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Nature of costs
1. Cost behaviour patterns and their relevance to decision-making
2. Cost estimation: underlying assumptions, cost function parameters,
difficulties encountered, approaches used (high-low, account analysis)
Classification of costs
a. Various cost classifications (variable vs. fixed, step variable, step fixed,
mixed, period vs. product, prime, conversion, opportunity, relevant, direct
vs. indirect, sunk, controllable vs. non-controllable, committed vs.
discretionary, attributed vs. allocated, relevant range)
Product costing
1. Flow of costs within a manufacturing environment and preparation of
schedule of cost of goods sold and cost of good manufactured
2. Service department cost allocation (step, direct, reciprocal)
3. Variable or direct versus full or absorption costing
4. Cost of capacity (actual, normal, theoretical, and practical capacity)
Joint product and by-product costing
Process costing
1. Process costing applied: weighted average and FIFO methods
2. Treatment of normal and abnormal spoilage
Job Costing
1. Job costing applied to various types of jobs
2. Treatment of normal and abnormal spoilage
Activity-based costing (ABC)
1. Pros and cons of using activity-based costing, and application
2. Activity-based management (process improvement, process value
analysis, cost reduction, activity-based financial performance
measurement)
Relevant costing
1. Make or buy (outsourcing), special order, sell or process further, add or
drop a product/service/department/customer decisions
2. Other costing (eg. hybrid costing, operations costing, kaizen costing,
product life cycle costing)
Standard cost systems
1. Difference between actual, normal, and standard costing systems and
their applications
2. Establishment of standards
Budgeting
Nature of the budgeting process
1. Objectives of budgeting
2. Budgeting process: functions, relationships, components, timeframe,
techniques
3. Difference between forecasts, pro forma, and budgets
Types of Budgets
1. Master budget and its components (sales, productions, materials, labour
and inventory, overhead and administration, cash)
2. Activity-based budgeting
3. Zero-based budgeting
Adjustment to Plans and Budgets
a. Flexible budgets
Cash budgeting (ie. Cash flow forecasts and short-term and long-term sources
and uses of funds)
Benchmarking
Budget variance analysis
1. Cost and sales variances: price/rate, efficiency, denominator, spending,
mix, yield, volume, quantity, market share, and market size
2. Criteria used to select variances to investigate (eg. materiality,
cost/benefit, consistency of occurrence, ability to control, nature of item)
3. Favourable and unfavourable variance analysis
Performance indicators
1. Variance performance indicators
2. Efficiency and effectiveness performance measures for not-for-profit and
government entities
3. CVP graphs
4. Break-even analysis calculations with changing variables
Trend and sensitivity analysis
1. Sensitivity analysis as applied to CVP, contribution margin, relevant
costing, etc.
Contribution margin analysis
Cost-benefit analysis
Scenario planning (business intelligence tool)
Quantitative modeling (linear programming, regression analysis, cause and
effect diagrams, etc.)
Production planning in a scarce resources environment
Theory of constraints
Business planning for IT applications and how information systems can facilitate
business process re-engineering
Pricing Decisions
Industry structure
1. Competitive markets and perfect competition
2. Monopoly, oligopoly, and monopolistic competition
Pricing strategies
1. Factors that affect demand for a product or service and have an impact on
pricing
2. Various approaches to pricing (cost-based, demand-based, target-based,
life cycle-based, and value-based; reverse engineering pricing strategy)
Cost-plus compared to fixed price contract
Product differentiation, mix, and marketing
1. Customer relationship management (CRM)
2. Product life cycle (stages, characteristics, market positioning, dimensions,
domestic and international markets)
3. Product line sales and profits calculations
Sourcing (insource, outsource, contracting) also see relevant costing (ie. Risks
and costs associated with outsourcing/offshoring/contracting)
Transfer Pricing
Objectives, advantages/disadvantages/selection/application of appropriate
transfer pricing methods (market price, variable cost, full cost, negotiated),
behavioural implications, and consideration of transfer pricing policies
Transfer price calculations
International transfer pricing: differences from domestic transfer pricing,
influencing factors (exchange rates, tax rate, duties, political climate,
repatriation of profits), objectives, behavioural implications