Cost & Management Accounting 101

What Will You Learn?

• Understand the purpose and scope of cost and management accounting
• Classify costs by nature, behaviour and function
• Analyse cost behaviour using the high-low method and the cost function y = a + bx
• Prepare a job cost sheet and calculate the cost per unit
• Distinguish between job costing and process costing, and know when to use each
• Allocate, apportion and absorb manufacturing overheads correctly
• Calculate and apply predetermined overhead absorption rates
• Adjust for under- and over-absorption of overheads at period-end
• Distinguish between absorption costing and marginal costing, and reconcile the two profit figures
• Calculate contribution per unit and the contribution-to-sales ratio
• Apply contribution analysis to special orders, make-or-buy, and product discontinuation decisions
• Perform break-even analysis in units and in sales revenue
• Calculate target profit and margin of safety, and interpret a break-even chart
• Use contribution per limiting factor to determine the optimal product mix
• Prepare the main functional budgets — sales, production, materials, labour and cash
• Prepare a flexible budget and use it to evaluate performance fairly
• Identify relevant costs and revenues for short-term decision-making
• Apply relevant costing to make-or-buy, special order, accept-or-reject, and discontinuation decisions
• Distinguish between relevant, irrelevant, sunk and opportunity costs
• Calculate material price, material usage, labour rate and labour efficiency variances
• Interpret variances and identify interdependence between them
• Integrate cost and management accounting techniques in a single coherent business analysis