i have to prepare assignment on manageral accounting practices of accompany like ABC etc. here i am going to attach sample file
PowerPoint Presentation 담백미 (Dambackmi) Cost Accounting Easy to understand / Practical issue Easy-access to data (Owner & POS System) ? Why dAMBACKMI 2 Billion KRW Initial investment for land & building Facilities & Utensil 150 million KRW 2002 2009 2018 30 million KRW Accumulated Depreciation - 120 Million KRW for 10 years 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Final Land & Building 2.0 2.1 2.2 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3.0 3.1 3.2 3.3 3.5 3.6 3.7 3.7 Initial investment 0.15 0.16 0.16 0.16 0.16 0.17 0.18 0.18 0.19 0.2 0.2 4.0 Evaluation of the Investment Scenario #1 Deposit Bank - Average Interest rate(4%) Scenario #2 Buy Samsung Electronic Stock 5,200(2002) 49,500(2018) /past opportunity cost/ 19,04 He wants to rent this restaurant ▧ Income (rent fee) \ 7 million / month ▧ Sell the Utilities & utensil \ 30 million ▧ Opportunity cost : 7 million / month ▧ Sunk cost : 120 million ▧ His actual wage is….. 3million?? ( Summary 11,000,000.0 KRW Net Income Rent fee 7,000,000.0 KRW 1,000,000.0 KRW Depreciation / His wage Is 3,000,000 KRW Recommendation for my friend 1. Hire manager & find another job (more than 3M) 2. Study the stock market, or buy Samsung stocks 3. 7million won(Rent)/month is big money “Enjoy your life” 4. If you guys have more idea.. Restaurant’s Accounting Information Direct Materials 수입육 Imported meat 2,000,000 V a ri a b le d ir e c t m a te ri a l 돼지고기 Pork 2,500,000 소고기 Beef 25,000,000 면 Noodle 300,000 쌀 Rice 700,000 야채 vegetable 1,500,000 과일 Fruit 300,000 각종양념류 A variety of herbs 500,000 주류 Beer/Soju 2,000,000 음료수 Beverages 250,000 Direct Labor 요리사 cook(4people) 11,300,000 V a ri a b le d ir e c t m a te ri a l아르바이트 part-time job 800,000 홀서빙 hall server 2,400,000 홀서빙2 hall server2 2,400,000 홀서빙3 hall server3 2,400,000 Manufacturing Overhead 정수기 Water purifier 80,000 In d ir e c t m a te ri a l물티슈/티슈 Wipes / tissues 250,000 숯 Charcoal 800,000 주방용품 Kitchenware 300,000 자판기 Vending machine 100,000 화장실용품 Toilet supplies 100,000 세제등소모품 Consumables such as detergents 100,000 청소용품/소독비용 Cleaning supplies / disinfection costs 80,000 주유비 Gasoline expenses 300,000 In d ir e c t la b o r 주차관리 Parking management person 850,000 공사비 construction expenses 500,000 4대보험 The four major insurance policies 1,500,000 O th e r m a n u fa c tu ri n g o ve rh e a d 화재보험 Fire insurance 200,000 상하수도 Water and water supply 200,000 ADT Caps ADT CAPS 100,000 CCTV CCTV 65,000 전기세 Electric costs 900,000 가스비용 Gas costs 800,000 부가가치세 VAT 2,000,000 Direct Materials A d m in is tr a ti v e e xp e n se 쓰레기처리비용 Waste disposal costs 170,000 차량관리비 Vehicle management cost 500,000 카드사 Credit card fee(3%) 2,700,000 통신/인터넷요금 Communications/Internet Rate 50,000 S e lli n g E xp e n se 판촉물제작 Promo production 100,000 마케팅비용 Marketing Costs 100,000 기타비용 Other Costs 1,500,000 Type of business chosen (restaurant) does not have any beginning inventory accounts ><><><><><><><>< data="" was="" used="" to="" prepare="" two="" types="" of="" income="" statements:="" income="" statement="" absorption="" costing="" variable="" costing="" absorption="" costing="" sales="" 81,473,100="" sales="" discount="" service="" 1,363,000="" general="" discount="" 409,200="" 1,772,200="" actual="" sales="" 79,700,900="" less="" cogs="" variable="" direct="" material="" 35,050,000="" variable="" direct="" labor="" 19,300,000="" variable="" moh="" 4,510,000="" fixed="" moh="" 4,715,000="" 63,575,000="" gross="" margin="" 16,125,900="" less="" selling="" and="" administrative="" expense="" variable="" 4,900,000="" fixed="" 220,000="" 5,120,000="" net="" income="" 11,005,900="" sales="" 81,473,100="" sales="" discount="" service="" 1,363,000="" general="" discount="" 409,200="" 1,772,200="" actual="" sales="" 79,700,900="" less="" variable="" expenses="" variable="" direct="" material="" 35,050,000="" variable="" direct="" labor="" 19,300,000="" variable="" moh="" 4,510,000="" variable="" cogs="" 58,860,000="" variable="" s&e="" 4,900,000="" 63,760,000="" contribution="" margin="" 15,940,900="" less="" fixed="" expenses="" fixed="" moh="" 4,715,000="" fixed="" s&e="" 220,000="" 4,935,000="" net="" income="" 11,005,900="" variable="" costing="" evaluation="" ●="" as="" we="" don’t="" have="" any="" inventory="" (lean="" manufacturing).="" the="" result="" in="" the="" net="" income="" of="" absorption="" costing="" and="" variable="" costing="" will="" be="" the="" same.="" ●="" for="" convenience,="" the="" restaurant="" can="" choose="" either="" of="" them="" as="" they="" don’t="" create="" so="" much="" difference.="" depending="" on="" the="" focus="" and="" perspective="" of="" the="" owners.="" absorption="" vs="" variable="" costing="" advantages="" ●="" variable="" costing:="" 1.="" easy="" to="" understand="" 2.="" consistent="" with="" cvp="" analysis="" 3.="" a="" product’s="" variable="" cost="" provides="" a="" better="" basis="" for="" the="" pricing="" decision="" ●="" absorption="" costing:="" 1.="" fixed="" moh="" is="" treated="" the="" same="" as="" the="" other="" product="" costs,="" direct="" material="" and="" direct="" labor="" 2.="" most="" firms="" that="" use="" cost-based="" pricing="" base="" their="" price="" on="" absorption="" costing="" data="" 3.="" external="" reporting="" and="" income="" tax="" law="" require="" absorption="" costing="" abc="" costing="" why="" is="" abc="" costing?="" •="" abc="" costing:="" assign="" more="" indirect="" costs="" (overhead)="" into="" direct="" costs="" compared="" to="" traditional="" costing.=""> More accurate to show the actual production cost • Job order costing: Cost are traced and allocated to jobs and then the costs of the job are divided by the number of units in the job => Unable to do so in restaurant context as each job just consume not too much time, job costs tends to share among many product (food types) • Process costing is used when a single product is produced on a continuing basis or for a long period of time. => Not the characteristics of restaurant products - food ABC costing (monthly): Step 1 Activity cost pool Activity Measure • Customer orders => Number of customer orders: Assigned all costs of resources that are taking and processing customer orders • Customer relations => Number of active customers: Assigned all cost associated with maintaining relations with customers • Customer size daily => Number of customer going to the restaurant as activity will differ depending on peak day and bottom day • Other => Not applicable: assigned all restaurant-sustaining costs and unused capacity costs Step 1: Define activities, activities cost pools and activity measures ABC costing: Step 2 Step 2: Assign overhead costs to activity cost pools Activity-based costing system: Direct material , direct labor, all types of insurance, ADT CAP S, CCTV, VAT, parking management person sa lary, vehicle management costs, wage dispos al costs, water purifier are excluded because the owner can directly trace these cost to the number of customer orders. Other costs are a lso excluded because of no clarity in cost spe cification ABC costing: Step 2 ABC costing: Step 2 ABC costing: Step 3 - 400 customer orders - 500 customer served Step 3: Calculate activity rate: The restaurant will have these total activities for each activity cost pool Activity cost pools Total cost ($) Total activity Activity rate Customer orders 1,796,000 400 customer orders 4,490 won per order Customer relations 1,013,000 600 customers 2,026 won per customer Customer size daily 1,562,000 600 customers 3,124 won per customer ABC costing: Step 4 Customer 1: There is a first-year birthday party for the first son of Hwang family 1. The number of guests invited is 50 people 2. To prepare for the guests enough food, family has reserved 100 orders in case there will be inviters family will also come. Each order will cost 청계산 양념소갈비 (24,000) + 초당두부 된장찌개 + 공기밥 (3000) +육사시미 (25000)=52,000 won per order Step 4: Assigning overhead to products ABC costing: Step 4 Activity cost pools Activity rate Activity ABC cost (won) Activity cost pools Customer orders 4,490 100 449,000 Customer orders Customer relations 2,026 50 101,300 Customer relations Customer size daily 3,124 50 156,200 Customer size daily Step 4: Assigning overhead to products ABC costing: Step 5 Customer margin (Profitability) Analysis Assumption: Order cost: 52,000 won per order Number of labor working day in a month: 30 days (to calculate direct labor within a day) Direct material: 38,000 won per order Step 5: Prepare management report ABC costing: Step 5 Step 5: Prepare management report Sales 5,200,000 Direct cost Direct material 3,800,000 Direct labor 643,333.33 ABC cost assignment Customer order 449,000 Customer relation 101,300 Customer size daily 156,200 Customer margin 50,166.67 Conclusion • As there are many food in the menu, the effort to build up everything could need more time. However for special orders for a big event, there could be some kind of calculation basing on ABC costing to see how much can we discount to the customer to retain our profit but still can gain customer positive attitude. Ethical Issues Financial accounting -investors, -tax auditors, -share holders Managerial accounting -managers, -decision making Consequense Withholding information Misleading information Competence Conflicts of interest Ethical issue 1 • ABC costing is more accurate than the traditional costing in determining actual cost to produce any product • However, the effort to do the ABC costing for the restaurant is very high effort and there will be a chance that the accountant can switch the method between traditional costing and activity based costing for convenience and distort the cost for profit purpose. => There is a need for the consistent policy inside the restaurant to clarify the announcement of types of accounting costing used and the reasons • Activity-based costing can solve problems relating to OH costs not proportional to production volume (High volume products are overcosted, low-volume products are undercosted). • For traditional costing this kind of problem will easily appear. Some products are overcosted and reports a lower product margin and the contrasting direction could also possible. => It seems possible that the accountant under the benefits given by our competitors will just show the traditional accounting and emphasizes manager attention to products which seems to be profitable but it seems bring less profit for