Cost analysis and decision making
Cost accounting - M31
A word from the author
For companies, introducing a management control system promotes growth and productivity. This type of control system helps companies define their goals. No action can be taken without accurate knowledge of the volume of sales that must be achieved in the future to reach breakeven. This introductory module describes cost accounting and costing systems, as opposed to financial accounting (general accounting). The aim is to familiarise you with the key terms and to describe the main techniques to use to meet operational management needs.
List of chapters
- Financial and cost accounting
- The cost concept
- Cost accounting methods
- Quiz
Learning objectives
- Differentiate financial accounting from cost accounting
- Understand the uses of cost accounting
- Grasp the cost concept
- Increase understanding of the main costing methods
The contribution costing method - M32
A word from the author
How are the breakeven quantity point and the breakeven sales point for a department or business line calculated? What contribution margin do you need, and how do you work that margin out? What impact do costs have on profitability? These questions are all vital when preparing forecasts, and so the the proper running of the company. This module has been designed to answer all these questions.
List of chapters
- The specific costing method
- The variable costing method
- Case study
Learning objectives
- Understand variable costing (distinguishing variable costs from fixed costs, calculating the contribution margin on variable costs and the breakeven quantity point)
- Understand the specific costing method (distinguishing specific fixed costs from shared fixed costs, calculating the contribution margin on direct costs and the specific breakeven quantity point)
- Maximise profit according the cost structure under consideration.
The full costing method - M33
A word from the author
You want to launch a new product or service. What should its selling price be for it to show a profit? To answer that question you must first calculate the total cost of your product or service. This module has been designed so you can do just that.
List of chapters
- Principle
- Advantages and limitations
- Case study
Learning objectives
- Distinguish direct costs from indirect costs
- Define cost centres
- Apportion indirect costs to the product or business line being considered
- Calculate the total cost of the product or business line being considered
- Describe the merits and limitations of the method.
Appropriate costs and decision-making - M34
A word from the author
How can you take an important operational decision (setting selling prices, producing in-house or subcontracting, hiring, firing, discontinuing or launching a product range) without knowing what the implications are regarding costs? This module answers that question: there is a cost that is appropriate to each decision; from the appropriate cost you can work out which costing method to use assess profitability and make the right decision.
List of chapters
- Making the right decision
- Full utilisation of production capacity
- Reducing selling price
- Manufacturing or subcontracting
- Discontinuing a business or market segment
- Setting the selling price for a new activity
- Choosing the appropriate method
- Quiz
Learning objectives
- Define the appropriate cost
- Use the costing method(s) appropriate to the decision to be taken
- Make the right decision