Chapter 9
Download
1 / 15

Chapter 9 - PowerPoint PPT Presentation


  • 120 Views
  • Uploaded on

Chapter 9. Cost Accounting for Service Businesses and the Balanced Scorecard. Learning Objectives. LO1 Perform job order costing for service businesses. LO2 Prepare budgets for service businesses. LO3 Apply activity-based costing for a service firm.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Chapter 9' - mallorie


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Chapter 9

Chapter 9

Cost Accounting for Service Businesses and the Balanced Scorecard


Learning objectives
Learning Objectives

LO1 Perform job order costing for service businesses.

LO2 Prepare budgets for service businesses.

LO3 Apply activity-based costing for a service firm.

LO4 Compare the results of cost allocations using simplified costing versus activity- based costing.

LO5 Prepare a balanced scorecard for various business entities.


Characteristics of a service business
Characteristics of a Service Business

  • Typically have little or no inventory.

  • Labor costs often comprise 75% or more of the total costs.

  • Approximately 90% of jobs created in the U.S. in the past 20 year have been service industries.


Job order costing for service businesses
Job Order Costing for Service Businesses

  • When the amount of complexity of service provided varies from customer to customer, a job order costing system should be used.


Job cost sheet
Job Cost Sheet

  • The basic document used to accumulate costs for a service business.

  • Will indicate labor time, labor rate, and the total cost for each labor category worked.

  • Other direct costs may be traced to the individual jobs.


Budgeting for service businesses
Budgeting for Service Businesses

  • Revenue budget.

  • Labor budget.

  • Overhead budget.

  • Other direct expenses budget.

  • Budgeted income statement.


Activity based costing in a service firm
Activity-Based Costing in a Service Firm

  • Firms that use activity-based costing attempt to shift as many costs as possible out of the indirect cost pool and into direct cost pools that can be specifically traced to individual jobs.

  • Remaining costs are separated into homogeneous cost pools and allocated to individual jobs via separate allocation bases for each pool.


Activity based costing vs simplified costing
Activity-Based Costing vs. Simplified Costing

  • Activity-based costing is worthwhile to implement when different jobs use resources in different proportions.

  • Should be a cost/benefit decision as to whether to implement a more sophisticated costing system.




The four categories of a balanced scorecard
The Four Categories of a Balanced Scorecard

  • Financial

  • Customer

  • Internal Business Processes

  • Learning and Growth


Financial
Financial

  • Return on Investment (ROI)

  • Operating Income

  • Gross Margin Percentage

  • Revenue from New Products


Customer
Customer

  • Number of New Customers

  • Market Share

  • Percentage of Products Returned

  • Customer Satisfaction Surveys


Internal business processes
Internal Business Processes

  • Percentage of On-Time Deliveries

  • Percentage of Defect-Free Units Produced

  • Time Taken to Replace Defective Products

  • Time From Receipt of Order to Shipment


Learning and growth
Learning and Growth

  • Employee Turnover

  • Number of Employee suggestions

  • Percentage of Employees Trained in New Processes

  • Percentage of Compensation Based on Employee/Team Performance


ad