1、2022年12月7日星期三1 ABC Activity Based Costing/GRIMMTRAINING PRESENTATION2 Activity Based Costing/GRIMMABC Definition/Disclosure/Background Pg.4&5Elements of a Cost Estimate&Diagram Pg.6&7Direct Labor.Pg.9-11Indirect Labor.Pg.12Fringe Benefits.Pg.13MRO Labor.Pg.14&15Labor Summary.Pg.16LABOR Frequently as
2、ked Questions&Answers.Pg.17-18TABLE OF CONTENTS:3 Activity Based Costing/GRIMMDepreciation Pg.21&22Interest.Pg.23&24Insurance .Pg.25Utilities.Pg.26Indirect Materials.Pg.27MRO(Burden).Pg.28-33 Burden Summary.Pg.34&35Frequently asked Burden Questions&Answers.Pg.36TABLE OF CONTENTS:Burden Presentation4
3、 ABC Activity Based Costing What is GRIMM and ABC?GRIMM-Cost Optimizations DatabaseGlobal Rates and Information of Machines and Materials.Used to accumulate&calculate manufacturing labor&overhead(burden)rates.Activity Based Cost SystemIdentifies the uniqueness of each products processing method to d
4、etermine overhead allocation,and applies the cost based on the major elements(Cost Drivers).Consistent and fair method to compensate suppliers for product cost.Machines operating cost will remain consistent regardless of manufacturer.ConfidentialityGood judgment should be maintained when discussing
5、equipment cost between competitive manufactures.Many machine builders request a non-disclosure agreement.Sensitive material should only be shared with the supplier for comparison information.Not a“one-sided”sharing process.5 ABC Activity Based Costing GRIMM Equipment Representation;Currently the dat
6、abase represents over 400 equipment manufacturers,and approximately 1600 machines,2300 raw materials,&2900 SBOCs.(Standard Bought Out Components)New technologies are being studied and continually added to the database.This system is shared globally,compiling data from 9 countries/regionsUnited State
7、s,Great Britain,Germany,France,Italy,Mexico;Domestic and Maquiladora,Spain,and Portugual.Machines and Materials are updated annually.Raw material suppliers are contacted every year,and the new cost is entered into the system.Machine manufactures are contacted on a three year cycle.During the precedi
8、ng two years,the PPI(Purchased Price Index,supplied by the Bureau of Labor Statistics)is utilized to update cost on an annual basis.The PPI method of updating has proved to be very accurate,within 1/2%of the new quotes from the manufacturers.6 ABC Activity Based Costing Cost Elements;Materials (incl
9、udes raw matl.and purchased components)Labor Direct Labor Indirect Labor(Non-Skilled)Fringe Benefits MRO Labor(Skilled)Equipment Overhead(Burden)DepreciationInterest(Opportunity cost)Floorspace Cost(Building and Expenses)MRO-Equipment Maintenance (Non-Labor)MRO-Tooling Maintenance(Non-Labor)Utilitie
10、sIndirect MaterialsInsurance Markups (includes SGA,Profit,End-Item scrap,RD&E,etc)7 Cost Estimate DiagramMATERIALLABORBURDENMARKUPSDirect IndirectFringeManufacturingOverheadMRO LaborEnd Item ScrapSG&AProfitRaw MaterialPurchased PartsED&TTOTALLABORTOTAL MFG.COST0-0.7%VariesVariesVaries TOTALESTIMATED
11、 PC.PRICE8 ABC Activity Based Costing LABOR PRESENTATION9 Activity Based Costing LABOR DIRECT LABORWages of person performing manufacturing process.(Value added operations)Generally expressed in rate per hourCurrently there are 11 primary categories available in CAPE;General ManufacturingWiringForgi
12、ngElectrical/ElectronicsRubber&Plastics Textiles FabricationAutomotive StampingAir BagBody in WhiteTool&DieNon-Ferrous FoundryEach Primary category has 3 to 4 sub categories Sub categories are skill level based10 Activity Based CostingLABORDIRECT LABOR CATEGORIES Labor Group CodesAGeneral Manufactur
13、ingCForgingDElectrical/ElectronicsERubber/PlasticsGTextile FabricationHWiringJAir Bag(Special Studied)KBody in WhiteMAutomotive StampingPNon-Ferrous FoundryTTool and DieCode DescriptionCode DescriptionSkill Factor CodesA Low Skill Level C High Skill LevelB Medium Skill LevelS Special StudiedAA Gener
14、al Manufacturing/Low SkillEB Rubber Fabrication/Medium SkillKC Body in White Fab./High Skill Examples:11Labor specifically identified with a value-added step in the manufacturing process.Each year,during an economic adjustment,information is gathered from the following resources.Rates are developed
15、based on the average wage in the commodity.This includes union and non-union shops,and all regions in the targeted country.They are not intended to reflect any one particular supplier,but are intended to cover the range of labor cost paid by efficient suppliers.Resources U.S.Department of Labor,Bure
16、au of Labor Statistics;Employment&Earnings Report U.S.Bureau of Census Survey of Manufactures Historical documentation;Supplier/Estimator Feedback Activity Based Costing LABOR DIRECT LABOR12 Activity Based Costing LABOR INDIRECT LABORPersonnel not directly associated with manufacturing processSuch a
17、s;Material Handlers,Shipping/Receiving,Quality Control,First Line Supervision&Manufacturing Engineering,etc.Expressed as a percentage of Direct Labor.Studies have shown proportional cost relationships between Direct and Indirect labor within commodities.Indirect labor support is applied to individua
18、l commodity categories.Examples:Direct Labor Cost Indirect Labor Cost General Manufacturing;$1.00$0.55Rubber&Plastics$1.00$0.70Automotive Stamping$1.00$0.75Body in White$1.00$1.05ResourcesIndustrial Technologies InstituteAmerican Foundrymens AssociationHistorical documentation;Supplier/Estimator Fee
19、dback 13 Activity Based Costing LABOR FRINGE BENEFITSPersonnel BenefitsSuch as;Shift premiums,vacation/holiday pay,insurance,pensions,tuition reimbursements,clothing allowances,etc.Expressed as a percentage of Direct&Indirect LaborFringe benefits are applied to both the Direct&Indirect personnelUnli
20、ke Indirect Labor,the percentage of fringe is consistent across commodities.Currently(2003)recognized at 50%.ResourcesU.S.Department of Labor,Bureau of Labor StatisticsCompensation&Working Conditions ReportFord Internal DataHistorical documentation;Supplier/Estimator Feedback 14 Activity Based Costi
21、ng LABOR MAINTENANCE,REPAIR&OTHER(MRO)LABORPersonnel supporting Equipment,Tooling&Building Skill Trades Labor,including machine repair,electricians,millwrights,pipefitters,tool&die repair,etc.Cost is based on building maintenance per square meter.The system applies a fully accounted skilled trades r
22、ate to the amount of floorspace required,including outside maintenance,office space,warehousing,restroom,etc.Cost is based on the investment value.The system applies a percentage factor to the investment,so that as the capital requirement increases,so does the amount of maintenance funding.Equipment
23、 and ToolingBuilding15 Activity Based Costing LABOR MAINTENANCE,REPAIR&OTHER(MRO)LABORResources;R.S.Means Construction and Maintenance Models Marshall and Shift;Construction Appraisal Ford Land Development European Database,Manufacturing Engineering Study Ford Internal Maintenance studies Equipment
24、ManufacturersEquipment and ToolingBuilding16 Activity Based Costing LABOR Labor Summary:Labor GroupDirect Labor12.56 13.95 15.35Indirect Labor 6.91 7.67 8.44Fringe Benefit 9.93 11.03 12.13 MRO Labor .96 .96 .96General ManufacturingAAABACTotal Labor Rate/hour 30.36 33.61 36.88(MRO Labor remains const
25、ant becauseit is based on Machine&Floorspace,notDirect Labor wage)17 Activity Based Costing LABOR Labor-Question&AnswersWhen Im negotiating with a supplier,should I change my direct labor rate/hour to match the supplier?No.The direct labor rate is based on the national average,which we believe is th
26、e competitive wage all suppliers should be measured against.Do these rates reflect union shops?Union shops are included in the study,as well as non-union shops.Regardless if the supplier is union or not,it is their responsibility to remain competitive.We treat all suppliers equally,not allowing anyo
27、ne an advantage over another.How often are rates updated?We update all the rates annually.Each year the rates are based on January 1st economics.Are rates/hour based on the region of the country?No,we do not segment the rates by region,only by commodity and skill level.18 Activity Based Costing LABO
28、R Labor-Question&AnswersIf Indirect labor is 55%of Direct Labor,does that mean there are.55 heads indirect for every direct head?No.It means for every dollar spent on direct wages,there are$.55 dollars spent for indirect support.Isnt MRO Labor still indirect labor?YES,we have separated it from the u
29、nskilled and first line supervisor,because it is not proportional to direct labor.When you compare Fords indirect percentage to a suppliers,you should combine both the“indirect category”along with the the MRO Labor category.Where is Scrap compensated?There are two types of scrap;(1)process scrap is
30、determined by the estimator and applied in the estimate as an allowance,(2)end-item scrap,is a minimal amount applied to finished good,to compensate for destructive testing,damage in transit,etc.19 ABC Activity Based Costing BURDEN PRESENTATION (MANUFACTURING OVERHEAD)20 ABC Activity Based Costing T
31、erminology;“PPI”-Purchased Price Index,Bureau of Labor StatisticsLifetime Years-Expected life of equipmentOpportunity Cost-Also referred to as Interest costMRO(Maintenance,Repair&Other)SG&A(Sales,General&Administration)RD&E(Research,Development&Engineering)Work Pattern-20 hrs/day,237 days/yearTechni
32、cal Availability-Expected Uptime of equipmentManning Type-three levels1.Direct labor head associated with equipment2.No direct labor head,but requires indirect support(robots,automation)3.No direct labor or indirect labor required(conveyors)21 Activity Based Costing BURDEN DEPRECIATIONThe means of c
33、ompensating supplier for capital equipment used in the production of Ford parts.Ford does not assume total capacity,we pay for what we use.It is the suppliers responsibility to sell their available equipment time.(These costs are paid in SGA allowance).Ford utilizes the straight line method of depre
34、ciation over the entire useful life of the machine.This way the equipment is devalued by a constant amount.Many companies use accelerated depreciation for tax purposes.Tax accounting depreciation rules are not necessarily an equitable way to determine a fair price for a given product.Ford should nev
35、er pay the entire cost of any capital equipment over the life of a program,unless the expected useful life of that capital is equal to or less than the life of the program.22 Activity Based Costing BURDEN STRAIGHT LINE DEPRECIATION METHODFormula;(Initial Capital Value)+(Freight&Installation)-(Residu
36、al Value)(Lifetime hours)20 hrs/day x 237 days/yr x 86%utilization x 10 yrsAssumptions;Initial Capital Cost$500,000 -Cost of MachineFreight&Installation$50,000-10%default if not availableResidual Value$25,000-5%default salvage value if not availableLifetime hours40,760 hrs$500,000+$50,000-$25,000 =$
37、525,000 =$12.88/hr.=$.2147/min 40,760 40,76023 Activity Based Costing BURDEN INTERESTInterest is intended to compensate suppliers for the opportunity cost incurred in owning assets used to produce parts for Ford and should approximate the return on invested capital for a low risk investment.The inte
38、rest rate is applied to the cost of capital and included in the burden rate.Current 2003 interest calculation is 6.1%.It is Cost Optimizations policy to NEVER allow a higher interest rate than that provided by the Special Studies section,burden analysis24 Activity Based Costing BURDEN INTEREST CALCU
39、LATION FORMULA;(Initial Investment x 50%)x(Interest amount)Annual HoursAssumption;Initial investment$100,000Interest amount 6.1%Equipment Utilization 90%($100,000 x .5)x.061 =$50,000 x .061 =$3,050 =$.715/hr =$.011/min 20 x 237 x 90%4266 426625 Activity Based Costing BURDEN INSURANCEThis category re
40、presents the insurance for equipment capital only.The insurance for the building is included in the floorspace allocation.Insurance recovery cost is applied as a percent of capital.As the equipment value increases,so does the amount of insurance expense.FORMULA;(Insurance Percentage)x (Replacement V
41、alue of Equipment)Annual HoursAssumption;Capital$500,000,Freight&Installation$50,000,Residual Value$25,000Replacement value=$500,000+$50,000-$25,000=$525,000Insurance factor.5%.5%x$525,000 =$2,625 =$.644/hr.=$.011/min.4076 hr/yr 407626 Activity Based Costing BURDEN UTILITIESThis category compensates
42、 the supplier for the utility consumption of the equipment during the manufacture of products.As with insurance,the building utilities are included in the building cost models.Utility costs are applied to the burden rate in the appropriate units of measure,example;electricity is in Kilowatts per hou
43、r,compressed air is in cubic meters,etc.Utility cost per unit is not based on any particular region or manufacturer,it is published as a national average.This measures suppliers on a level playing field,without penalizing a suppliers competitive advantage.RESOURCES;Consumers Energy NewsFord Internal
44、 Manufacturing facilities27 Activity Based Costing BURDEN INDIRECT MATERIALSThis category compensates the supplier for the Indirect materials,consumed by the equipment during the manufacture of products.These include;hydraulic oil,cutting oils,acetylene gas,etc.This does not include the amount store
45、d in a tank or reservoir,but the amount exhausted during the production hour.Indirect material costs are applied to the burden rate,as consumed,in the appropriate units of measure,eg.kilograms,liters,cubic meters,etcRESOURCES;Manufacturers of materialsFord Internal Manufacturing facilities28 Activit
46、y Based Costing BURDEN MAINTENANCE,REPAIR&OTHER(MRO)BURDENMRO Burden for Equipment&Tooling Cost applied to these segments are separated between the capital cost of the equipment/tooling and operating supplies.Equipment and ToolingCapital cost of Equipment and Tooling These costs apply to the Plant E
47、ngineering and Tool shop equipment necessary to maintain machines and tools.It is the responsibility of the supplier to keep their equipment/tooling in good operating condition to assure Ford quality standards and efficient productivity levels.Capital recovery cost is applied as a percent of investm
48、ent.Operating Supplies cost of Equipment and Tooling Operating Supplies include spare parts,perishable tooling,safety equipment,gloves,etc.Operating Supplies recovery cost is applied as a percent of investment.29 Activity Based Costing BURDEN MAINTENANCE,REPAIR&OTHER(MRO)BURDENMaintenance SchedulesT
49、he maintenance of the machine or tool is predicated on the assumption that the equipment and tool is new.Its logical,that at the beginning of production,the required maintenance will be a minor amount,and increase during its expected life.Our rates,however,generate an average amount,constant over th
50、e entire life,thus over compensating during the 1st-half and possibly under compensating on the 2nd-half.RESOURCES;Equipment ManufacturersInternal Ford Manufacturing FacilitiesHistorical Maintenance SchedulesEuropean Industrial HandbookEquipment and Tooling30 Activity Based Costing BURDEN MAINTENANC
