Defining the general principles of cost accounting
- Relationship with general accounting and cost accounting.
- Analysis of costs in decision making.
- Restatement of general accounting charges.
- Concept of costs: the components of cost, the characteristics of a cost, the issues around the method of calculation.
Hands-on work
Case study Identify the shortcomings of general accounting. Determine the inputs for cost accounting.
Understanding the rationale of full-cost
- Benefits of the method.
- Breakdown of direct and indirect costs.
- Treatment of indirect expenses. Homogeneous sections or analysis centers.
- Allocation keys and charge rates. Allocation schedules and choice of work units (WU).
- Methods: implementation difficulties, disadvantages.
Hands-on work
Case study Calculation of cost price. Arbitration between finished products with a strong margin and those that are unprofitable.
Applying methods based on partial-cost
- Fixed and variable costs.
- Method of variable costs. Profitability threshold and break-even point. Direct Costing and Advanced Direct Costing.
- Rational allocation of fixed charges.
- Marginal cost.
Hands-on work
Case study Highlighting the inadequacies of cost price and practical work on methods of analysis of cost price.
Analyzing actual costs
- Controlling budgets.
- Standard and pre-determined costs.
- Flexible departmental budget.
- Analyzing the variances.
- Difficulties inherent in budgetary control.
Hands-on work
Case study Practice analyzing “actual” and “forecast”. Optimize resources for better productivity.
Understanding the rationale behind activity-based costing
- ABC method.
- Cross-departmental processes and definition of “activities”.
- Cost drivers.
