as a language!

(vocabulary)Suppliers (fabric

and accessories

manufacturers) Retailers

and Final

Consumers

Façonists

Agents

Divisa UM Qta Qta Qta Qta

A EUR 0,0129 N. 1,00 0,0129 1,00 0,0129 1,00 0,0129 1,00 0,0129

A EUR 0,0090 N. 1,00 0,0090 1,00 0,0090 1,00 0,0090 1,00 0,0090

A EUR 0,4499 N. 3,00 1,3499 3,00 1,3499 3,00 1,3499 3,00 1,3499

A EUR 0,2757 N. 4,00 1,1028 4,00 1,1028 4,00 1,1028 4,00 1,1028

A EUR 4,0000 N. 1,00 4,0000 1,00 4,0000

A EUR 4,0000 N. 1,00 4,0000 1,00 4,0000

A EUR 0,2779 N. 1,00 0,2779 1,00 0,2779 1,00 0,2779 1,00 0,2779

A EUR 0,0215 N. 1,00 0,0215 1,00 0,0215 1,00 0,0215 1,00 0,0215

A EUR 0,0179 N. 1,00 0,0179 1,00 0,0179 1,00 0,0179 1,00 0,0179

A EUR 0,0206 N. 0,50 0,0103

A EUR 0,0206 N. 0,50 0,0103

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0017 CM 111,25 0,1953 122,50 0,2151 136,83 0,2402 154,50 0,2713

A EUR 1,5000 N. 1,00 1,5000 1,00 1,5000 1,00 1,5000 1,00 1,5000

A EUR 0,0264 N. 1,00 0,0264 1,00 0,0264 1,00 0,0264 1,00 0,0264

A EUR 0,0284 N. 1,00 0,0284 1,00 0,0284 1,00 0,0284 1,00 0,0284

A EUR 0,1700 N. 1,00 0,1700 0,33 0,0561

A EUR 0,2070 N. 0,66 0,1366 0,33 0,0683

A EUR 0,3749 N. 0,66 0,2474

A EUR 0,2487 N. 1,00 0,2487

A EUR 0,0584 N. 1,00 0,0584

A EUR 0,0892 N. 1,00 0,0892 1,00 0,0892

A EUR 0,1199 N. 1,00 0,1199

A EUR 0,0099 N. 1,00 0,0099 1,00 0,0099 1,00 0,0099 1,00 0,0099

A EUR 0,0003 CM 143,75 0,0572 155,00 0,0616 169,00 0,0672 182,50 0,0726

A EUR 0,0003 CM 114,25 0,0378 134,00 0,0443 157,66 0,0521 180,00 0,0595

A EUR 0,0084 CM 57,00 0,4842 58,00 0,4927 60,00 0,5097 63,00 0,5352

A EUR 0,0005 CM 48,00 0,0265 50,50 0,0279 53,66 0,0296 57,00 0,0315

A EUR 0,0005 CM 59,50 0,0356 62,00 0,0371 65,00 0,0389 67,33 0,0403

A EUR 0,0029 CM 81,00 0,2350 83,50 0,2423 86,66 0,2514 90,00 0,2611

A EUR 0,0021 CM 60,00 0,1273 60,00 0,1273 60,00 0,1273 60,00 0,1273

9,8055 9,9082 10,0995 10,1455

T EUR 0,1277 CM C2 16,00 2,0447 16,00 2,0447 18,00 2,3003 18,00 2,3003

T EUR 0,0279 CM 3,00 0,0838 3,00 0,0838 3,00 0,0838 3,00 0,0838

T EUR 0,1277 CM C2 2,00 0,2555 2,00 0,2555 2,50 0,3194 2,50 0,3194

T EUR 0,0417 CM C2 104,50 4,3677 125,33 5,2384 154,16 6,4434 185,83 7,7671

T EUR 0,0279 CM 67,50 1,8862 83,00 2,3194 102,33 2,8596 126,66 3,5395

T EUR 0,0044 CM 10,16 0,0456 11,66 0,0524 14,27 0,0641 17,49 0,0786

8,6839 9,9944 12,0708 14,0889

18,4895 19,9027 22,1704 24,2345

<---- 10 / 12 ---->

ImportoComponente Costo Unitario Importo Importo

CINTURA IN TESS.FIB.CM3 X TG.7-12

Importo

<---- 2 / 3 ----> <---- 4 / 6 ----> <---- 7 / 9 ---->

Etichet. 80%PL 18%VI 2%EA

ET. LAVAGGIO 6 (A SECCO CON FERRO)

BOTT.AUTOMAT.2 PZ.RICOPERTO LIN.36

BOTT.PERS.MONNALISA 4FNYL LIN.40


ETICHETTA TAGLIA 10 ANNI

CARTELLINO MONNALISA MADE IN ITALY

ETICHETTA CLIENTE MADE IN ITALY

CARTELLINO SA8000









BUSTA SAGOMATA MIS.55+5+5x120S.0.03



ELASTICO MORBIDO MM.35

FIOCCO DOPPIO GRO+VELOUR DA CUCIRE

ETICHETTA MONNALISA MADE IN ITALY

MARCHIO MONNALISA PER GRUCCE

GRUCCIA CAPOSPALLA CM.30

GRUCCIA CAPOSPALLA CM.34 E9-AT34

GRUCCIA CAPOSPALLA MIS. 36 E10 S.ST

GRUCCIA CAPOSPALLA CM. 38

BUSTA SAGOMATA MIS.50+5+5x80 S.0.03

BUSTA SAGOMATA MIS.55+5+5x160s 0.03

BUSTA CON MINIGRIP CM. 6x8

NASTRO VILIDON CM.1,5

ROLLINO RETINATO MM.70

nast.Adesivo mm 40 su 31745 d.f.

COSTO Tessuti

COSTO MATERIALE

NAST RINFORZ.RIFINITO MM.5 DF

Velour

Velour

Velour

Adesivo capospalla

Fodera raso

Fodera raso

NAST.ADES.MAGL.POLYSTAR H.MM40 SBI.

NASTRO GROS GRAIN H.CM.3,7 (CINA)


COSTO Accessori

Garment components Quantity and Total Costs of a single component by size

(Accessories “A” + Fabric “T”) Unit costs

Total Material Costs by size

Total cost of Accessories (“A”) by size

Total cost of Fabric (“T”) by size 10 / 12 years

2 / 3 years 4 / 6 years

2 / 3 years 4 / 6 years 7 / 9 years


Designers/

StylistsSales /

Marketers

belt

CFO /

Accountants

Production

managers

bow

1

2

Customer Satisfaction

- Service offered

- Delivery time iiu

Divisa UM Qta Qta Qta Qta

A EUR 0,0129 N. 1,00 0,0129 1,00 0,0129 1,00 0,0129 1,00 0,0129

A EUR 0,0090 N. 1,00 0,0090 1,00 0,0090 1,00 0,0090 1,00 0,0090

A EUR 0,4499 N. 3,00 1,3499 3,00 1,3499 3,00 1,3499 3,00 1,3499

A EUR 0,2757 N. 4,00 1,1028 4,00 1,1028 4,00 1,1028 4,00 1,1028

A EUR 4,0000 N. 1,00 4,0000 1,00 4,0000

A EUR 4,0000 N. 1,00 4,0000 1,00 4,0000

A EUR 0,2779 N. 1,00 0,2779 1,00 0,2779 1,00 0,2779 1,00 0,2779

A EUR 0,0215 N. 1,00 0,0215 1,00 0,0215 1,00 0,0215 1,00 0,0215

A EUR 0,0179 N. 1,00 0,0179 1,00 0,0179 1,00 0,0179 1,00 0,0179

A EUR 0,0206 N. 0,50 0,0103

A EUR 0,0206 N. 0,50 0,0103

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0206 N. 0,33 0,0067

A EUR 0,0017 CM 111,25 0,1953 122,50 0,2151 136,83 0,2402 154,50 0,2713

A EUR 1,5000 N. 1,00 1,5000 1,00 1,5000 1,00 1,5000 1,00 1,5000

A EUR 0,0264 N. 1,00 0,0264 1,00 0,0264 1,00 0,0264 1,00 0,0264

A EUR 0,0284 N. 1,00 0,0284 1,00 0,0284 1,00 0,0284 1,00 0,0284

A EUR 0,1700 N. 1,00 0,1700 0,33 0,0561

A EUR 0,2070 N. 0,66 0,1366 0,33 0,0683

A EUR 0,3749 N. 0,66 0,2474

A EUR 0,2487 N. 1,00 0,2487

A EUR 0,0584 N. 1,00 0,0584

A EUR 0,0892 N. 1,00 0,0892 1,00 0,0892

A EUR 0,1199 N. 1,00 0,1199

A EUR 0,0099 N. 1,00 0,0099 1,00 0,0099 1,00 0,0099 1,00 0,0099

A EUR 0,0003 CM 143,75 0,0572 155,00 0,0616 169,00 0,0672 182,50 0,0726

A EUR 0,0003 CM 114,25 0,0378 134,00 0,0443 157,66 0,0521 180,00 0,0595

A EUR 0,0084 CM 57,00 0,4842 58,00 0,4927 60,00 0,5097 63,00 0,5352

A EUR 0,0005 CM 48,00 0,0265 50,50 0,0279 53,66 0,0296 57,00 0,0315

A EUR 0,0005 CM 59,50 0,0356 62,00 0,0371 65,00 0,0389 67,33 0,0403

A EUR 0,0029 CM 81,00 0,2350 83,50 0,2423 86,66 0,2514 90,00 0,2611

A EUR 0,0021 CM 60,00 0,1273 60,00 0,1273 60,00 0,1273 60,00 0,1273

9,8055 9,9082 10,0995 10,1455

T EUR 0,1277 CM C2 16,00 2,0447 16,00 2,0447 18,00 2,3003 18,00 2,3003

T EUR 0,0279 CM 3,00 0,0838 3,00 0,0838 3,00 0,0838 3,00 0,0838

T EUR 0,1277 CM C2 2,00 0,2555 2,00 0,2555 2,50 0,3194 2,50 0,3194

T EUR 0,0417 CM C2 104,50 4,3677 125,33 5,2384 154,16 6,4434 185,83 7,7671

T EUR 0,0279 CM 67,50 1,8862 83,00 2,3194 102,33 2,8596 126,66 3,5395

T EUR 0,0044 CM 10,16 0,0456 11,66 0,0524 14,27 0,0641 17,49 0,0786

8,6839 9,9944 12,0708 14,0889

18,4895 19,9027 22,1704 24,2345

<---- 10 / 12 ---->

ImportoComponente Costo Unitario Importo Importo


Importo

<---- 2 / 3 ----> <---- 4 / 6 ----> <---- 7 / 9 ---->

Etichet. 80%PL 18%VI 2%EA

ET. LAVAGGIO 6 (A SECCO CON FERRO)

BOTT.AUTOMAT.2 PZ.RICOPERTO LIN.36

BOTT.PERS.MONNALISA 4FNYL LIN.40



CARTELLINO MONNALISA MADE IN ITALY

ETICHETTA CLIENTE MADE IN ITALY

CARTELLINO SA8000









BUSTA SAGOMATA MIS.55+5+5x120S.0.03



ELASTICO MORBIDO MM.35

FIOCCO DOPPIO GRO+VELOUR DA CUCIRE

ETICHETTA MONNALISA MADE IN ITALY

MARCHIO MONNALISA PER GRUCCE

GRUCCIA CAPOSPALLA CM.30

GRUCCIA CAPOSPALLA CM.34 E9-AT34

GRUCCIA CAPOSPALLA MIS. 36 E10 S.ST

GRUCCIA CAPOSPALLA CM. 38

BUSTA SAGOMATA MIS.50+5+5x80 S.0.03

BUSTA SAGOMATA MIS.55+5+5x160s 0.03

BUSTA CON MINIGRIP CM. 6x8

NASTRO VILIDON CM.1,5

ROLLINO RETINATO MM.70

nast.Adesivo mm 40 su 31745 d.f.

COSTO Tessuti

COSTO MATERIALE

NAST RINFORZ.RIFINITO MM.5 DF

Velour

Velour

Velour

Adesivo capospalla

Fodera raso

Fodera raso

NAST.ADES.MAGL.POLYSTAR H.MM40 SBI.



COSTO Accessori

Garment components Quantity and Total Costs of a single component by size

(Accessories “A” + Fabric “T”) Unit costs

Total Material Costs by size

Total cost of Accessories (“A”) by size

Total cost of Fabric (“T”) by size 10 / 12 years


2 / 3 years 4 / 6 years 7 / 9 years


Research phase

Research, Design and Development

of the Collection

Collection

Briefing

Design phase

Management

Committee

Inter-

functional

workgroups

Paper pattern

drafting phase

PrototypingphaseCost-

Driven

Gate

Sampling phase

planning & control - luiss guido carlidocenti.luiss.it/.../2016/...control-abc-monnalisa.pdf ·...

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