1

RCA Discussion:

RCA Modeling Example

Larry R. White, CMA, CFM, CPA, CGFM

Executive Director

Resource Consumption Accounting Institute

2

Resource Consumption Accounting

• RCA Inherits Core Principles

from German Cost

Management (GPK)

– Practiced since the Late 1940’s

– Used in 3,000+ Companies

– GPK Strengths:

• Cost and Capacity Planning

• Marginal Profitability

Analysis

• Focus:

– Internal Management

Decision Making

RCA

Resource view

Advantages

Process view

Advantages

GPK ABC

Capacity

Analysis and

Management

Process Analysis

and Management

Capacity-

Focused

Activity-

Focused

RCA Recognition

RCA Institute All Rights Reserved 3

Copied from IFAC Information Paper: Evaluating The Costing

Journey: A Costing Levels Continuum Maturity Model.

Activity Based

Costing

Traditional Standard

Costing

Diagram from IFAC Information Paper:

Evaluating The Costing Journey: A Costing

Levels Continuum Maturity Model

www.ifac.org

CAUSALITY ANALOGY

Modeling Concepts

Information Use

Concepts

Operational Model Costed

Baseline Optimization Information

Inputs:

Resources

Output: Information

For Decisions

CAUSALITY ANALOGY

Modeling Concepts

Information Use

Concepts

Operational Model Costed

Baseline Optimization Information

Inputs:

Resources

Output: Information

For Decisions

• Resource • Managerial

Objective • Cost • Responsiveness • Traceability • Capacity • Work • Attributability • Homogeneity • Integrated Data

Orientation

• Avoidability • Divisibility • Interdependence • Interchangeability

• Objectivity • Accuracy • Verifiability • Measurability • Materiality

• Impartiality • Congruence

Concepts

Constraints

Concepts

Constraints

Resources

Define as Resource Pools Based on Output (and Capability)

Model Resource Relationships

Output

Responsiveness

9

Prod Line A Prod Line B

Relationship of Resources to Output & Summarize

Primary

Consumption

Relationships

Relationship of Resources to Output

Primary

Consumption

Relationships

Define as Resource Pools Based on Output (and Capability)

Trace Consumption Relationships between Resource Pools

Primary

Consumption

Relationships

Secondary

Consumption

Relationships

Summarize

Primary

Consumption

Relationships

Secondary

Consumption

Relationships

Get Well Plant

Weigh and Mix

Manual Additions

Storage & Material

Line 2 No Pane, Burn away , Better beat, or relief capsules

Pill weigh & Press

Weigh & capsule

Blister or Bottle, weigh &inspect

Seal, Package, inspect

Weigh and Mix

Line 1 Burn away or relief capsules

Bottle, weigh &inspect

Seal ,Package, inspect

To Distribution

Product Testing & Storage

Manufacturing Clean Room

Product Testing & Storage

Weigh & capsule

Pill weigh &Press

Pill Coat Print

inspect

inspect

Distribution-Tonmiles: 150000

Qty Dollars

Primary Fix Var. Total

Salaries 60,000 0 60,000

Fring.Benfit 24,000 0 24,000

Supplies 1,000 50,000 51,000

Deprection 70,000 0 70,000

Electricity

Maintenance - Laborhr: 11232

Qty Dollars

Primary Fix Var. Total

Salaries 50,000 180,000 230,000

Fring.Benfit 20,000 72,000 92,000

Supplies 100 700 800

Deprection 1,000 0 1,000

Electricity

System Sup. - Infr: 27

Qty Dollars

Primary Fix Var. Total

Salaries 130,000 0 130,000

Fring.Benfit 52,000 0 52,000

Supplies 300 0 300

Deprection 20,000 0 20,000

Electricity 0 0 0

Util. & Fac. - SqFt: 89000

Qty Dollars

Primary Fix Var. Total

Salaries 40,000 0 40,000

Fring.Benfit 16,000 0 16,000

Supplies 300 0 300

Deprection 50,000 0 50,000

Electricity 0 0 0

Util. & Fac. - Kwh: 233000

Qty Dollars

Primary Fix Var. Total

Salaries 0 0 0

Fring.Benfit 0 0 0

Supplies 300 700 1,000

Deprection 10,000 0 10,000

Electricity 0 10,000 10,000

No Pane

Better Beat

Burn Away

Relief

Line 1

Productn 1-Labor hrs: 14144 Productn 1-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 100,000 240,000 340,000 Salaries 0 0 0

Fring.Benfit 40,000 96,000 136,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 500 2,000 2,500

Deprection 0 0 0 Deprection 50,000 0 50,000

Line 2

Productn 2-Labor hrs: 6240 Productn 2-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 120,000 170,000 Salaries 0 0 0

Fring.Benfit 20,000 48,000 68,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 300 1,900 2,200

Deprection 0 0 0 Deprection 75,000 0 75,000

Packaging

Packaging-Labor hrs: 19968 Packaging : Mach. hrs 4000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 360,000 410,000 Salaries 0 0 0

Fring.Benfit 20,000 144,000 164,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 600 3,000 3,600

Deprection 0 0 0 Deprection 80,000 0 80,000

Distribution-Tonmiles: 150000

Qty Dollars

Primary Fix Var. Total

Salaries 60,000 0 60,000

Fring.Benfit 24,000 0 24,000

Supplies 1,000 50,000 51,000

Deprection 70,000 0 70,000

Electricity

Maintenance - Laborhr: 11232

Qty Dollars

Primary Fix Var. Total

Salaries 50,000 180,000 230,000

Fring.Benfit 20,000 72,000 92,000

Supplies 100 700 800

Deprection 1,000 0 1,000

Electricity

System Sup. - Infr: 27

Qty Dollars

Primary Fix Var. Total

Salaries 130,000 0 130,000

Fring.Benfit 52,000 0 52,000

Supplies 300 0 300

Deprection 20,000 0 20,000

Electricity 0 0 0

Util. & Fac. - SqFt: 89000

Qty Dollars

Primary Fix Var. Total

Salaries 40,000 0 40,000

Fring.Benfit 16,000 0 16,000

Supplies 300 0 300

Deprection 50,000 0 50,000

Electricity 0 0 0

Util. & Fac. - Kwh: 233000

Qty Dollars

Primary Fix Var. Total

Salaries 0 0 0

Fring.Benfit 0 0 0

Supplies 300 700 1,000

Deprection 10,000 0 10,000

Electricity 0 10,000 10,000

No Pane

Better Beat

Burn Away

Relief

Line 1

Productn 1-Labor hrs: 14144 Productn 1-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 100,000 240,000 340,000 Salaries 0 0 0

Fring.Benfit 40,000 96,000 136,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 500 2,000 2,500

Deprection 0 0 0 Deprection 50,000 0 50,000

Line 1

Productn 1-Labor hrs: 14144 Productn 1-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 100,000 240,000 340,000 Salaries 0 0 0

Fring.Benfit 40,000 96,000 136,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 500 2,000 2,500

Deprection 0 0 0 Deprection 50,000 0 50,000

Secondary Secondary

Maint(Labr) 0 0 0 Maint(Labr) 2,050 21,483 46,242 67,724

Fac(SqFt) 5,000 9,611 0 9,611 Fac(SqFt) 20,000 38,446 0 38,446

Fac(Kwh) 0 0 0 Fac(Kwh) 80,000 6,656 7,546 14,202

Syst.(Infra) 3 36,410 0 36,410 Syst.(Infra) 0 0 0 0

Total$ 186,021 338,700 524,721 Total$ 117,084 55,788 172,872

Rate $13.15 $23.95 $37.10 Rate $58.54 $27.89 $86.44

Line 2

Productn 2-Labor hrs: 6240 Productn 2-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 120,000 170,000 Salaries 0 0 0

Fring.Benfit 20,000 48,000 68,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 300 1,900 2,200

Deprection 0 0 0 Deprection 75,000 0 75,000

Line 2

Productn 2-Labor hrs: 6240 Productn 2-Mach hrs: 2000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 120,000 170,000 Salaries 0 0 0

Fring.Benfit 20,000 48,000 68,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 300 1,900 2,200

Deprection 0 0 0 Deprection 75,000 0 75,000

Secondary Secondary

Maint(Labr) 0 0 0 0 Maint(Labr) 1,350 14,147 30,452 44,599

Fac(SqFt) 5,000 9,611 0 9,611 Fac(SqFt) 20,000 38,446 0 38,446

Fac(Kwh) 0 0 0 0 Fac(Kwh) 80,000 6,656 7,546 14,202

Syst.(Infra) 5 60,683 0 60,683 Syst.(Infra) 2 24,273 0 24,273

Total$ 140,294 170,700 310,994 Total$ 158,821 39,898 198,720

Rate $22.48 $27.36 $49.84 Rate $79.41 $19.95 $99.36

Packaging

Packaging-Labor hrs: 19968 Packaging : Mach. hrs 4000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 360,000 410,000 Salaries 0 0 0

Fring.Benfit 20,000 144,000 164,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 600 3,000 3,600

Deprection 0 0 0 Deprection 80,000 0 80,000

Packaging

Packaging-Labor hrs: 19968 Packaging : Mach. hrs 4000

Qty Dollars Qty Dollars

Primary Fix Var. Total Primary Fix Var. Total

Salaries 50,000 360,000 410,000 Salaries 0 0 0

Fring.Benfit 20,000 144,000 164,000 Fring.Benfit 0 0 0

Supplies 0 2,700 2,700 Supplies 600 3,000 3,600

Deprection 0 0 0 Deprection 80,000 0 80,000

Secondary Secondary

Maint(Labr) 0 0 0 0 Maint(Labr) 4,500 47,157 101,507 148,663

Fac(SqFt) 5,000 9,611 0 9,611 Fac(SqFt) 20,000 38,446 0 38,446

Fac(Kwh) 0 0 0 0 Fac(Kwh) 60,000 4,992 5,660 10,651

Syst.(Infra) 2 24,273 0 24,273 Syst.(Infra) 0 0 0 0

Total$ 103,885 506,700 610,585 Total$ 171,194 110,166 281,360

Rate $5.20 $25.38 $30.58 Rate $42.80 $27.54 $70.34

Distribution-Tonmiles: 150000

Qty Dollars

Primary Fix Var. Total

Salaries 60,000 0 60,000

Fring.Benfit 24,000 0 24,000

Supplies 1,000 50,000 51,000

Deprection 70,000 0 70,000

Electricity

Maintenance - Laborhr: 11232

Qty Dollars

Primary Fix Var. Total

Salaries 50,000 180,000 230,000

Fring.Benfit 20,000 72,000 92,000

Supplies 100 700 800

Deprection 1,000 0 1,000

Electricity

System Sup. - Infr: 27

Qty Dollars

Primary Fix Var. Total

Salaries 130,000 0 130,000

Fring.Benfit 52,000 0 52,000

Supplies 300 0 300

Deprection 20,000 0 20,000

Electricity 0 0 0

Util. & Fac. - SqFt: 89000

Qty Dollars

Primary Fix Var. Total

Salaries 40,000 0 40,000

Fring.Benfit 16,000 0 16,000

Supplies 300 0 300

Deprection 50,000 0 50,000

Electricity 0 0 0

Util. & Fac. - Kwh: 233000

Qty Dollars

Primary Fix Var. Total

Salaries 0 0 0

Fring.Benfit 0 0 0

Supplies 300 700 1,000

Deprection 10,000 0 10,000

Electricity 0 10,000 10,000

No Pane

Better Beat

Burn Away

Relief

No Pane

Better Beat

Burn Away

Relief

Distribution-Tonmiles: 150000

Qty Dollars

Primary Fix Var. Total

Salaries 60,000 0 60,000

Fring.Benfit 24,000 0 24,000

Supplies 1,000 50,000 51,000

Deprection 70,000 0 70,000

Electricity

Secondary

Maint(Labr) 1,000 10,479 22,557 33,036

Fac(SqFt) 3,000 5,767 0 5,767

Fac(Kwh) 0 0 0 0

Syst.(Infra) 2 24,273 0 24,273

Total$ 195,519 72,557 268,076

Rate $1.30 $0.48 $1.79

Maintenance - Laborhr: 11232

Qty Dollars

Primary Fix Var. Total

Salaries 50,000 180,000 230,000

Fring.Benfit 20,000 72,000 92,000

Supplies 100 700 800

Deprection 1,000 0 1,000

Electricity

Secondary

Maint(Labr) 0 0 0 0

Fac(SqFt) 5,000 9,611 0 9,611

Fac(Kwh) 7,000 582 660 1,243

Syst.(Infra) 3 36,410 0 36,410

Total$ 117,704 253,360 371,064

Rate $10.48 $22.56 $33.04

System Sup. - Infr: 27

Qty Dollars

Primary Fix Var. Total

Salaries 130,000 0 130,000

Fring.Benfit 52,000 0 52,000

Supplies 300 0 300

Deprection 20,000 0 20,000

Electricity 0 0 0

Secondary

Maint(Labr) 0 0 0 0

Fac(SqFt) 2,000 3,845 0 3,845

Fac(Kwh) 1,000 178 0 178

Syst.(Infra) 10 121,366 0 121,366

Total$ 327,688 0 327,688

Rate $12,137 $0.00 $12,137

Util. & Fac. - Kwh: 233000

Qty Dollars

Primary Fix Var. Total

Salaries 0 0 0

Fring.Benfit 0 0 0

Supplies 300 700 1,000

Deprection 10,000 0 10,000

Electricity 0 10,000 10,000

Secondary

Maint(Labr) 500 5,240 11,279 16,518

Fac(SqFt) 2,000 3,845 0 3,845

Fac(Kwh) 0 0 0 0

Syst.(Infra) 0 0 0 0

Total$ 19,384 21,979 41,363

Rate $0.08 $0.09 $0.18

Util. & Fac. - SqFt: 89000

Qty Dollars

Primary Fix Var. Total

Salaries 40,000 0 40,000

Fring.Benfit 16,000 0 16,000

Supplies 300 0 300

Deprection 50,000 0 50,000

Electricity 0 0 0

Secondary

Maint(Labr) 1,832 60,523 0 60,523

Fac(SqFt) 2,000 3,845 0 3,845

Fac(Kwh) 5,000 416 0 416

Syst.(Infra) 0 0 0 0

Total$ 171,083 0 171,083

Rate $1.92 $0.00 $1.92

Decision

• Should you outsource maintenance for

$30/hr?

RCA Institute All Rights Reserved 29

30

www.RCAInstitute.org

lwhite@rcainstitute.org

757 288 6082