Cost Accounting Mastery: Traditional vs ABC Costing & Break-Even Analysis

Cost Classification

Costs are classified based on their relationship to production volume (activity level).

Classification by Activity Level

Type	Behavior	Examples
Fixed Cost (FC)	Constant regardless of volume	Rent, depreciation
Variable Cost (VC)	Proportional to volume	Direct materials, direct labor
Mixed Cost	Fixed + variable components	Utilities, maintenance

Manufacturing Cost Structure

Direct Materials (DM)
  +
Direct Labor (DL)
  = Prime Cost

Direct Labor (DL)
  +
Manufacturing Overhead (OH)
  = Conversion Cost

DM + DL + OH = Total Manufacturing Cost

Traditional Costing vs. ABC Costing

Traditional Costing

Allocates manufacturing overhead using a single overhead rate (often based on direct labor hours or cost).

Problem: Complex and simple products receive overhead at the same rate. Complex products tend to be under-costed, distorting profitability analysis.

Activity-Based Costing (ABC)

Allocates costs based on activities that consume resources.

1. Define cost pools: Group costs by related activities
2. Identify cost drivers: The measurable cause of each activity
3. Rate = Cost Pool / Total Cost Driver Quantity
4. Product allocation = Rate × Product’s cost driver consumption

Advantage: Reflects actual resource consumption patterns for more accurate costing.

Break-Even Point (BEP) and CVP Analysis

Contribution Margin

Contribution Margin = Revenue - Variable Costs

The contribution margin covers fixed costs and then generates profit.

Break-Even Calculation

BEP (units) = Fixed Costs / Contribution Margin per Unit BEP (revenue) = Fixed Costs / CM Ratio

Margin of Safety

Margin of Safety = Current Sales - BEP

Shows how much current sales exceed the break-even point. A larger margin of safety means greater resilience to downturns.

Degree of Operating Leverage (DOL)

DOL = Contribution Margin / Operating Income

High DOL means a small increase in sales produces a large increase in profit — but also means higher risk if sales fall.

Cost Accounting Simulator

원가계산 시스템

전통적 원가계산, 활동기준원가계산(ABC), 손익분기점 분석을 직접 실습하세요.

전통적 원가계산ABC 원가계산손익분기점

직접재료비 (DM)

원

직접노무비 (DL)

원

제조간접비율 (직접노무비 대비 %)

150%

생산량 (단위)

개

원가 계산 결과

직접재료비500,000 원

직접노무비300,000 원

제조간접비450,000 원

주요원가 (DM + DL)800,000 원

가공원가 (DL + OH)750,000 원

총제조원가1,250,000 원

단위당 원가12,500 원