After a second visit to the company and an interview with the partners, we note that Mercurio SRL does not have any cost system.
The company tells us that according to the experience acquired over the years, it is convenient for them to market products with high turnover, but they do not find a costing method that serves as the basis for determining the sale price of each product and that At the same time, indicate that part of the Company consumes higher costs.
That is why we carry out the following Practical Work that is summarized in four stages:
Stage Nº1: Data collection and general survey of the Company.
Stage # 2: Determination of a Costing system according to the needs of the Company and implementation.
Stage No. 3 Determination of Indices. Balance Point, Safety margin.
Stage No. 4 Conclusions.
Stage Nº1: Data collection and general survey of the company.
At this stage we analyze each of the data provided by society and summarize it below:
- Pricing policy (we check current legislation) Inventory system used. Product analysis (We review the data obtained in previous balls). Type of activity carried out by the company. (Commercial) Costing systems applicable to this type of activity. Possible types of apportionment, functions, activities, number of personnel, etc. Types of expenses. (Fixed and variable)
- Pricing policy
The marketing margins of each of the stages are established by Resolution No. 93 of the SSCI
| Drugstore Price | Margin to be applied on the exit price of the laboratory | 16% |
| Pharmacy Price | Margin to be applied on the sale price of drugstore without VAT | 30% |
| Mutual Pharmacy Price | Margin to be applied on the laboratory exit price without VAT | fifteen % |
- Determination of Cost (current)
For determination of cost of sales, the company carries a perpetual inventory system using the method of the P irst E ntrado P irst S Alido. This method consists of assigning to the cost of sales the price of the first purchases made of each product, the value of inventories being valued at the cost of the last purchases.
The sale price is set as follows: (See PDF)
- Inventory system used
From the diversity of products marketed by MERCURIO SRL we randomly select ACTCHELEA GEL and LAXUAVE ENTERAL. As an example, we made the monthly Inventory Worksheet for both products.
| Acthelea gel fco. 40 u. | |||||||||
| Date | Description | ENTRY | DEPARTURE | BALANCES | |||||
| Qty | $ Unit | $ Total | Qty | $ Unit | $ Total | TOTAL | |||
| 6/1/01 | STARTING BALANCE | 0 | 0 | 0.00 | 0.00 | ||||
| 6/1/01 | Invoice No. 8391 | 6 | 9.13 | 54.78 | 54.78 | ||||
| 6/4/01 | I refer 936 | 6 | 9.13 | 54.78 | 0.00 | ||||
| 6/7/01 | Invoice No. 9222 | 22 | 9.13 | 200.86 | 200.86 | ||||
| 6/9/01 | I refer 1055 | 8 | 9.13 | 73.04 | 127.82 | ||||
| 6/13/01 | I refer 1405 | 14 | 9.13 | 127.82 | 0.00 | ||||
| 6/20/01 | Invoice No. 9519 | 10 | 9.23 | 92.30 | 92.30 | ||||
| 6/27/01 | I refer 1800 | 10 | 9.23 | 92.3 | 0.00 | ||||
| 38.00 | 347.94 | 38.00 | 36.62 | 347.94 | 0.00 | ||||
| Final Stock (U) | 0 | 0 | 0 | 0 | |||||
| Pcio. ($) | 0 | 0 | 0 | 0 | |||||
| Amount ($) | 0 | 0 | 0 | 0 | |||||
| Total inputs (U) | 38.00 | Total Purchases (U) | 38.00 | ||||||
| Total tickets ($) | 347.94 | Total Purchases ($) | 347.94 | ||||||
| Enteral Laxuave | 2.25 gr Capsules X 24 | ||||||||
| Date | Description | ENTRY | DEPARTURE | BALANCES | |||||
| Qty | $ Unit | $ Total | Qty | $ Unit | $ Total | TOTAL | |||
| 6/2/01 | STARTING BALANCE | 10 | 7.9 | 79.00 | 79.00 | ||||
| 6/3/01 | Invoice No. | 90 | 7.9 | 711.00 | 790.00 | ||||
| 6/7/01 | I refer | 0.00 | 80 | 7.9 | 632 | 158.00 | |||
| 6/15/01 | Invoice No. | 200 | 7.9 | 1,580.00 | 1,738.00 | ||||
| 6/16/01 | I refer | 0.00 | twenty | 7.9 | 158.00 | 1,580.00 | |||
| 6/21/01 | I refer | 0.00 | 200 | 7.9 | 1,580.00 | 0.00 | |||
| 6/22/01 | Invoice No. | 300 | 7.9 | 2,370.00 | 2,370.00 | ||||
| 6/24/01 | I refer | 0.00 | 100 | 7.9 | 790.00 | 1,580.00 | |||
| 6/24/01 | I refer | 0.00 | 80 | 7.9 | 632.00 | 948.00 | |||
| 6/26/01 | Invoice No. | 100 | 7.9 | 790.00 | 1,738.00 | ||||
| 6/27/01 | I refer | 0.00 | 180 | 7.9 | 1,422.00 | 316.00 | |||
| 6/29/01 | I refer | 0.00 | 40 | 7.9 | 316 | 0.00 | |||
| 0.00 | |||||||||
| 700.00 | 5,530.00 | 700.00 | 5,530.00 | 0.00 | |||||
| Final Stock (U) | twenty | 0 | 0 | 0 | |||||
| Pcio. ($) | 7.9 | 0 | 0 | 0 | |||||
| Amount ($) | 158 | 0 | 0 | 0 | |||||
| Total inputs (U) | 700.00 | Total Purchases (U) | 700.00 | ||||||
| Total tickets ($) | 5,530.00 | Total Purchases ($) | 5,530.00 |
- Types of Costs. (Fixed and variable)
| Rentals | Permanent | Gross income | variable |
| Amortizations M and U and Inst. | Permanent | Interest and surcharges imp. | Permanent |
| Amortizations Rolled | Permanent | Bookstore and mat. comp. | Permanent |
| Fuels | Permanent | Maintenance Bs. Of Use | variable |
| Communications | Permanent | Building maintenance | Permanent |
| Discounted discounts | Permanent | Photocop maintenance. | Permanent |
| Exchange rate | Permanent | Maintenance Sist. Tango | Permanent |
| Donations and Contribuc. | Permanent | Other taxes | Permanent |
| Freight and haulage | variable | Toll and parking | Permanent |
| Photocopies | Permanent | Spreads | variable |
| Administrative expenses | Permanent | Advertising | Permanent |
| Representation expenses | variable | Repair, spare parts., Pat. | variable |
| Travel expenses | Permanent | Safety and Hygiene | variable |
| Clerk expenses | Permanent | Insurance | Permanent |
| Gtos. And bank interest | Permanent | Public services | Permanent |
| Various fees | Permanent | Salaries and contributions | Permanent |
| Printing and others | Permanent | Surveillance | Permanent |
Stage Nº2: Determination of a Costing system according to the needs of the Company and its implementation.
Once all the detailed information in the previous paragraph has been obtained, we determine the costing system that, in our opinion, is the most useful for the company, after justification, and we develop it.
Proposal of a costing method to Mercurio SRL:
ABC (Activity Based Costing): Activity Based Costing
Concept of this method
They are procedures aimed at assigning the costs derived from the use of an organization's resources to the activities carried out in it, in order to provide the Directorate with information that contributes to managing them efficiently, and in addition, allows rational determination of the unit costs of the other objects. costs that are necessary (products, services, customers, etc.)
Why ABC?
- It is a suitable method for any type of companies. Companies have a conditioning context: competitiveness, customer satisfaction, total quality, technological changes, where new management techniques are applicable-Studies carried out internationally have pointed out the importance given by the businessman at the cost level, where new management techniques are incentives to achieve the incentive to pursue the constant improvement of companies. The interesting question to answer is if small companies can face this challenge: they also have problems in the cost structure, even if they do not know it, and they are also immersed within the described context even though it seems to have been designed. for large companies.What do I reduce? How much do I reduce? Do I reduce well? These are the majority of the businessman's questions, for which there is generally no coherent answer.When Management focuses on the analysis and control of activities, the products and services produced are placed in the background of interest, since they are conceptually mere activity users. These are the fearsome consumers of organizations' resources and, consequently, it is essential to know and control their costs in order to manage them efficiently. In summary, it is the activities that consume the resources, and the products or services manufactured or marketed that use the activities.When the Management focuses the analysis and control of the activities, the products and services produced are located in a second plane of interest, since conceptually they are mere users of the activities. These are the fearsome consumers of organizations' resources and, consequently, it is essential to know and control their costs in order to manage them efficiently. In summary, it is the activities that consume the resources, and the products or services manufactured or marketed that use the activities.When the Management focuses the analysis and control of the activities, the products and services produced are located in a second plane of interest, since conceptually they are mere users of the activities. These are the fearsome consumers of organizations' resources and, consequently, it is essential to know and control their costs in order to manage them efficiently. In summary, it is the activities that consume the resources, and the products or services manufactured or marketed that use the activities.It is essential to know and control your costs to manage them efficiently. In summary, it is the activities that consume the resources, and the products or services manufactured or marketed that use the activities.It is essential to know and control your costs to manage them efficiently. In summary, it is the activities that consume the resources, and the products or services manufactured or marketed that use the activities.
ABC Methodology
- Identification of the organization's activities.
We call the set of coordinated tasks whose purpose is to add value to an object. Those of such magnitude must be identified that a suitable balance can be reached between the level of detail of the information that is desired to be obtained from the system and the measurement and recording efforts necessary to obtain it.
Here the process of continuous improvement will begin, since the visualization of the map of the activities will allow us to weigh them from the value that they add in terms of the entity's objective, trying to eliminate activities that do not add value, questioning those that do so to a small extent and focus attention on those that are essential.
- Allocation of the costs of resources to activities.
There will be certain costs that cannot be directly assigned to the activities, so for them it will be necessary to resort to the allocation procedures of all indirect costs, allocation bases that reasonably reflect the portion of the cost of the resource caused by each activity.
- Identification of the cost drivers of each of the activities.
By observing the characteristics of the activities, the costs they consume and the outputs they generate, identify an element that reasonably reflects the causal relationship between the activity carried out and the costs accrued. In this way, the causes that generate the costs will be exposed, enabling the development of cost reduction policies focused on the management of such indicators.
- Determination of the final Costing Units or outputs and allocation of the costs of the activities to those.
The final cost units are the final objects whose cost you want to know and make up the final result of the different activities, such as: products, services, projects, etc. Without prejudice to remember that the products, services and other outputs are not the focus of greatest interest of an activity-based management, it must be admitted that the allocation of costs to them is necessary to enrich the planning, decision-making processes and management control.
Then, within the framework of an objective of determining unit costs of products, services, etc., a series of direct costs would be detected for said outlets, which can be accurately assigned to them without the need to use any intermediate cost unit, as it is in the case of Mercury, the purchase price of medicines.
Analysis: Implementation of ABC cost
1. Identification of activities
The different activities within the entity are:
- ExpeditionShoppingDeposit ReceptionMarketingAdministrationBillingTreasury
Expedition: the tasks included in this activity are: Preparation and shipment of merchandise.
Assigned staff 1 (one) person. The basis for the calculation is units of products.
Purchases: here the tasks related to supply are carried out (request for quotes, award of purchase, issuance of purchase orders). Assigned staff 2 (two) people. The basis for the calculation is the purchase order.
Deposit - Receipt: receives the merchandise (controls what is requested in the purchase order with the merchandise received that appears in the shipment), stores and performs stock control and specific controls on the conditions of the medications, entering the merchandise into the system, and removing the ones that are dispatched. Assigned staff 2 (two) people. The basis for the calculation is the purchase order.
Marketing: the activity consists of tasks aimed at making the sale effective, contacting customers and preparing order notes, and in the case of public tenders, receiving notifications from them. Assigned staff 1 (one) person. The basis for the calculation is the number of invoices.
Administration: The tasks developed here are those of accounting registration, customer follow-up and documentation filing. Assigned staff 3 (three) people. The basis for the calculation are the processed forms.
Billing: is in charge of issuing invoices and remittances. Assigned staff 1 (one) person.. The basis for the calculation is the number of invoices.
Treasury: it is responsible for charging clients, paying suppliers and carrying out bank procedures. Assigned staff 2 (two) people. The basis for the calculation are the processed forms.
- Allocation of the costs of resources to activities.
The following tables were taken into account for the cost distribution bases:
| Table 1 - Distribution s / square meters | ||
| Meters | Percentage | |
| Squares | ||
| Expedition | 200 | 31% |
| Purchases | fifty | 8% |
| Deposit Reception | 200 | 31% |
| Commercialization | fifty | 8% |
| Administration | fifty | 8% |
| Billing | fifty | 8% |
| Treasury | fifty | 8% |
| Total | 650 | 100% |
For the calculation of costs assignable to public services; As well as Building maintenance, Maintenance Bs. Use, Surveillance and Rentals, the base used was Distribution according to square meters used by each activity.
| Table 2 –Distribution s / Consumed telephone pulses | ||||
| pulses | Percentage | |||
| Consumed | ||||
| Expedition | 247 | 5% | ||
| Purchases | 986 | twenty% | ||
| Deposit Reception | 247 | 5% | ||
| Commercialization | 986 | twenty% | ||
| Accountancy | 986 | twenty% | ||
| Billing | 493 | 10% | ||
| Treasury | 986 | twenty% | ||
| Total | 4931 | 100% | ||
Communications expenditure was assigned according to telephone pulses consumed by each of the activities.
| Table 3 - Distribution s / combination of percentages people and PC | |||||
| Percentage | Percentage | Average | |||
| personal | Computers | Both of them | |||
| Expedition | fifteen% | 0% | 8% | ||
| Purchases | fifteen% | 14% | fifteen% | ||
| Deposit Reception | fifteen% | 14% | fifteen% | ||
| Commercialization | 8% | 14% | eleven% | ||
| Accountancy | 2. 3% | 29% | 26% | ||
| Billing | 8% | 14% | eleven% | ||
| Treasury | fifteen% | 14% | fifteen% | ||
| Total | 100% | 100% | 100% | ||
For the Distribution of the expense of bookstores and computer materials, a combination of percentages between the number of people and the amount of PC was taken as the basis, since we understand that both parameters affect this expense.
| Table 4 –Dist. S / Administrative Staff | ||||
| adm personal cant, | Percentage | |||
| by activity | ||||
| Expedition | 0 | 0% | ||
| Purchases | one | 25% | ||
| Deposit Reception | 0 | 0% | ||
| Commercialization | 0 | 0% | ||
| Accountancy | one | 25% | ||
| Billing | one | 25% | ||
| Treasury | one | 25% | ||
| Total | 4 | 100% | ||
For the distribution of administrative expenses we take into account the number of administrative personnel in each of the areas.
They are directly related to the number of people according to data provided by the company.
| Table 5 –Distribution for personnel using photocopies | ||
| quantity | Percentage | |
| persons | ||
| Expedition | 0 | 0% |
| Purchases | one | eleven% |
| Deposit Reception | one | eleven% |
| Commercialization | one | eleven% |
| Accountancy | 3 | 33% |
| Billing | one | eleven% |
| Treasury | two | 22% |
| Total | 9 | 100% |
The cost of photocopies was distributed in relation to the number of people using the service.
| Table 6 - Dist. According to certifications made | ||||
| quantity | Percentage | |||
| certifications | ||||
| Expedition | 0 | 0% | ||
| Purchases | 0 | 0% | ||
| Deposit Reception | 0 | 0% | ||
| Commercialization | 66 | 70% | ||
| Accountancy | 0 | 0% | ||
| Billing | 0 | 0% | ||
| Treasury | 28 | 30% | ||
| Total | 94 | 100% | ||
For the allocation of Gs. Writing for the different activities was used based on the number of certifications carried out by activity.
| Table 7 - Distribution s / Forms used | |||
| Total | Percentage | ||
| forms | |||
| Expedition | 220 | 8% | |
| Purchases | 510 | 19% | |
| Deposit Reception | 115 | 4% | |
| Commercialization | 170 | 6% | |
| Accountancy | 685 | 26% | |
| Billing | 570 | 22% | |
| Treasury | 358 | 14% | |
| Total | 2628 | 100% |
For the allocation of Gs. From Printing to the different activities, the number of forms used (Printed) used by each of the activities was used as a basis.
| Table 8 -Distribution s / quantity of PC | ||
| Qty PC | Percentage | |
| Expedition | 0 | 0% |
| Purchases | one | 14% |
| Deposit Reception | one | 14% |
| Commercialization | one | 14% |
| Administration | two | 29% |
| Billing | one | 14% |
| Treasury | one | 14% |
| Total | 7 | 100% |
This distribution was used to assign the maintenance cost of the Tango System to each activity based on the number of PCs.
| Table 9 - Distribution proportional to all activities | ||
| Percentage | ||
| Expedition | 14.28% | |
| Purchases | 14.28% | |
| Deposit Reception | 14.28% | |
| Commercialization | 14.28% | |
| Administration | 14.28% | |
| Billing | 14.28% | |
| Treasury | 14.28% | |
| Total | 100% |
To calculate the costs assignable to Safety and Hygiene, Gross Income, Other Taxes and Donations-Contributions, a distribution proportional to all activities was used.
| Table 10 - Distribution s / kilometers consumed by function | |||
| kilometres | Percentage | ||
| consumed | |||
| Expedition | 5000 | 44% | |
| Purchases | 100 | one% | |
| Deposit Reception | 5000 | 44% | |
| Commercialization | 0 | 0% | |
| Accountancy | 300 | 3% | |
| Billing | 80 | one% | |
| Treasury | 980 | 9% | |
| Total | 11460 | 100% |
For the calculation of the costs assignable to Amortizations of Wheels, Fuels, Insurance and Toll and Parking, a Distribution was used according to the mileage consumed in each activity.
| Table 11 –Distribution of Wages and Contributions s / Number of Employees in dependency relation. | ||||||||
| Concept | % | Expedition | Purchases | Dep. / Recep, | Commercial. | Accountancy | Billing | Treasury |
| Qty employees | two | two | one | one | two | one | two | |
| Gross salary | 350 | 390 | 500 | 400 | 440 | 360 | 450 | |
| Total gross wages | 700 | 780 | 500 | 400 | 880 | 360 | 900 | |
| Contributions | ||||||||
| Retirement | eleven% | 77.00 | 85.80 | 55.00 | 44.00 | 96.80 | 39.60 | 99.00 |
| Law 19.032 | 3% | 21.00 | 23.40 | 15.00 | 12.00 | 26.40 | 10.80 | 27.00 |
| Social work | 3% | 21.00 | 23.40 | 15.00 | 12.00 | 26.40 | 10.80 | 27.00 |
| Labor union | 4% | 28.00 | 31.20 | 20.00 | 16.00 | 35.20 | 14.40 | 36.00 |
| Total Contributions | twenty-one% | 147.00 | 163.80 | 105.00 | 84.00 | 184.80 | 75.60 | 189.00 |
| Net Salaries | 553.00 | 616.20 | 395.00 | 316.00 | 695.20 | 284.40 | 711.00 | |
| Contributions | 151.69 | 169.03 | 108.35 | 86.68 | 190.70 | 78.01 | 195.03 | |
| Salaries + Cont. | 851.69 | 949.03 | 608.35 | 486.68 | 1070.70 | 438.01 | 1,095.03 |
For the calculation of the costs assignable to Salaries and Wages and Social Charges of the employees in a dependency relationship, a Distribution was used according to the number of employees who perform the different tasks that make up each activity and the salary of each one.
| Table 12 -Dist. S / qty Personal and used Rolled (combination) | ||||||
| Percentage | Percentage | Percentage | ||||
| personal | I used Rod | combined | ||||
| Expedition | fifteen% | 44% | 29% | |||
| Purchases | fifteen% | one% | 8% | |||
| Deposit Reception | fifteen% | 44% | 29% | |||
| Commercialization | 8% | 0% | 4% | |||
| Accountancy | 2. 3% | 3% | 13% | |||
| Billing | 8% | one% | 4% | |||
| Treasury | fifteen% | 9% | 12% | |||
| Total | 100% | 100% | 100% | |||
For the apportionment of the insurance paid in the year and taking into account that they are included in this concept, the wheeled policies and the compulsory personal insurance, we combine the number of employees and the use of wheeled vehicles averaging the percentages obtained in the table 10 and the number of personnel in each activity.
The rest of the expenses in the table were directly assigned to the activity to which they relate.
Below we show the general table of costs and activities that shows us how the costs were distributed to each of the activities.
| Concept | Monthly | Expedition | Purchases | Dep.- Rep. | Commercial. | Administ. | Billing | Treasury | Ref. (Assignment) | ||||||||
| Salaries and contributions | 5,499.49 | 851.69 | 949.03 | 608.35 | 486.68 | 1,070.7 | 438.01 | 1,095.03 | Table 11 | ||||||||
| Administrative expenses | 1,296.47 | 0.00 | 324.12 | 0.00 | 0.00 | 324.12 | 324.12 | 324.12 | Table 12 | ||||||||
| Public services | 2,403.65 | 739.58 | 184.90 | 739.58 | 184.90 | 184.90 | 184.90 | 184.90 | Table 2 | ||||||||
| Various fees | 3,074.21 | 974.21 | 2,100.00 | Direct | |||||||||||||
| Repair, spare parts., Pat. | 886.66 | 386.85 | 7.74 | 386.85 | 0.00 | 23.21 | 6.19 | 75.82 | Table 10 | ||||||||
| Photocop maintenance. | 136.25 | 0.00 | 15.14 | 15.14 | 15.14 | 45.42 | 15.14 | 30.28 | Table 5 | ||||||||
| Clerk expenses | 383.75 | 268.63 | 115.13 | Table 6 | |||||||||||||
| Building maintenance | 533.21 | 164.06 | 41.02 | 164.06 | 41.02 | 41.02 | 41.02 | 41.02 | Table 2 | ||||||||
| Amortizations Rolled | 2,171.44 | 947.40 | 18.95 | 947.40 | 0.00 | 56.84 | 15.16 | 185.69 | Table 10 | ||||||||
| Amortizations M and U and Inst. | 222.37 | 42.36 | 21.18 | 42.36 | 31.77 | 31.77 | 21.18 | 31.77 | Table 14 | ||||||||
| Gtos. And bank interest | 6,262.49 | 6,262.49 | Direct | ||||||||||||||
| Fuels | 595.64 | 259.88 | 5.20 | 259.88 | 0.00 | 15.59 | 4.16 | 50.94 | Table 10 | ||||||||
| Bookstore and mat. comp. | 684.79 | 54.78 | 102.72 | 102.72 | 75.33 | 178.05 | 75.33 | 102.72 | Table 4 | ||||||||
| Photocopies | 144.11 | 0.00 | 16.01 | 16.01 | 16.01 | 48.04 | 16.01 | 32.02 | Table 5 | ||||||||
| Communications | 1,972.37 | 98.62 | 394.47 | 98.62 | 394.47 | 394.47 | 197.24 | 394.47 | Table 3 | ||||||||
| Representation expenses | 376.39 | 376.39 | Direct | ||||||||||||||
| Insurance | 1,062.34 | 311.42 | 84.31 | 311.42 | 42.49 | 136.07 | 47.26 | 127.22 | Table 13 | ||||||||
| Maintenance Bs. Of Use | 1,488.22 | 457.91 | 114.48 | 457.91 | 114.48 | 114.48 | 114.48 | 114.48 | Table 2 | ||||||||
| Maintenance Sist. Tango | 143.42 | 20.49 | 20.49 | 20.49 | 40.98 | 20.49 | 20.49 | Table 8 | |||||||||
| Freight and haulage | 1,037.44 | 1,037.44 | Direct | ||||||||||||||
| Toll and parking | 1,267.79 | 553.14 | 11.06 | 553.14 | 0.00 | 33.19 | 8.85 | 108.42 | Table 10 | ||||||||
| Spreads | 1,021.57 | 1,021.57 | Direct | ||||||||||||||
| Printing and others | 274.83 | 23.01 | 53.33 | 12.03 | 17.78 | 71.64 | 59.61 | 37.44 | Table 7 | ||||||||
| Safety and Hygiene | 27.83 | 3.97 | 3.97 | 3.97 | 3.97 | 3.97 | 3.97 | 3.97 | Table 9 | ||||||||
| Interest and surcharges imp. | 347.29 | 347.29 | Direct | ||||||||||||||
| Discounted discounts | 59.18 | 59.18 | Direct | ||||||||||||||
| Gross income | 4,309.96 | 615.46 | 615.46 | 615.46 | 615.46 | 615.46 | 615.46 | 615.46 | Table 9 | ||||||||
| Advertising | 104.70 | 104.70 | Direct | ||||||||||||||
| Surveillance | 16.67 | 5.13 | 1.28 | 5.13 | 1.28 | 1.28 | 1.28 | 1.28 | Table 2 | ||||||||
| Travel expenses | 1,292.58 | 1,292.58 | Direct | ||||||||||||||
| Rentals | 25.00 | 7.69 | 1.92 | 7.69 | 1.92 | 1.92 | 1.92 | 1.92 | Picture | ||||||||
| Exchange rate | 78.10 | 78.10 | Direct | ||||||||||||||
| Other taxes | 1,090.62 | 155.74 | 155.74 | 155.74 | 155.74 | 155.74 | 155.74 | 155.74 | Table 9 | ||||||||
| Donations and Contribuc. | 231.33 | 33.03 | 33.03 | 33.03 | 33.03 | 33.03 | 33.03 | 33.03 | Table 9 | ||||||||
| Totals | 40,522.13 | 8,723.31 | 2,883.52 | 4,221.12 | 5,800.63 | 6,981.70 | 2,144.13 | 9,765.44 | |||||||||
- Identification of the cost drivers of each of the activities.
After observing each of the activities, the costs consumed and the way in which they interact, we determined the most representative inductors or Cost Drivers for each of the activities.
- Determination of the final Costing Units or outputs and allocation of the costs of the activities to those.
At this point in the work we take as a final object the unit price of two products, one of them with a low volume of sales and the second with a high volume of sales.
Products:
- Acthelea gel fco. 40 u. (4 units sold monthly) Laxuave Enteral (700 units sold monthly)
We recall that products, services and other outputs are not the focus of greatest interest of an activity-based management. But the allocation of costs to them is necessary to enrich the planning, decision-making and management control processes.
In this case, Mercurio SRL has a deep interest in determining how product costs vary according to the monthly commercialized volume.
| Laxuave Enteral (Highest number of units sold) | ||||||||||||
| Expenses of the | Units | Units | cost | |||||||||
| Expedition | Activity for | Total Prod. | Enteral Laxuave | Assignable | ||||||||
| All Prod. | Monthly | Monthly | of this Activity | |||||||||
| Total | $ 8,723.31 | 765,000 | 700 | $ 7.98 | ||||||||
| Expenses of the | Total Orders | O / C for | cost | |||||||||
| Purchases | Activity for | shopping | Enteral Laxuave | Assignable | ||||||||
| All Prod. | monthly | Monthly | of this Activity | |||||||||
| Total | $ 2,883.52 | 570 | 4 | $ 20.24 | ||||||||
| Expenses of the | Total Orders | O / C for | cost | |||||||||
| Deposit Reception | Activity for | shopping | Enteral Laxuave | Assignable | ||||||||
| All Prod. | monthly | Monthly | of this Activity | |||||||||
| Total | $ 4,221.12 | 570 | 4 | $ 29.62 | ||||||||
| Expenses of the | Total Invoices | Invoices for | cost | |||||||||
| Commercialization | Activity for | monthly | Enteral Laxuave | Assignable | ||||||||
| All Prod. | Monthly | of this Activity | ||||||||||
| Total | $ 5,800.63 | 510 | 7 | $ 79.62 | ||||||||
| Expenses of the | Total Invoices | Invoices for | cost | |||||||||
| Billing | Activity for | monthly | Enteral Laxuave | Assignable | ||||||||
| All Prod. | Monthly | of this Activity | ||||||||||
| Total | $ 2,144.13 | 510 | 7 | $ 29.43 | ||||||||
| Expenses of the | Total forms | Form. For | cost | |||||||||
| Accountancy | Activity for | processed | Enteral Laxuave | Assignable | ||||||||
| All Prod. | monthly | Monthly | of this Activity | |||||||||
| Total | $ 6,981.70 | 2,044 | 27 | $ 92.22 | ||||||||
| Expenses of the | Total receipts and | Total receipts and | cost | |||||||||
| Treasury | Activity for | OR / payment process | OR / payment process | Assignable | ||||||||
| All Prod. | monthly | Enteral Laxuave | of this Activity | |||||||||
| Total | $ 9,765.44 | 864 | 6 | $ 67.82 | ||||||||
TOTAL COSTS ASSIGNED TO ALL ACTIVITIES $ 326.92
UNIT COST = TOTAL COST / QTY. FROM $ 0.47
($ 326.92 / 700 unit)
UNIT PRICE (according to inventory system) $ 7.90
TOTAL UNIT COST $ 8.37
SALE PRICE (CURRENT) $ 9.50
| Acthelea gel fco. 40 u. | ||||||||||||||
| Expenses of the | Units | Units of | cost | |||||||||||
| Expedition | Activity for | Total Prod. | Acthelea gel | Assignable | ||||||||||
| All Prod. | Monthly | Monthly | of this Activity | |||||||||||
| Total | 8,723.31 | 765,000 | 38 | $ 0.43 | ||||||||||
| Expenses of the | Total Orders | O / C for | cost | |||||||||||
| Purchases | Activity for | shopping | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | Monthly | of this Activity | |||||||||||
| Total | 2,883.52 | 570 | 3 | $ 15.18 | ||||||||||
| Expenses of the | Total Orders | O / C for | cost | |||||||||||
| Deposit Reception | Activity for | shopping | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | monthly | of this Activity | |||||||||||
| Total | 4,221.12 | 570 | 3 | $ 22.22 | ||||||||||
| Expenses of the | Total Invoices | Invoices for | cost | |||||||||||
| Commercialization | Activity for | monthly | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | of this Activity | ||||||||||||
| Total | 5,800.63 | 510 | 4 | $ 45.50 | ||||||||||
| Expenses of the | Total Invoices | Invoices for | cost | |||||||||||
| Billing | Activity for | monthly | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | of this Activity | ||||||||||||
| Total | 2,144.13 | 510 | 4 | $ 16.82 | ||||||||||
| Expenses of the | Total forms | Form. For | cost | |||||||||||
| Accountancy | Activity for | processed | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | monthly | of this Activity | |||||||||||
| Total | 6,981.70 | 2,044 | 13 | $ 44.40 | ||||||||||
| Expenses of the | Total receipts and | Total receipts and | cost | |||||||||||
| Treasury | Activity for | OR / payment process | Acthelea gel | Assignable | ||||||||||
| All Prod. | monthly | monthly | of this Activity | |||||||||||
| Total | 9,765.44 | 964 | 7 | $ 70.91 | ||||||||||
TOTAL COSTS ASSIGNED TO ALL ACTIVITIES: $ 215.45
UNIT COST = TOTAL COST / QTY. FROM U. Mens. (230.25 / 38) $ 5.67
UNIT PRICE (based on PEPS Inventory System) $ 9.13
TOTAL UNIT COST $ 14.80
SALE PRICE (Current) $ 13.00
Observations obtained in the application of the ABC method
Applying the ABC Activity Based Costing method, we obtained responses to the company's statement: "It is convenient to market high-turnover products."
According to the results obtained in both cases (Laxuave Enteral and Acthelea), we can affirm that the company must offer its customers as many high-turnover products as possible, such as the case of Laxuave Enteral, leaving second-rate products behind.
Stage No. 3 Determination of Indices. Balance Point, Safety margin
Economic breakeven point:
| 392,860 | = | 392,860 | = 2,899.47474 | ||||
| one- | 3,135,917 | 1 - 0.86 | |||||
| 3,627,408 |
SAFETY MARGIN:
It determines to what extent the company can decrease its sales without becoming a deficit.
| Sales - PE $ | = | 3,627,408 | - | 2,899,474 | = | 0.2007 | |
| Sales | 3,627,408 | ||||||
| Safety margin | Coef * Sales | = | 0.2007 | * | 3,627,408 | = | 727,934 |
FINANCIAL BALANCE POINT
It sets the minimum sales volume that the company must reach to be able to continue the activity without facing a financial deficit.
| PC | = | CF- Non-chargeable charges | = | 392,860 | - | 28,726 | = | 364,134 | = | ||
| one- | CV | one | - | 3,135,917 | 0.114 | ||||||
| Collections | 3,538,374 | ||||||||||
| 3,194,158 | |||||||||||
|
Collection |
= |
Credits start at |
= |
660,339 |
|||||||
| Gross sales for the year | = | 3,665,496 | Net Sales x 5% x 21% | ||||||||
| Credits at closing | = | -787,461 | |||||||||
| 3,538,374 |
Stage Nº4 Conclusions.
The Monetary Equilibrium Point has been obtained, since the company markets a wide variety of products (thousands) in which the only common element that is added to the cost is the percentage of profit.
The company should sell $ 2,899,474 to be able to support its fixed structure and cover its variable costs. At this level of sales, the company does not show losses or gains. From this point begins to generate profits.
The safety margin indicates to what extent sales can decrease without entering the loss zone. The distance between the break-even point and said margin is adequate since, in the face of a drop in sales of up to $ 727,.934, the company is not at risk in terms of covering its costs, both fixed and variable.
There is also a financial or closing point where account can be taken of fixed expenses. It was observed that the financial equilibrium point is located below the economic equilibrium point.
At Mercurio SRL there is not much difference between the two equilibrium points, since it has few non-expendable costs, so you should be careful not to fall into a financial deficit.
The analysis made from the equilibrium point graph where the company's situations are reflected in different production and sales volumes, is an optimal instrument for budget formulation.
- The implementation of an activity-based cost system (ABC) was analyzed and after said analysis we obtained the following conclusion:
We note that with the costing carried out for two randomly chosen items, Acthelea gel fco. 40 u. and Laxuave, for the first, the unit cost is $ 14.80 and the sale price is $ 13, which shows an important lack of information. Regarding the second Laxuave product, the determined cost was $ 8.37 and the sale price was $ 9.50, which maintains a favorable relationship with the expected profit margin.
This indicates that the company reduces its unit costs by selling and buying a greater quantity of units of the same product, given that the cost that each product consumes in the activities is less if the quantity per order increases. For example. Selling 700 units of Laxuave implies a lower unit cost than selling 70 units of another product. The company should focus its efforts on generating large sales operations, but because there are products that it needs to commercialize to enter or stay in the market, their sales should be minimal. We are in a position to say that the company evidences the need for a cost system.
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