Produktkalkylering på ett tillverkande företag

Sammanfattning: Introduction The company produces different kinds of hearing protection aids, varying from simple plugs to advanced hearing-muffs with built-in electronics. At the department where this thesiswork was executed, hearing-muffs with electronics are produced. The company wishes to analyse the production-costs for some of the products by using an activity-based costing, (ABC). The ABC is expected to result in different suggestions how to reduce the production-costs. Finally, a new ABC will be made, taking into consideration the consequences of the different changes. The second part of the thesiswork is to investigate the different ways to automatize the assembly of the products, in order further to reduce the production-costs. The thesis thus consists of the following two tasks; 1. To execute an ABC-analysis and suggest improvements. 2. To propose different methods to automatize the assembly and to present the cost-consequenses hereof. Activity Based Costing (ABC) As mentioned, the first part of the thesiswork consists of an ABC-analysis. The ABC is presented in a conclusive way in this part, while the analyse is presented in the next part. The last decades have seen a change in the production-philosophy, from a functional line-production in large series to a highly flexible, customer-orientated production. The information-technology in combination with increased competition has increased the influence of the customer and thus led to higher flexibility, increased automation, higher development-costs and shorter life-cycles for the products [Ranta, J. 1991]. In short this means that the indirect costs are increasing while the direct costs are reduced. The result is that the indirect/direct cost-ratio is greatly increasing. The traditional ways of costingation were developed to suit the functional high-volume line-production. The methods are therefore adapted to the customer-orientated production [Ask, U. & Ax, C. 1995]. With this in mind, the two authors R.S. Kaplan and T. Johnson wrote the book ”Relevance lost: The rise and fall of management accounting”, 1987, where they introduced a new method of costing; the activity-based costing, shortly named ABC. In the ABC, the different assignments in the company are divided into activities which, to different extent, consumes the resources of the company. The cost of the activity thus depends on its consumption of resources, which are determined by ”first stage cost-drivers”. For example, one activity consumes a certain amount of space. In this case, the ”first stage cost-driver” is the number of sq.ft. required for the activity, while the resource is the costs for rent, heating, electricity etc. When the costs of the company´s activities are determined, the activities are to be assigned so called ”second stage cost-drivers”. After that it is to determine how much of each activity the product consumes. To establish the cost of the product, the activity-consumption is added to the cost of material. It might happen that some of the activities are not fully distributed. If that occurs, it is an indication that there is an over-capacity in the company. vii (xi) Rapport till examensarbete Av: Per-Åke Sigbrandt. Cost-structure and ABM - Activity Based Management In the second and final part of the ABC, some specific costs are further analysed. The internal costs are analysed with a method called ABM (Activity-Based Management), which is described below [Ask, U. & Ax, C. 1995]. As far as the external costs are concerned, additional suppliers will be contacted to check if present price-level is competitive. Also, cost for own production will be compared with the cost for buying (outsourcing). In the ABM the company is divided into activities in the same way as when the ABC is executed. However, there is one major difference. In the ABM the activities are deeper analysed by assigning four different drivers. The drivers are presented below and as an example the activity ”transportation of material” is used. − Initiator: describes the reason for the existance of the activity. In this case, need of filling. − Resource-driver: describes the consumption of resources. In this case, equipment avaliable. − Activity-driver: describes the frequency of the activity. In this case, capacity of each transportation-cycle. − Activity-measure: is identical to the second-stage cost-driver of ABC. In this case, number of transportation-hours. The analyse will result in an explanation of the volume of the activities. The next step is to introduce changes that reduces the consumption of resources for the activity, alternatively eliminates the activity. Finally, the resources must be adjusted in accordance to the new consumption of resources. (When only optimizing the consumption of resources without an adjustment of their volume, the costs for the company will remain unchanged.) Limitations To finalize the thesis in time, and due to practical circumstances, some limitations were introduced. − Only a limited number of products were analysed − Over-head costs, not directly connected to the production, are excluded from the analyse. − Over-head costs, connected to the production, were not completely activity-distributed (see methods). − The completion of the automation-project will take place apart of this thesiswork. Methods As mentioned under limitations, the over-head costs were not completely activity-distributed. The method used instead was to determine the time for over-head of the department producing the articles in question. As a complement, the budget was used to distirbute other costs for over-head. By distributing the time directly, the possibility to determine the over-capacity was lost (the resource was distributed directly to the products). The ABC was divided into seven phases. Within these seven phases, the budget was completed with interviews, productivity-reports, reports of presence/absence etc., finally to result in a new costing of the products analysed. With the activity-divided costing, the precision increases considerably. In order to save time, (but in accordance with theories of ABC) the precision is somewhat reduced for activities of lower costs. As a consequence, cost for low-volume products will be slightly lower than the true cost. However, when comparing the ABC with present costing, the difference still is obvious. In the ABM, certain actvities (internal costs) were further analysed, following the theoretical description above. viii (xi) Rapport till examensarbete Av: Per-Åke Sigbrandt. A number of alternative suppliers were contacted in the external analyse to have additional offers for components. Some of the suppliers also calculated assembly-operations, presently performed at the department. Finally, the results were summarized and a new ABC was performed. As mentioned earlier, further limitations were implemented regarding the automation, caused by the fact that assistance and offering this kind of equipment was connected with external expenses. However, all internal work with complete assembly-information, investment consequences and approximate investment level has been fulfilled. The only remaining task is to calculate the profit-possibilities, based on the various offers. Results In the table on the next page please find the result of ABC:s compared with the traditional metod of costing presently used by the company. Stockvalue (SV) includes direct production costs, production-administration, warehousing, education and overhead for the department analysed. Product cost includes SV, marketing, product development, other administration and internal shipping. The ABC:s are based on actual times why they should be compared with the post-costing and not the pre-costing. The period analysed is the first six months of 1998. The budget is valid for 12 months and has therefor been divided in two. When comparing costs according to the pre-costing with same costs according to the post-costing certain deviations appear. The differences are explained by lower material- and overhead-costs than planned. When the post-costing is compared with ABC I the costs for the high-volume products drops even more while the costs for the low-volume products increases. This result is expected when traditional costing is compared with ABC [Gerdin, J. 1995]. The decreasing cost-level is depending on lower cost for maintenance, factory administrstion, shipping and, to some extent, lower cost for product development. ABC II was executed considering a number of cost-reduction proposals. Lower material costs were acheived through suppliers offering better prices. Outsourcing and a new department layout was also considered. In total, outsourcing and a new layout would mean lower costs for electricity, heating, personel and material administration and quality. Finally a new method to exchange information was proposed, in order to reduce the number of meetings and also to reduce the lead-time. As outsourcing would have great effects on the personel situation ABC III was executed, considering only change of supplier and a different department layout. It is to conclude that ABC II compared with ABC III shows very small differences. Most of the cost reductions are thus due to a new supplier and not to outsourcing. In the table below, please find the effects of the five different costings. ix (xi) Rapport till examensarbete Av: Per-Åke Sigbrandt. Recommendationsb When the ABC was performed at the analysed department, costs for high- and low-volume products changed dramatically. While the costs dropped for high-volume products they rose for the counterpart. If the new method of costing is combined with a change of supplier and a new department-layout the cost for high-volume products drop even further. As far as model 5 is concerned, cost compared with the pre-costing drop by 35 %, and compared with the post-costing they drop by 25 %. The recommendations therefor are to deepen the contacts with the alternative supplier. The new layout is also recommended as it requires less space. It also has been trimmed to match the flow of material as well as the target-orientated work-groups. As far as outsourcing is concerned, the method is not recommended. The acheivable profit is neglectable. Finally, automation. My feelings are that the production volumes are too low to defend the investment level, but that is something that the offers will determine later.