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RCA Discussion: The Concept of Responsiveness
Larry R. White, CMA, CFM, CPA, CGFM
Executive Director Resource Consumption Accounting Institute
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Resource Consumption Accounting
• RCA Inherits Core Principles from German Cost Management (GPK)– GPK is a Well Developed Standard Costing
System– Principles Applied in Practice since the Late
1940’s– Implemented by 3,000+ Companies
• RCA Creates an Integrated Economic Model of Operations for Decision Making– Enterprise Optimization– Principle Based– Superior Marginal Analytics
RCARCA
Resource view
Advantages
Process view
Advantages
GPK ABC
Capacity Analysis
and Management
Process Analysis and Management
Capacity-Focused
Activity-Focused
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IMA Managerial Costing Conceptual Framework Task Force
Managerial Costing Conceptual Framework
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Modeling ConceptsQualitative Characteristics
4IMA Managerial Costing Conceptual Framework Task Force
Modeling Concepts
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Information Use ConceptsQualitative Characteristics
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IMA Managerial Costing Conceptual Framework Task Force
Information Use Concepts
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• The correlation between a particular managerial objective’s output quantity and the input quantities required to produce that output– It facilitates accurate marginal cost information,– It provides insights into the nature of cause and
effect relationships, and– It enables the costing of managerial objectives
at all levels throughout the organization.
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Reponsiveness
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Related Traditional Concepts
• Variable and Fixed Costs• Step Fixed Costs
– Capacity Concept blended in• RCA:
– Proportional Input output relationships– Fixed Input output relationships– Resource Quantities/Capacity Modeled first
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Variability
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Responsiveness
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Responsiveness
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Product 1Product 2Product 3
Machine 1 Machine 2 PackagingSupervisor
Labor
Supplies
Depreciation F
FP&FP&F
Supervisor
Labor
Supplies
Depreciation F
FP&FP&F
Supervisor
Labor
Supplies
Depreciation F
FP&FP&F
Electricity Floor SpaceP F
0.2 0.20.2 0.10.3 0.4
0.10.10.2
Fixed Rate per Machine Hr Proportional Rate per Machine Hr
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Plant Maintenance Resource Pool Output Measure : Maintenance Labor HourOutput Quantity: 20,000 Hours
Primary Costs Fixed Proportional
Technician Wages -$ 600,000$
Supervisor Salary 80,000$ -$
General Material 12,000$ 100,000$
Depreciation: Shop Equipment 50,000$ -$
142,000$ 700,000$
Secondary Costs
Resource Pool Output Fixed Qty Prop Qty
Utilities MW-Hrs 40 160 6,000$ 24,000$
Activity/Process Driver Fixed Qty Prop Qty
HR: Benefits Adjustments # Adjusts 22 0 1,100$ -$ Purchase: Gen Materials # PO's 10 200 500$ 10,000$
7,600$ 34,000$
Total Resource Pool Costs 149,600$ 734,000$
Unit Cost Rates (/20,000 Hrs) 7.48 36.70
RCA Information
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www.RCAInstitute.org
757 288 6082
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RCA Storyboard
Product Support Cost
S: Ancillary Production Equipment
S: AdministrationHuman Resources
& Accounting
S: Quality Assurance
RP: Dryer (Hours)Capacity: 100Output Qty: 100
S: Plant Engineering and
Maintenance
RP: Plant Maintenance (Maint. Labor)Capacity: 30,000Output Qty: 30,000
P: Extrusion Line
RP: Extrusion Labor (Labor hours)Capacity; 32,000Output Qty: 30,000
Product P & L’s
Department
Resource PoolAbbreviated RP
Activity
RP: Chiller (Hours)Capacity: 50,000Output Qty: 50,000
Acctg
Admin
QA Test
Legend
S-Support
P- Production
Common Fixed Costs
Eval Defect
RP: Extrusion Machine1(Machine hours)Capacity; 17,520Output Qty: 10,000
Manufacturing Costs
Budgeted Products
RP: QA Labor(Labor hours)Capacity: 14,000Output Qty: 14,000
RP: Admin Labor(Labor hours)Capacity: 17,000Output Qty: 17,000
HR