ec. ionut bandrabur 26, ecaterina teodoroiu street panciu, vrancea, 625401, romania
DESCRIPTION
Environmental Cost Accounting. requirements and solutions for Romanian enterprises. Ec. Ionut Bandrabur 26, Ecaterina Teodoroiu Street Panciu, Vrancea, 625401, Romania Phone: +40741623593 E-mail: [email protected]. May 2006. Objectives on ECA. - PowerPoint PPT PresentationTRANSCRIPT
Ec. Ionut Bandrabur26, Ecaterina Teodoroiu StreetPanciu, Vrancea, 625401, RomaniaPhone: +40741623593E-mail: [email protected]
Environmental Cost Accountingrequirements and solutions for
Romanian enterprises
May 2006
Objectives on ECA
For implementing eco-efficiency concept in Romanian manufacturing business area it is necessary to reducereduce before to recyclerecycle:
reduction of operational costs reduction of energy and water consumption reduction of emissions, harmful substances and waste
May 2006
Some definitions Sustainable developmentSustainable development means: Other form of production (with a view of
environmental effects); Other uses of raw materials and energy. In the spirit of Eco-efficiencyEco-efficiency, top priority is
to realize the product or to provide the service while reducing energy and materials needs.
Environmental Cost Accounting – Environmental Cost Accounting – identification, appropriation and aplication of environmental costs. May 2006
Organisation benefits Identification of where
materials and energy costs are greatest;
Better informed decisions about how non-product outputs minimisation will save your organisation money;
Identification of potential productivity gains;
Demonstrating to investors, financial institutions, customers, employees and the community that your organisation is committed to forward planning and environmental responsability May 2006
Steps toward ECA State of the Art concerning
Romanian situation Flow cost accounting in: physical units – Material flow Material flow
accounting accounting monetary units – Process costing Process costing
systemsystem and Activity-based CostingActivity-based CostingMay 2006
Cost concepts for Production
Direct materials Direct labour Prime cost= cost of direct
materials + cost of direct labour
Conversion cost= cost of direct labour + factory overhead
Factory overhead
Direct costs: all costs that can be directly related to a product
Indirect costs: costs offered for a host of different products and services it is very hard to allocate these costs over the different products and services
May 2006
Flow cost accounting – what and how? Flow-Cost Accounting is a material
and energy flow-oriented cost accounting approach.
The implementation of FCA is comprised of following steps:
1) Creation a Flow Model;2) Collection of Material and Cost
Data;3) Allocation of Costs. May 2006
Flow model Material value
and costs; System value and
costs; Delivery and
disposal value and costs.
May 2006
Collection of Material and Cost Data Production
order; Input material; Product
material; Product area
machine.May 2006
Allocation of costsAllocate shared
costs using selected methods:
Process costing system;
Activity-Based Costing (ABC). May 2006
Process costing system Process costing system
Provides unit cost information Supplies cost data to support
management decisions Furnishes ending values for inventory
accounts Materials Inventory Work in Process Inventory Finished Goods Inventory
May 2006
Activity-Based Costing (ABC) and Multiple Overhead Rates ABC is a method of assigning overhead based on a
number of different allocation bases (rather than just one). ABC groups overhead costs into Cost Pools.
Model Elements Resources Activities Cost Objects Resource Drivers Activity Drivers
May 2006
Why ABC/ECA Conventional systems are not complete
Do not show the consequences of resource management decisions
Do not show the cost of doing business how we do business
Provide few insights about how to improve, or may even encourage actions that damage competitiveness
Do not provide leaders/managers with the information they need to efficiently run their organization.
May 2006
ABC basics - example
BSETUP
€60 / 30 setups=
€2 per Setup
Resources Activities ProductsDrivers
40 hours
60 hours
Lots = 5
Lots = 35
DriversSCHEDULING
€40 / 40 Lots =
€1 per LotPERSONNEL
100 Hours
€1 per Hour
A
€35
€40
€75
€25
€5
€20
Setups = 20
Setups = 10
Personnel Exp.€100
Lots Scheduled - 40Setups Performed - 30 May 2006