Cost accounting in refrigerated warehouses: direct costing versus full cost accounting

Cost accounting in refrigerated warehouses: direct costing v e r s u s

full cost accounting*

G. Lorenz and K.-P. Brehm Institute for Business Economics and Market Research of F o o d Processing, Federal Dairy

Research Center, Kid , F R G Received 9 September 1988; revised 16 January 1989

The aim of this paper is to elaborate a concept for a modem direct costing system for refrigerated warehouses. After a brief introduction on the purposes and objectives of running a cost accounting system as well as a comparison of available accounting systems, full cost accounting systems which are actually used will be critically analysed. The main influences which determine the profit/loss situation of a refrigerated warehouse will be qualitatively and quantitatively evaluated. On the basis of these findings the concept for a modem, hierarchical direct cost accounting system for refrigerated warehouses will be outlined. This direct cost accounting system will provide managers of cold stores with a powerful tool for analysing the real causes for the (actual) profit/loss situation in detail. As a result of this, the decision making process in a refrigerated warehouse could be effectively improved, which would lead to significantly better economic results than managing such an enterprise just by 'rules of thumb' or 'educated guesses'. (Keywords: refrigerated warehouses; eostings; accounting systems)

La comptabilite dans les entrepets frigorifiques: evaluation directe des cofits ou evaluation globale des cofits

Eobjectif de cet article est d'blaborer le concept d'un systbme d'evaluation directe des cofits pour les entrepSts frigorifiques. Apr#s une brbve introduction sur les raisons et les objectifs de l'utilisation d'un systbme de comptabilit# et une comparaison des syst#mes comptables disponibles, on analyse de fagon critique les syst#mes de comptabilite 91obale rbellement utilises. On bvalue qualitativement et quantitativement les principales influences agissant sur la situation des profits et pertes d'un entrepOt frigorifique. A partir de ces raisonnements on esquisse le concept d'un syst#me de comptabilit# direete, moderne, hi#rarchis#e pour les entrepets frigorifiques. Ce syst#me de comptabilit# directe procurera aux exploitants d'entrepets frigorifiques un outil efficace pour l'analyse detaillee des causes reelles de la situation (reelle) des profits et pertes. Par suite, le processus de prise de dkcisions dans un entrepOt frigorifique pourrait dtre ambliorb effectivement, ce qui assurerait de meilleurs r#suhats #conomiques que la gestion d'une entreprise de fa(on empirique ou au coup par coup. (Mots cles: entrepets frigorifiques; evaluation des cofits; systdmes de comptabilite)

Purposes and objectives of a cost accounting system 1 step

In contrast to financial bookkeeping procedures, which are subject to legally fixed rules (orderly bookkeeping to protect stock holders, etc.), there is neither a definite obligation to run a cost accounting system in a specified form nor to run it at all. Fo r this reason managers dispense with cost accounting in many branches. In this 2 s t e p case managers are not able to thoroughly analyse the real causes for success/failure of their enterprise, which incorporates the danger of taking false decisions/actions and in the worst case may lead to bankruptcy.

However, progressive managers normally run a cost 3 s t e p accounting system in order to be provided with a useful instrument for planning purposes (regarding a profitable storage programme, a profitable structure of customers, etc.), for a price-making aid [for single services (articles)] and for control purposes (e.g., cost in relation to performance). The general running of a cost accounting system is depicted in Figure I.

* English translation of a German paper originally published in Figure 1 Fleischerei (1987) 9 794-803 Figure 1

Der iva t ion of costs on basis I of f i n a n c i a l • c o s t t y p e s b o o k k e e p i n g

1, Allocation~ cost centres of c ° s t s l ~-c°StotherUnits

allocation hierarchy

control ] Use of cos t s price evaluation I

p l a n n i n g /

object ives of cost

accounting

Purposes and objectives of a cost accounting system 1 Raisons et objectifs d'un systbrne de comptabilit#

014(~7007/89/030125 12503.00 © 1989 Butterworth & Co (Publishers) L tdand l lR Rev. Int. Froid 1989 Vol 12 Mai 125

Cost accounting in refrigerated warehouses." G. Lorenz and K.-P. Brehm

FULL ABSORPTION COSTING

CHARACTERIS'[1C:

all costs ore allocated to cost centers and then to cost units (on certain allocation bases)

DIRECT COSIING SYSTEMS (HIERARCHY BASED SYSTEMS)

CHARACTERIS11C:

there are no allocation bases for cost allocation, all costs ore assigned as single cost to their specific hierarchy level in form of fixed and variable cost elements.

bad, due to the allocation of common costs to cost centers, n o responsibility of a department manager for the amount of his department's costs Is evoluabte

bad, when capacity usage is low, prices result; s~tstemotic

mis,ludgement of the market

bad, the relevant costs in a--'decision situation ore not evaluoble

Figure 2 Figure 2

APPROACH TO OBJEC~VES

CONTROL OF CENTERS OF RESPONSIBILITY

PRICE MAKING AiD

PLANNING

Full absorption costing versus direct costing I

good, the variable costs that could be influenced on the specific level ore documented

good, at least a minimum price can be calculated

good, the relevant costs in a decision situation ore outlined.

Concept de l'rvaluation globale et de l'dvaluation directe des cof~ts

no. cost type

1. depreciation

2. Interest

3. salaries

4. profit non- dependant taxes and charges

5. miscellaneous costs

6. : wages

7. electric power

DM p.o.

771,381 24.2

555,467 17.4

58.4 490,000 15.3

47,020 1.5 .

costs in ~ rough cloulflcatlon DM/cbm occupied control method of total costs of cost types

fixed plant > costs 111.02

at time of investment

at time of financing

low

low

(fixed) costs 577,501 18.1 of service 34.41 low

centers

44.68

190.11

variable product/ servlce re4oted costs

490,000 15.3

23.5

262,500 8.2

8. ~.. cost types 3,193,869 1 O0

yss

yes

project evaluation

comparison of conditions

lnterperiod comporlsion

• (internally and/or externally)

labor scheduling and control electric power consumption analysis and control

Figure 3 Cost-type structure of a typical refrigerated warehouse (35000m a gross storage capacity, 21000 m a net storage capacity, 16800 m 3 occupancy). (cf. Reference 10, p. 18) Figure 3 Structure du co~t d'un entrep6t frigorifique type (capacit~ d'entreposaqe brute de 35 000 m 3, capacit~ d'entreposage nette de 21 O00rn 3, occupation de 16800m 3) (cf. R~f~rence 10, p. 18)

Direct costing versus full absorption costing

Principally there are two different categories of accounting systems, the traditional full absorption cost accounting system which basically consists of cost type, cost centre and cost unit accounting, and the modem direct costing systems with a calculation object hierarchy which differentiates between fixed and variable (single) cost elements on all levels. Full absorption costing systems, which still prevail in FRG, mostly serve the purpose of a recalculation. In contrast to this the dominating target of (extended) direct costing systems is an orientation towards the present and future market and cost situation. This is achieved by a separation of costs into fixed and variable single costs that can be used in calculation systems which show the effect of actual decisions on realizable profit. This is especially true for an (extended) direct costing system due to a decision oriented hierarchy for the allocation of (single) revenues and (single) costs. The following comments on direct

costing systems, therefore, mainly concern such an extended direct costing system which is known as 'Deckungsbeitragsrechnung' in FRG.

A comparison of both basic cost accounting systems (full absorption costing and direct costing) has largely been given in cost accounting literature. The work of Riebel 2, Kilger 3, Heinen 4 and Williams 5 should be mentioned in particular. The advantages and disadvantages of the two basic cost accounting systems are, therefore, only outlined in condensed form in Figure 2. I fa comparison of the two systems is made considering the basic goals of a cost accounting system - to provide aids for planning, pricing and control purposes - then this comparison is definitely in favour of the direct costing systems, if the normally greater effort to run such systems is not taken into consideration. From our point of view the hierarchy-based direct costing system conceived by Riebel 2 is especially advantageous. This system is ideally suited to outline the effect of managerial decisions as it allocates all costs as single costs due to their specific

126 Int. J. Refrig. 1989 Vol 12 May

Cost accounting in refrigerated warehouses. G. Lorenz and K.-P. Brehm

NO. ~ COST CENTERS iAMOUNTS TAKEN FROM

BOOKKEEPING COST TYPES ~ DM p.o.

1 DEPRECIATION 771.380

2 INTEREST 555.467

3 COST RELEVANT TAXES 47.020

4 SALARIES AND WAGES 980.000

5 ELECTRICITY 262.500

6 MISCELLEANOUS COSTS 577.500

7 ~.. TOTAL COSTS 3.193.867

8 FREEZER THROUGHPUT t

9

10

AllOCATION BASE

t fixed-asset accounting

3,5//71,5/25,0

2,o141,o157,o

20,0/75,0/ 5,0

3,5/"/I ,5/25,0

FREEZER

DM p.o.

55.814

30.904

1.646

19.600

52.500

20.213

STORAGE

DM p.o.

570.550

401.761

33.619

401.800

196.875

412.913

TRANSPORT

DM p.o.

145.016

122.803

11.755

558.600

13.125

144.375

- 180.675 2.017.518 995.674

10.000 (=2X5.000)

CUMULATED 60.000 OCCUPANCY t (=12x5.000)

TRANSPORTED 30.000 TONNAGE t (=3x2x5.000)

11 FULL ABSORPTION COSTING 18,07 33.63 33,19 COST UNIT RATES (DM/t) (l)ll/~ ~1 mmlh) (DII/t id tnmpit}

12 GOOD SPECIRC COST UNIT RATES ARE CALCULABLE BY WEIGHTING RGURES!I

Figure 4 Figure 4

Full absorption costing for refrigerated warehouses - simplified expense distribution sheet I J ° Evaluation globale des coats pour des entrep~ts frigorifiques - fiche de r~partition simplifi~e des d~penses

I DIRECTLY INFLUENCABLE I PARAMETERS THAT CAN l ONLY BE INFLUENCED [

Returns from business services

ratable costs of services

service- I product group- plant- enterprise-

~p ricse of business services ~ (Balm-)terlff rates* business service peckage pricos ~.----f----~ structure of customers advert/sing, customer aoqu/s i t lon~-- -~--~ m/x of oold stored goods range of business services ~ capacity usage batch density in storege/frsezer-*-----~--~- turnover rate (bottleneck situation) l ~ storage technology

= manpower sehed1*Hn~ ",- energy consumption

related fixed costs * tariff rates that are paid within the

EC agricultural surplus storage program

= result

Figure 5 Principle factors which influence the financial result of a refrigerated warehouse 1' 1~ Figure 5 Principaux facteurs dbterminant le resultat financiel d'un entrep~t frigorifique

hierarchy level. The hierarchy resembles the real structure of the production process and thus results in information suitable to support management's decision making. For this reason - after a critical analysis of full absorption costing systems for refrigerated warehouses - a conception of a modern accounting system on the basis of such a hierarchy-based direct costing system is elaborated.

Refrigerated warehouse full absorption cost accounting

Irrespective of the advantages of direct costing systems outlined in Figure 2, full absorption cost accounting systems still dominate in practice and not only in

refrigerated warehouses 6-9. In a full absorption cost accounting system, the financial bookkeeping expenses have to be normalized and calculated with regard to periods (cost type accounting). For an average German refrigerated warehouse (in 1984--1985) with approximately 35 000 m 3 gross storage capacity a typical cost structure is depicted in Figure 3. This cost structure is striking in so far as the dominating part of the costs (58.4~o) is due to the fixed cost elements depreciation, interest, salaries, profit independent taxes/charges, miscellaneous costs amounting to 18.1 ~o, whereas only 23.5 ~o of the costs are due to the variable cost elements, direct labour and electric power.

Such a high fixed cost charge, compared to other

Rev. Int. Froid 1989 Vol 12 Mai 127

Cost accounting in refrigerated warehouses: G. Lorenz and K.-P. Brehm

I Z 3 4 5 8 7 8 I f i g . b (pa r t 1): REFRIOERATED WAREHOUSE COSlS AND RETURNS MODEL 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 costs of a r e f r i g e r a t e d warehouse of * 5 basic values 6 cbm: see row 4 7 net /gross . 8 capac i ty usage: . 9

10 weight-%: . I I s torage room/t: . 12 we ight / rack : . 13 w e i g h t l p a l e t t . 14 p a l e t t s ( in reserve) * 15 p r i c e / p a l e t t DM* 16 p r i c e / r a c k DM* 17 f r e e z e r capaci ty t * 18 f reezer racks 1. + s . l t capac. * 19 pr ice f r eeze r rack I. + 12 hooks * 20 p r i ce f r eeze r rack s . * 21 running cap i t a l * 22 23 p rov i s i ona l r e s u l t s 24 volume-% 25 net volume (cbm) 26 occupied vol . (cbm) 27 ca lcu la ted weight ( t ) 28 occupied weight ( t ) 29 no. p a l e t t s ca l cu la ted 30 no. p a l e t t s in reserve 31 no. racks ca lcu la ted 32 no. racks in reserve 33 no. f r eeze r racks ca lcu la ted I. + s. 34 35 investments 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 38 I. s i t e * 39 per sq.m ° 40 2. b u i l d i n g (wi th o f f i c e , 41 loading area, i n s u l a t i o n ) * 42 43 3. r e f r i g e r a t i o n & e l e c t r i c i t y * 44 45 4. i n t e r n a l p lan t t ransp. * 46 47 5. p a l e t t s 48 49 b. racks 50 51 7. f r eeze r racks 52 8. o f f i c e f u r n i t u r e and cars 53 (wi thout t e l . , t e l e x , EDP) * 54 55 running cap i t a l 56 57 58 t o t a l costs: 59 . . . . . . . . . . . . 60 dep rec ia t i on 61 i n t e r e s t 62 tax. r e l . costs * % of 63 investment r e l . costs * 64 miscel leanous costs exc. depr. , 65 and tax r ~ l . costs * 66 67 '.(,,Jr,,. ~IU. p Z3)

35000 cba

0.6 0.8

bu t te r beefquar t , boxedbeef other 30 17 3 50

1.8 4.9 2.9 3.8 0.93 1.1 0.75

O. 9 O. 93 1.1 O. 75

2 1200

3 X cbm + *

( p r o v i s i o n a l 16.07 24.79 2.59

3375.00 5206.25 543.75 2/00.00 4165.00 435.00 1875.00 1062.50 187.50 1500.00 850.00 150.00

2083 1142 170 2083 1142 170

- 1142 170 - 1142 170

40

invest , t o t a l per cbm investm.

10000 sq.m 100 DM 1000000

222 7770000

48 1680000

400000 DM 400000

166384 DM 166384

1041123 1041123

68000 68000

65000

348/03 DM J48703

12539210

52 bM

2

500 I

t o t a l : 56.55

11875.00 9500.00 3125.00 2500.00

4167 4167 4167 4167

40

deprec ia t . %

1 22

190 20

x l l 12 year ly re turns

336 ) t o t a l s 1 0 0 . 0 0

21000.00 16800.00 6250.00 5000.00

7563 7563 5480 5480

depre- i n t e r e s t c i a t i o n r a t e *

8.0

0 - 80000

3 233100 310800

10 168000 67200

ZO 80000 16000

33.33 55456 6655

20 208225 41645

20 13600 2720

20 13000 2600

0 2/896

771381 555517

771381 555517

0 . 5 0 . / 5 47022

1820000 3 1 9 3 9 1 9

Figure 6 (Part 1) Refrigerated warehouse costs and returns model Figure 6 (Ire partie): Modele des co~ts et des benefices d'un entrep~t ,fi'igortifique

businesses, does not necessarily mean that the possibilities of management influencing the firm profit positively by a decision calculus must also be very limited. On the contrary, this high fixed cost charge implies that the method of cost allocation within an accounting system decisively influences the result of a decision calculus, so that the system of cost allocation in refrigerated warehouses should receive special attention.

Full absorption cost accounting systems allocate the single cost elements gained from cost type accounting to cost centres (department costing), which in the case of

refrigerated warehouses normally consist of the main cost centres: freezer, storage and transport. Other departments, such as, the repair station, compressor station, truck wash, etc., normally play a minor part, so that mostly for these less important departments no extra cost centre is provided and no cost centre charge transfer is necessary. Regarding the cost elements depreciation and interest this allocation is - in case a specified fixed- asset card file is maintained -mos t ly definite, whereas the allocation of salaries and other costs is only possible by arbitrarily chosen cost allocation bases. Normally in cold

128 Int. J. Refrig 1989 Vol 12 May


1 2 3 4 5 6 7 8 71 f i g . 6 (part 2): REFRIGERATED WAREHOUSE COSTS AND RETURNS MODEL 72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 74 break down of total costs freezer storage transport 75 . . . . . . . . . . . . . . . . . . . . . . . . . DMlcbm % % % 7 6 * * * 77 depreciat ion 22.04 55814 570551 145016 78 in te res t 15.~7 30905 401796 122815 79 cost taxes 1.34 1846 3.5 33621 71.5 11/58 25 80 wages & sa lar ies* 28 19600 2 401800 41 558600 57 81 e l e c t r i c i t y * 7.5 52500 20 196875 /5 13125 5 82 misceIleanous costs* 16.5 20213 3.5 412913 71.5 144375 25 83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 1806/7 201/555 995b87 85 3193919 86 === . . . . . . . 87 annual returns; 88 . . . . . . . . . . . . . . . freezer storage transport other 89 tons occup, tons occup, tons occup. 90 x* 2 x* 12 x* 2 91 x pr ice* x pr ice* x price* 92 93 but ter 16.75 50250 24.00 432000 41.90 125700 94 s tock i l pa l . * 95 beef hind quarters 43.90 74630 38.90 3 9 6 7 8 0 145.60 247520 50830 96 97 boxed beef 36.80 [1040 24.80 44640 76.40 22920 98 99 other 45.00 33750 36.00 1080000 45.00 354375

100 % of tons frozen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 10 169670 1953420 750515 102 1.5 *add. fac.transp, other goods profit or loss: 103 to ta l : 2924435 -269484 104 . . . . . . . . . . . . . . . . . . . . 105 106 break down of investment c o s t s freezer storage transport 107 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . deprec, inter.rate deprec, inter.rate deprec, inter.rate 108 109 I. s i te 2800 57200 20000 110 % * 3.5 71.5 25 111 2. building (with office, 112 loading area, insulation) 8159 10878 1 6 6 6 6 7 222222 58275 77700 113 % * 3.5 71.5 25 114 3. r e f i r g e r a t i o n & e l e c t r i c i t y 33600 13440 126000 50400 8400 3360 115 % * 20 75 5 116 4. inplant transport 0 0 16000 3200 64000 12800 117 % * 0 20 BO 118 5. palettes 0 0 44365 5324 11091 1331 119 % * 0 80 20 120 6. racks 0 0 208225 41645 0 0 121 % * 0 0 0 122 7. freezer racks 13600 2720 0 0 0 0 123 % * I00 0 0 124 8. office furniture and cars 455 91 9295 1859 3250 650 125 % * 3.5 71.5 25 126 9. running capital - 976 19946 6974 127 % * 3.5 71.5 25 128 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 55814 30905 5 7 0 5 5 1 4 0 1 7 9 6 1 4 5 0 1 6 122815 130 131 to ta l : 771381 555517 132 ======== . . . . . === 133 source: ( i0, p. 23)

Figure 6 (Part 2) Refrigerated warehouse costs and returns model Figure 6 (2e partie): Modele des co~ts et des b~nefices d'un entrep6t frigorifique

1 3

2 . 3

store operations the tonnage of frozen, stored, or handled product is used as a cost allocation base, The allocated costs are then aggregated per cost centre and divided by the respective tonnage (load) which leads to cost unit costs for the freezer, storage and transport functions (Figure 4). These rates are calculated per ton of 'average storage good', which in a subsequent calculation could be specified due to special goods (boxed beef, beef quarters, butter, ice cream, etc.). Such full absorption costing based cost unit rates up to now form most often the only basis for decisions of a refrigerated warehouse management in the areas of planning, pricing and control.

Criticism of the actually applied full absorption costing systems

Full cost unit rates for the operations (freezer, storage and transport) which are normally calculated as outlined above, have the disadvantage that they react promptly to

a variation of capacity usage:

• When only a small part of the capacity of an operation is used, very high cost unit rates result. If such a high cost unit rate is used in the entrepreneurial price- making process, the enterprise is in danger of calculating itself out of the market by prices above the market (so-called systematic misjudgement of the market).

• Additionally we note that within the frame of full absorption costing there is no clearly logical method to allocate costs to cost centres, which implies that cost unit rates for single operations (goods) can always be influenced arbitrarily to a certain extent.

However, for planning and control purposes, the actual applied full absorption costing system seems to be unsuitable as well:

• For planning purposes it cannot point out which effect



DM (in thou,~,t,)

souac~ (p. 5s + 7s)

Figure 7 Result of a refrigerated warehouse as a function of space occupancy and turnover rate when storing either butter or beef hindquarters Figure 7 R~sultat d'un entrep6t frigorifique en fonction de l'occupation des locaux et du taux de rotation dans le cas de I'entreposage de beurre ou de quartiers arri~re de boeuf

a change in the structure of services and/or customers would have on profits.

• Concerning control purposes, the examination of cost centre/functional areas is not sufficiently supported, as the costs are not systematically differentiated in variable single costs that can be influenced on, for example, a cost centre level and those fixed single cost elements that cannot be influenced.

Additionally, it must be recognized that physically a storage operation can only be made when the transport of goods precedes it. Cold storage activities, therefore, are always joint activities, which consequently should be treated as such on a cost and revenue level. Irrespective of this, full absorption costing makes an artificial cost centre charge transfer and thus evokes the false impression of being able to reveal loss activities/operations in a proved way.

If a possible deal calculated on the basis of full absorption costing indicates a loss in the freezer cost centre and if management on this basis decides against the deal, this may be an erroneous decision:

• possibly the deal - even from a full absorption costing point of v i ew- would have been profitable, when taking all activities (joint operation aspect) into account; and

• when capacity usage is low, a part of the total fixed cost block that might have been reduced by the deal is unnecessarily renounced, thus worsening the total result.

To avoid such false decisions an (extended) direct costing

system with a suitable hierarchy for the allocation of returns and costs is needed to have a better information basis available and thus to be able to take actions that are economically more efficient.

Basic possibilities to influence the results of a cold store

The development of a hierarchy/systematic for a cold store (extended) direct costing system must be preceded by a qualitative and quantitative evaluation of the main factors that have an impact on the profit/loss situation. Figure 5 outlines these variables qualitatively. As depicted, the profit/loss situation is dependent on the returns from services (which themselves are a result of the total spectrum of services offered, the prices of services, the acquisition of customers and the (overall) capacity usage) on the variable costs of services actually performed, as well as the expenses (mainly investment and derived costs) that are necessary to be able to offer the services.

Another parameter that may partly be influenced by a cold-store warehouse management is the structure of customers, which influences both the composition of the mix of goods stored as well as the capacity usage. A detailed quantitative evaluation of the above parameters had been undertaken in Reference 6 on the basis of a variable model for returns and costs of a cold storage warehouse. This model was developed originally by the German refrigerated warehouse association (based on 1985 data) (see Figure 6). In this model costs are still allocated to cost centres (freezer, storage, transport) on the basis of cost allocation keys in reference to full absorption cost accounting.

The model will be described shortly as it is well suited to determine the main influences on the economics of a refrigerated warehouse. This way a good basis is provided for parameters that have to be considered within an (extended) direct costing system later on. This calculation model of an average cold-store on the basis of an electronic spreadsheet M U L T I P L A N 12 under the operating system MS-DOS 2.11 ~ 3 is constructed in such a way that it can simulate the variation of different capacity usage levels (row 8, column 3), of a different mix of goods stored (row 10, columns 3-6), as well as taking the different storage room occupancy of goods (row 11, columns 3-6) into account.

The calculated profit/loss situation based on the above input parameters is shown in Figure 6, row 103, column 8, which is the difference of returns (row 103, column 7) and costs (row 65, column 8). In Figure 6 the result was calculated for an average mix of stored goods which consisted of 30°/ butter, 1 7 ~ beef hindquarters, 3 ...... / o o

boxed beef, and 50 % of other foodstuffs and, thus, did not yet show the relative profitability of the single goods. The profitability for the two most important storage goods in FRG - butter and beef hindquarters with a strong difference in specific space occupancy - will be briefly outlined.

The profit/loss situation of a refrigerated warehouse which exclusively stores beef hindquarters or alternatively butter was simulated on the basis of BALM- payments (storage expenses which are paid by the Bundesanstalt fiir landwirtschafliche Marktordnung (BALM) as the most important cold-store warehouse 'customer') and the cost connected with the necessary operations. The result was that for butter the calculated



I 2 3 4 5 6 7 138 f i g . 8: EXTENSION OF THE REFRI6ERATED WAREHOUSE COSTS AND RETURNS MOEDEL BY VARIABLE 139 ELECTRICITY AND LABOR SIANDARDS (par t 3) 140 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 142 e l e c t r i c i t y : bu t te r 143 . . . . . . . . . . . . 144 c o n s u m p t l o n / t (kwh) * 104 145 pr ice (DMlkwh) * 0.144709 146 p r i c e l t (DM) * 15.05 147 i t e l stored ( t ) 1500 148 turnover rate 2 149 turn over { t ) 3000 150 to be frozen (1) I00 151 . . . . . . . . 152 v a r i a b l e e l e c t r i c i t y cost (DM) 45149 153 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 155 f i xed consumptionlcbm (kwh) * 156 f i xed cons. lco ]d s tore (kwh) 157 f i xed consumption (DM) 158 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45.5376 1593816

beef quar.boxed beef other sum:

172.5 172.5 150

24.96 24.96 21.71 850 150 2500

2 2 3 1700 300 /500

100 100 10 . . . . . . . . . . . . . . . . . . . . . . . .

42436 7489 16280 111354

230640 ¢ = ~ = = ~ = = = =

159 e l e c t r i c i t y ( f i x . + v a r . ) / c o l d store (DM) 160 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 e l e c t r i c i t y ( f i x . + v a r . ) I c b m (DM) 9.7712 162 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ==== 163 164 personnel 165 . . . . . . . . . 166 pers .var , hou rs l t (h) * 0.8 5.4 1.5 1.2 167 personnel cost ra te (DMIh)* 27.22 168 personnel var. cost (DMIt) 21.78 146.99 40.83 32.66 169 turn over rate ( t ) 3000 1700 300 7500 170 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 var. personnel c o s t s 65328 249880 12249 244980 172 + add. t ranspor t for f reez ing 173 other goods (DM/t) 16.33 174 amount other goods (1) 10 175 amount other goods ( t ) 750 176 add. cost other goods 12249 177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 t o t a l var. personnel cost b5328 249880 12249 257229 584686 179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

419998 = = = = = ¢ ¢ = = ¢

180 f i xed number of employees * 6.5 181 average sa lary (DM/a) * 64615 182 f i xed personnel cos t /co ld store 183 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 personnel ( f i x . + v a r . ) I c o l d store (DM) 185 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 personnel ( f i x . + v a r . ) / c b m (DM) 187 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 189 source: own ca l cu l a t i ons

341993

28.7052

1004683 = = = ~ = = = = = =

Figure 8 Extension of the refrigerated warehouse costs and returns model by variable electricity and labour standards Figure 8 Extension du modble des cofits et profits d'un entreprt frigorifique aux normes de consommation d'rlectricit6 et de main-d'oeuvre variables

full costs had already been covered when reaching a storage capacity usage of 65 %, whereas in the case of beef hindquarters this was only possible when assuming a capacity usage of 100 % (Figure 7).

The cause for these different results has to be seen mainly in the different specific storage room occupancies of the goods to be stored (butter ~ l . 8 m 3 t -~, beef hindquarters ~6m3 t-l)*. When constructing an extended direct costing system, the different margins that will have to be calculated, for example, per ton of product or per customer, must especially take the goods- specific space occupancy into account. Additionally, concerning the cost of electric power and personnel, a differentiation of fixed (e.g. warehouse related) and variable (e.g. goods-specific) cost elements is necessary. An example of how such a differentiation can be done is

* The specific space occupation of 4 . 9 m 3 t -1 in Figure 6 (row 11, column 4) is an average for beef forequarters and hindquarters which had been adapted for the calculations outlined in Figure 7 to 6 m a t - 1

given in Figure 8. The variable electricity consumption (row 144, columns 2-5) for freezing goods had to be evaluated by special energetic or (here) statistical calculation methods, taking the difference of freezing meat in a tunnel and butter in a storage room into consideration. Figure 9 depicts how such a differentiation of the total electricity consumption in relation to the beef and butter amounts frozen and the cold losses on the warehouse surface can be made. Given the monthly electricity consumption and the monthly amounts of beef and butter frozen, the electricity consumption function can be estimated by multiple regression analysis 14. The data shown in Figure 9 are those of a larger refrigerated warehouse (67000m 3) than the model refrigerated warehouse (35 000 m3). For this reason they could only be used by assuming the same specific energy consumption values. The following values have been used: storage freezing of butter = 104 kWh t- 1 ; tunnel freezing of beef hindquarters = 172.5 k Wh t- 1; for the equalization of cold



DATA FROM WAREHOUSE XYZ:

MONTH ELECTRICITY

CONSUMPTION KWH

JAN. 377,500

FEB. 326, 100

MARCH 314,300

APRIL 332.600

MAY 373.700

JUNE 547,200

JULY 460,400

AUG. 440,400

SEPT. 375.700

OCT. 350.£00

NOV. £81,700

DEC. 313, 100

YEAR ~ . 4 . 4 9 2 , 9 0 0

AMOUNT OF BEEF AMOUNT OF BUTTER FROZEN (FRB) FROZEN (FRBU)

T T ! 373 381

3 12 233

544 189

89 639

i , 092 i 77 I i, 049 186

827 2£0

6 19 9 2 7

328 32

598 I 0

187 0

602 0 I i

6,620 R. 884 [

TARGET: DETERMINA'gON OF THE ELECTRICITY CONSUMPTION (EC) FUNCTION IN RELATION TO THE AMOUNTS OF FROZEN BEEF (FRB) AND FROZEN BUTTER (FRBU)

I Ec =F (FR~, FRBU) I METHOD: MULTIPLE REGRESSION (PER EDP, SOFTWARE E.G. SPSS)

RESULT: lEO [KWH/MONTH 1 = 254,254 + 1 0 4 . FRBU + 172 .5 . FRB] { I

KWH PER T OF BEEF KWH PER T OF BUTLER

MONTHLY COLD LOSS OF THE FACILITY IN KWH

SOURCE: OWN CALCULA"RONS ON BASIS OF FIRM DATA

Figure 9 Determination of frozen goods related (variable) and refrigerated warehouse related (fixed) electricity consumption standards Figure 9 D#termination des normes de consommation d'#lectricit# pour les aliments con qelOs (variables) et l'entrepg, t frigor!fique {.fixes)

losses of the refrigerated warehouse = [-(254 254 kWh x 12 month)/67 000 m3] ~ 46 kWh m - 3 y r - 1 Concern-

ing the calculations of personnel cost the hourly expense rate per craftsman (Figure 8, row 167, column2) - further details are given in Figure 10. In this table the annual working hours used and the resulting costs are shown. The total personnel cost consists of the expense for performed work (Figure 10 position IIA, sum 1 5= 26 318 DM yr l ) and the supplementary personnel costs (position IIB and C, sum 6 -19= 19884 DM yr-1). This calculation of personnel costs clearly indicates that supplementary personnel costs (legal, tariff or voluntary expenses) are factors that should not be overlooked in decision making.

Concept for an (extended) direct costing system for cold-store warehouses

After having examined the characteristic parameters which influence the result of a cold-store warehouse operation, a systematic for a suitable direct costing system can be developed. This method should be able to make the main parameters in a permanently operated procedure for evaluating the profit statement easily understood.

For such a direct costing system the following general construction devices must be considered 2'15.

1. Costs which in relation to a specific hierarchy level (for example, a single service) have a common cost character are in no case allowed to be allocated on that level. (Such costs with common cost character are single costs, however, in relation to another hierarchy level; for example, clerical costs are single cost on the hierarchy level enterprise.)

2. All costs/returns have to be allocated as so-called single costs on the respective hierarchy level, the hierarchy being an economic projection of real firm operations. 3. Costs/returns have to be allocated as single costs/ returns on the lowest hierarchy level possible, since the decision relevance is clear-cut on the lowest hierarchy level. 4. Generally a differentiation has to be made between fixed and variable costs. The aim of such construction devices is to build up a (extended) direct costing system as a management information system (MIS) for decision-making in the areas of profit planning, control of operations, and pricing.

Important questions in which a refrigerated warehouse direct costing system may aid decision-making are, for example, the following:

• Which cold stored goods, which services or customers are most profitable?

• Which is the (short term) lowest price limit for services'?

• Is the amount of personnel hours and energy consumption (costs) acceptable in relation to performance?

Figures 11 and 12 depict a calculation hierarchy for the allocation of costs within the concept of a product group related direct costing system. Starting from the returns of product specific services, these are reduced by the variable cost of each service resulting in margin I (mg I) of the service. A product group related aggregation of the mg I of services leads, after deduction of product group related (fixed) costs, to a mg II of product groups or services. Examples of such product group related fixed costs are special freezer racks for beef hindquarters, inclusive planned covering rates for depreciation, interest and energy costs of the actually used storage room. These mg II are then aggregated on a plant level and the single plant costs (management costs, charges, insurances) are deducted, which leads to the plant result in mg IlI. In multiplant enterprises the total enterprise profit/loss statement is evaluated in mg IV, which is the sum of the mg III of the plants minus the remaining enterprise related single costs. The above outlined allocation procedure for returns and costs is useful in making economic comparisons between single services, product groups, and different plants.

If one also wants to know which customer, with his mix of cold-stored products, is most profitable for the enterprise, only an EDP-sorting program (sort) is needed. This will aggregate all revenues and costs of all single orders of a specific customer on the basis of the customer number. If this is done for all customers a (sorted) file of customer related margins can be gained which is a valuable aid in supporting customer/order acquisition with respect to a targeted profit enhancement.

The product group related direct costing evaluation can be explained in detail with the help of data of a model refrigerated warehouse operation. This model cold-store (data drawn from Figure 3) is assumed to be occupied to 80 % (approximately 16 800 m 3) of the net storage room (totalling 21000 m3). Half of the occupied storage room is assumed to be occupied respectively by 4666 t (8400 m 3 : 1.8 m 3 t - ~) of butter and 1400 t (8400 m3:6.0 m 3 t 1 ) of beef hindquarters. The turnover rate for both goods is

132. Int. J. Refrig. 1989 Vol 12 May


L t J N b U I ~ ~ t U I t

I f ig . I0: Calculat ion of a personnel cost rate per performed lanhour 2 (e.g. , craftsman) 3 (Basis= At the beginning of 1985) 4 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

5 I . C a l c u l a t i o n o f the per formed manhours per annum 6 7 8 9

I0 11 12 13 14 15 16 17 18 19 20 21 22 I I . 23 24 25 28 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 6O 61 62 63 64 65 66 67 68

hours (h) days

A. pa id manhours a c c o r d i n g to t a r i f f (40 h/week; 52.14 weeks/annum) 2086 B. + pa id o v e r t i m e (0 2 hlweek) 104 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C. = t o t a l pa id worktime 2190 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

D. . I . paid vacation hours 244 (261) E. . I . paid sick- leave 160 ( 2 9 ) F. . / . paid legal hollday hours 64 ( 2 0 ) 6. . I . other paid extra hours 24 ( 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

H. = performed working hours 1698 (201) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C a l c u l a t i o n o f personne l cos ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DR/annum A. pay f o r performed work . . . . . . . . . .

1. bas i c wage= 2086 h * 14.00 DR/h 29204 2. o v e r t i m e pay w i t h o u t bonus= 104 h * 14.00 DMIh 1456 3. o v e r t i m e bonus (25 ~)= 104 h * 3.50 DNIh 364 4. o t h e r bonus= 2086 h * 1.40 DM/h 2920

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

t o t a l 1 - 4 33944 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. . I . for hours= 492 h * 15.50 DMlh . I . 7626 payment non-performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

payment for performed work ( to ta l 1 - 5) 26318 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B. Legal and s tandard t a r i f f supp lementa ry payments o f employer 6. h o l i d a y pay: 244 h * 15.50 OM/h 3782 7. c o n t i n u e d payment of wages tn case o f s ickness= 160 h * 15.50 DMIh 2480 8. payment o f l ega l h o l i d a y s : 64 h * 15.50 DMIh 992 g. payment o f e x t e r n hours f o r reasons not mentioned= 24 h * 15.50 DMIh 372

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

t o t a l wages (sum 1 - 9) 33944 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. c h r i s t m a s g r a t i f i c a t i o n (100 ~ o f a bas i c month ly wage) 2433 11. v a c a t i o n pay= 29 days * 20.00 DR/day 580 12. c a p i t a l c r e a t i n g payments 624

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b r u t t o annual income ( p r o v i s i o n a l sum 1 - 12) 37581 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13. l ega l s o c i a l i nsu rance 17.65 ~ 6633 (9 .35 ~ pens ion scheme, 6.10 % h e a l t h and 2.20 t unemployment i n s u r a n c e ) 37b

14. a c c i d e n t i n s u r a n c e ( 1 % of b r u t t o y e a r l y income) SO 15. e q u a l i s a t t o n payment (hand lcaped peop le ) 100 16. h e a l t h s u r v e i l l a n c e 420 17. wo rk ing c l o t h e s

C. v o l u n t a r y supp lementary payments o f employer 18. supp lementary f i r m pens ion (2 % o f b r u t t o annual income scheme) 752 19. r a t i o n a l l o w a n c e 300

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

supp lementa ry personne l cos ts (sum 6 - 19) 19894 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

D. t o t a l personne l cos ts 46212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

E. personnel cost rate per performed manhour (46212 DM = 1698 hl 27.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . = = = = = = = = = =

Figure 10 Calculation of a personnel cost rate per performed man hour (e.g. for a craftsman). Basis: at the beginning of 1985 Figure l0 Calcul du eoht du personnel par heure de travail (par ex. pour un ouvrier qual!fie). Base: debut 1985

assumed to be 0.5 which means that within the calculated period the goods are only transported into the storage room, not out of it. The making up of the product group related results based upon the above data/assumptions is shown in Figures 13 and 14.

The calculation of product group related results starts with the determination of returns for services from a product group in row 1. In row 2 the variable cost of a service (direct labour and electricity costs) on the basis of plant specific standards are calculated and deducted, which leads to mg I of services in rows 4 and 5. It is striking that, for example, the cold storage per ton of goods shows a mg I for beef hindquarters of 38.90 DM, compared with butter at only 24.00 DM. Nevertheless, this result reverses when the occupied space is taken into account:rag I per m 3 bu t te r= 13.33 D M and mg I per

m 3= 6.48 DM for beef hindquarters. Since the storage room left for free disposition is mostly the decisive bottleneck in cold-store operation, the specific margin per cubic metre of space occupied is very often the relevant figure.

After summarizing the mg I of the services of a product group the single costs of the product group [for example, paletts in the case of butter, boxes in the case of beef hindquarters, as well as the cost of the occupied storage room (fixed electricity cost, depreciation, interest)-] are deducted, which leads to a mg II of the product group in absolute terms (row 9) and specific terms (which means per cubic metre or per ton (row 10)). According to Figure 15 the product group result can be summarized, which results - after deducting the plant related single cost - in a mg III which forms the plant result.



BUTTER BEeF HIND qUARTERS

BOXED BEEF OTHER GOODS BUSINESS SERVICES

OF PLA~I~

4corrmmtmgN u ~ m IV (ua (= PRon'r/LOSS or THE m~'ERPmS~,)

Figure It Concept for a cost allocation hierarchy for a product group related direct costing system for refrigerated warehouses 1 Figure 11 Concept d'une hi~rarchie d'affectation des coats pour un systdme d'dvaluation direct des co~ts se rapportant ~ un groupe de produits pour les entrep4ts frigorifiques

C A L C U LATI O N C O N T E N T

Q CONIRJBU110N MARGIN MG I : - SINGLE RETURNS OF A BUSINESS SERVICE / VARIABLE SINGLE COST OF IHE ENJSlNESS S~RVIC£ MG I : - 'COMPARISON OF SINGLE OF SINGLE BU¢aNES5 SERVICES BUSINESS SERVICES'

L DIRECT LABOR COSTS

DIRECT ENERGY COS~3

: - ~L: MG I OF A PRODUCT GROUP OR A SERVICE / PRODUCT GROUP RELATED RXED COSTS ( ~ CONIRIBUTION MARGIN MG II OF PRODUCT GROUPS OR BUSINESS SERVICES

Q CON'IRIBUllON MARGIN MG III OF THE PLANT

@ co. ,oO ON .ARO,N OF THE ENTERPRISE

t RACKS DISASSEMBLY UNE

TSUC~ WASH

/ PROOUC3" GROUP RELATED COVERING RATES FOR DEPRECIA'nON, }NTEREST, ENERGY COST FOR THE ACllJALLY USED STORAGE ROOM

L DM/CBM STORAGE ROOM OCCUPIED

:= ~ MG II OF PROUUCT GROUPS/SERVICES / REMAJNING SINGLE COST OF THE PLANT

t PERSONNEL COSTS CHARGES, INSURANCE, ETC.

DEPRECIATION, INTEREST

MG IV := Z MG III OF PLANTS / REMAINING SINGLE COST OF 1HE ENTERPRISE

t MANAGEMENT SALARIES ASSOCIATION CHARGES

COST OF INFORMAllON RETRIEVAL

MG II : - 'COMPARISON OF SINGLE PROOUCT GROUPS OR SSRVIClES*

MG III := 'COMPARISON OF SINGLE PLJ~I"S'

MG IV := 'RESULT OF THE ENTERPRISE'

Figure 12 Concept for calculation and content of the contribution margins on the single hierarchy levels ~ Figure 12 Concept du calcul et de la teneur des marges de contribution aux niveaux hidrarchiques simples

From this table the absolute single contribution margin of a product group can be seen in relation to the plant result. As already mentioned, an analogous profit statement on the basis of customer contribution margins can be set up, if the customer orders are sorted according to the customer number and subsequently are customer specifically aggregated.

Since customer results are also the outcome of product specific results, the method of evaluating product group results has been mainly outlined in this paper. A detailed overview of how the allocation of all costs as so-called single costs on the lowest possible contribution margin hierarchy level (service, product group, plant or enterprise) has been made is given in Figure 16. As may be

seen from this figure, all costs (totalling 3 193 869 DM) have been allocated within the frame of the refrigerated warehouse direct costing hierarchy.

By pointing out the cost of the unoccupied storage room, the wages for unproductive time and the electricity consumption (cost) of the unoccupied storage room, the costs which are the responsibility of the management are clearly outlined (direct costing as control or responsibility accounting).

With the above elaborated refrigerated warehouse direct costing system it is possible to evaluate the relative profitability of single services, cold stored goods or customers. With such an accounting system management can take better actions on the basis of relevant


Cost accounting in refrigerated warehouses." G. Lorenz and K.-P. Brehm

I PROOUCT GROUP: E3 t_.l T T E Fit ~:~CIFIC STORAGE ROOM OCCUPANCY: 1.8 CSM/T

pERIOD: YEAR 1984

B U S I N E S S S E R V I C E S SINGLE RETURNS

NO. /SINOLE COSTS

1 SINGLE RETURNS 2 /. WAGES (STANDARD) 3 / ENERGY (STANDARD)

4 CONTRIBUTION MARGIN MG I OF BU~NESS SERMCES

5 SPEGIRC MG I OF BUSINESS SERVICES

8 ~"~MG I OF BUSINESS SERVICES OF A PRODUCT GROUP

2E MG I / CBM OCCUPIED 7

8 / PRODUCT GROUP RELATED SINGLE COSTS

8.1 PALETrS

8.2 COVERING RATE FOR FIXED ENERGY COST WI1HIN THE STORAGE AREA

8.3 COVERING RATE FOR FIXED COSTS ELEMENTS STORAGE AREA (DEPRECIATION, INTEREST FOR STORAGE, FREEZER, REFRIGERA'nON AND TRANSPORT EQUIPMENT)

T R A N S P O R T ( I N ) T R A N S P O R T ( O U T ) I N STORAGE FREEZING T(CU~llN~'lo",elo"/rl DM ~{c~)lH/llo~/~loW~ I OM ~C~)IH/TIOM/"I0./TI DM

44588 Z0.95 D7753 4666 15.71 r8156 4666 0.4 27.22 50803

4666 104 0.11 53379

46950 14777

10.06 5.31

1,415,535

C O L D S T O R A G E ~OJl IO. /Tp/C. I D M

~ g 2 24.0c ,5.33 134~08 0¢x *~*)

24.00 3.33

(I,415.535 DM/(4666 T * 1.8 CBM/T) = ) 16&54 DM/CBM OCCUPIED (303.37 DM/T STORAGE GOOD)

62,000

( ~ 5 4 KWH/MON. * 12 MON./67,OOO CBM),

(46 KWH/CBM * 0.11 DM/KWH * 8,398.8 CBM OCCUPIED =) 42,498

(DEPRECIATION + INTEREST WITIqlN 1HE STORAGE AREA 874,000 DM/21.000 CBM OCCUPIED)

(8,398.8 CBM * 41.61 DM/CRM = ) 349,474

MARGIN MG II 961,563 OF PRODUCT GROUP

MG II / CBM OCCUPIED (981,563 DM/83948 CBM =) 114.49 DM/CBM OCCUPIED (206.08 DM/T STORAGE GOOD)

Figure 13 Figure 13 beurre)

Concept for calculation of a product group related direct costing evaluation (contribution margin calculation for product group butter) 1 Concept du calcul d'une dvaluation directe des codts se rapportant d un groupe de produits (calcul de la marge de contribution pour le groupe du

PROOUCTGROUP: B E E F H I N D Q U A R T E R S SPECIRC STORAGE ROOM OCCUPANCY: 1.8 CBM/T

PERIOD: YEAR 1984

B U S I N E S S S E R V I C E S SINGLE RE'RJRNS

NO. /SINGLE COSTS

1 SINGLE RETURNS

2 ~ WAGES (STANDARD) 3 / ENERGY (STANDARD)

4 CONl~IBUllON MARGIN MG I OF BUSINESS SERVICES

5 SPECIRC MG I OF BUSINESS SERVICES

6 Z M G I OF BUSINESS SERVICES OF A PRODUCTGROUP

7 Z MG I / CBM OCCUPIED 6 1 PROOUCTGROUP RELATED

SINGLE COS~ 8.1 FREEZER RACKS + HOOKS

(DEPRECIATION. INTEREST)

8.2 STORAGE RACKS (', ")

8.3 COVERING RATE FOR FIXED ENERGY COST ~THIN 1HE STORAGE AREA

8.4 COVERING RATE FOR FIXED COSTS ELEMENTS STORAGE AREA (DEPRECIATION, INTEREST FOR STORAGE, FREEZER, REFRIGERA'I1ON AND I~ANSPORT EQUIPMENT

T R A N S P O R T ( I N ) T R A N S P O R T ( O U T ) IN STORAGE FREEZING ~C*.)I./T I DN/~IOM/T I OM ~ ) I H / T I ~/HIDM/T I DM ~{=~)I./T[ 0WHIDM/T I DM 1400 4~(i0 68~1 1400 43.90 51460

1400 6 27.22 22864~

1400 172.~ = 0.11 26565

1 16018~ 34895

-114.421 24.92 I

528,227

(528,227 09/(1,400 T * 6,0 CBM/T) - ) 62.88 DM/CBM OCCUPIED (377.31 OM/T STORAGE GOOD)

16,320

249,870 (46 K~4/CBM * 0.11 DM/1Q~I * 8400 ~ OCCUPIED =) 42,504

41.61 DM/CBM * 8400 CBM OCCUPIED -)349,524

C O L D S T O R A G E T(O&I.) I DM/T p9/=~ D M

MARGIN MG II -129,991 OF PRODUCT GROUP

MG II / CBM OCCUPIED - 15.47 DM/CBM OCCUPIED ( - 92.85 DM/T STORAGE GOOD)

38.9C 5.46

653520

Figure 14 Concept for the calculation routine of a product group related direct costing evaluation (contribution margin for product group beef hindquarters) l Figure 14 Concept de calcul courant pour l'dvaluation directe du cod*t se rapportant dz un #roupe de produits (marge de contribution pour le groupe des quartiers arridre de boeuf)

information, which normally will lead to better e c o n o m i c results than if management is only led by 'intuition' or 'educated guesses'.

References

Lorenz, G. Kostenrechnun 0 .t~r Kiihlhausbetriebe Vortrag anl/isslich des Seminars des Fachverbandes der Kiihlh/iuser und

Eisfabriken e. V., K61n, FRG, vervielfiiltigte Vortragsunterlagen (November 1985) 11-12

2 Riebel, P. Einzelkosten- und Deckungsbeitragsrechnung 5 Auflage, Gabler, Wiesbaden, FRG (1985)

3 Kilger, W. Flexible Plankostenreehnung und Deckungsbeitragsrechnung, 8 Auflage, Wiesbaden, FRG (1981)

4 Heinen, E. Kostenrechnung in: Handw6rterbuch der Betriebswirtschaflslehre Hrsg. Grochla, Wittmann, Stuttgart, FRG (1975) 2314 f

Rev. Int. Froid 1 9 8 9 Vol 12 Mai 1 3 5


~ ~ ' ~ P ROD U C ~B I~S~IEUP~|P RO . . . . . . . . . . . . . . . . . . . . . . . . THER SINGLE COSTS SERVICIgS) ~ BUSINESS

N G I / 9 6 1 , 5 6 3 - 1 2 9 9 9 1 . . . . . . . . . . (see f i g 1 3 and 14) L } !

z M G II OF PRODUCT GROUPS 831,572 /OTHER BUSINESS SER~qCES

iS S]2~GL~ P ~ COSTS - 1,722,284

klG I I I I - 8 9 0 , 7 1 2 , pLANT RESULT

! I

Figure 15 Plant result evaluation on basis of product group related contribution margins 1 Figure 15 Evaluation des r~sultats de l'~valuation d'aprks les marges de contribution se rapportant aux groupes de produits

5 Williams, B. R. Measuring Cost: Full Absorption Cost or Direct Cost?, Management Accounting 1976 (1) 36 f

6 Mahu, H. Die Kosten eines Kfihlhauses in: Die Tiefldihlkette (1967) 141 23-28

7 Baker, J. A uniform system of cost control for public refrigerated warehousemen in: International Association of Refrigerated Warehouses Manual, Costs (1980) B-52 f

8 Suead, Th. W., Wilklns, P. C. Guide to uniform accounting for locker and freezer provisioners Agriculture Handbook 163 USDA Farmer Cooperative Service, Washington DC (19601

9 Dickens, R. L. Management accounting for frozen food locker and related plants Agriculture Handbook 220 USDA Farmer Cooperative Service, Washington DC, Gov. Pr. Off. (1961)

10 Lorenz, G., Brehm, K.-P. Gutachtliche Stellungnahme im Ate/iraqi des B M L zu den mit der Gefrierlagerung yon Interventionsyikern (Butter, Kartonfleisch Fleisch in Vierteln) verbundenen Kosten und ErlBsen Institut ffir Betriebswirtschaft und Marktforschung der Lebensmit helverarbeitung, Bundesanstalt flit Milchforschung, Kiel, FRG (1985)

11 Bunnies, H., Lorenz, G., Brehm, K.-P. Kosten und ErlBse der Lagerhaltung yon interveniertem Getreide in der Bundesrepublik Deutschland Betriebs-und marktwirtschaftliche Studien zur Ern~ihrungswirtschaft, lnstitut fiir Betriebswirtschaft und Marktforschung der Lebensmittelverarbeitung, Heft 6, Kiel, FRG (1987)

12 Albrecht, P. Planen und Kalkulieren mit M U L T I P L A N Verlag Markt und Technik, Haar bei Miinchen. FRG [1984l

13 Fietz, M., Kitza, W., Mantz, M. Vom Umgano mit MS-DOS eine allgemein-verstiindliche Einfiihrung in 1.25 und 2.1 Vaterstetten bei Miinchen, FRG (1984)

14 Nie, N. H. et al. SPSS Statistical package/or the social seiem'es, 2nd Ed., McGraw-Hill, New York, USA /1975)

15 Drews, M. Prinzipieller Aufbau einer EDV-implementierten Deckungsbeitragsrechnung und Beispiele ihrer Anwendung als Entscheidungshilfe in Molkereien. Tell 1, in: Deutsche Molkerei- Zeitung (1982) 103(48) 1650-1657

NO. COSTS OM

1 DEPRECIATION, INTEREST 8 0 , 0 0 0

- SITE 542. 800

- BUILDING 235, 800 I 874. 000

- REFRIGERATION EQUIPMENT 9 6 , 0 0 0 / 2 t. 000 = 4 1 , 6 1 - PALETTES 62. 000 DM/C3H

- STORAGE RACKS 249. 870

- FREEZER RACKS 16. 320

- OFFICE 16. 811

- CURRENT ASSETS 2 7 , 8 4 7

; 2 WAGES 490, 000

- APPORTIONED VAR.WAGES :~79. 451

- WAGE DIFFERENCE ;>10. 549

ELEC1RICITY 2 6 2 , 5 0 0

- APPORTIONED VAR. ELECTR. COSTS 79. 944

- APPORllONED FIXED STORAGE ELEC1R. COSTS 85. 002

- TOTAL FIXED STORAGE ELCTRICI'P( COSTS 106. 260

- FIXED STORAGE ELCTR. COST DIFFERENCE 2 1. 258

- APPORTIONED RXED + VAR. EIFCI~ICITY COSTS 186 ,204

- OTHER ELECTRICITY COS]" DIFFERENCE 7 6 , 2 9 6

SALAR;ES 490, 000

CHARGES 4 7 . 0 2 0

MISCEllANEOUS COSTS 577, 50 1

~'~ COSTS 3. 193. B69

ALLOCATED SINGLE COSTS ON ]HE BUSINESS SERVICE LEVEL

BUTTER BEEF HIND DM QUARTERS

DM

5 0 . 8 0 3 2 2 8 . 6 4 8

5 3 . 3 7 9 2 6 . 5 6 5

ALLOCA1ED SINGLE COSTS ON "~E PROOUCT GROUP LEVEL

BUTTER BEEF HIND DM QUARTERS

DM

3 4 9 , 4 7 4 3 4 9 , 5 2 4

62,000

249.870

16,320

4 2 , 4 9 8 48. 504

ALLOCATED SINGLE COSTS ON "DIE PLANT (ENTERPRISE) LE~L

DM

80 ,000

175,002 (874.000-698,998) CALCULATORY COST OIFFERENGE (= COST OF THE UNOCCUPIED STORAGE ROOM)

1 6 , 8 1 1

2 7 , 8 4 7

2 lO. 549 WAGE DIFFERENCE (= WADES PAID, FOR UNPRODUC~/VE 11MES)

2 1 , 2 5 8 CALCULATORy STORAGE

ELECTRICITY COST DIFFIDENCE (= ELECTRICITY COST OF "file UNOCCUREO STORAGE ROOM)

76. 296 O~IER ELECTRIQTY COST DIF~O~CE

490,000

47.020

577.50 I

104, 182 8 5 5 . 2 13 453. 972 6 5 8 . 2 18 1. 722. 284

Figure 16 Rough concept for the allocation of all costs in form of fixed and variable single costs within the hierarchy of the refrigerated warehouse direct costing system l Figure 16 Concept approximatif d'affectation de I'ensemble des coats sous forme de frais ~l~mentales fixes et variables dans le cadre de la hi~rarchie du systbme d'kvaluation directe des coats de l'entreposage frigorifique


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Cost accounting in refrigerated warehouses: direct costing versus full cost accounting