文档介绍：Chapter 4 Activity-Based Cost Management Systems
Activity-Based Cost
Management Systems
Chapter 4
Problems With Simple Cost Accounting Systems: The Cooper pany Example
Cooper Pen had been the low-cost producer of blue pens and black pens, with profit margins exceeding 20% of sales
Several years ago Cooper Pen expanded their business by extending their product line into products with premium selling prices
The Cooper pany Example
Five years ago red pens were introduced
The same basic production technology
Could 6>be sold at a price that was 3% higher than for blue and black pens
Last year purple pens were added
Could be sold at a 10% price premium
The controller of Cooper Pen was disappointed with the most recent quarter’s financial results
Overall profitability for all four together had decreased
The red and purple pens, however, were more profitable than the blue and black pens
Total Profitability by Product
131>.5%
%
%
%
%
. %
$ 61,110
$ 900
$ 6,210
$ 24,000
$ 30,000
Gross Margin
390,690
4,050
35,640
156,000
195,000
Total Mfg. Expenses
180,000
1,800
16,200
72,000
90,000
Overhead
60,000
600
5,400
24,000
30,000
Labor
150,690
1,650
14,040
60,000
75,000
Material
$451,800
$4,950
$41,850
$180,000
$225,000
Sales
$
$
$
$
Price
100,000
1,000
9,000
40,000
50,000
Units
Total
Purple
Red
Black
Blue
Concern at Cooper Pen
The controller of Cooper Pen wondered whether pany should continue to deemphasize the blue and modity products and keep introducing new specialty colored pens
Cooper’s manufacturing mented on how the introduction of colored pens had changed the production environment:
Everything ran smoothly when producing just blue and black pens in long production runs
Difficulties started when the red pens were introduced and required more changeovers
Changes Caused by New Pens (1 of 2)
Making black ink was simple; there was not even a need to clean out the