Course Objectives

Cost management is an important topic in accounting and finance. Its effects stretch to all departments and impact the organization’s financial position. Cost management covers a lot of cost concepts like job and batch orders  and absorption costing. The pinnacle of any cost management training is activity-based costing which helps in making better decisions. Among these decisions are whether to drop or keep a product, make or buy, and replace or keep a piece of equipment. Moreover, cost management includes allocating costs of service departments internally. Also covered in this course are cost estimations and transfer pricing. The course will close with evaluating performance and a brief discussion on the balanced scorecard and managing scarce resources.

By the end of the course, participants will be able to:

• Discover the importance of analyzing and managing costs
• Develop important tools for planning and decision making
• Explain Activity-Based Costing (ABC) and Activity-Based Management (ABM)
• Estimate costs and allocate them properly
• Evaluate and manage performance through strategic cost management

Content

• Strategic need for analyzing and managing costs
  • Definition of cost management
  • Dimensions of cost management
  • Product costing systems: concepts and design issues
  • Cost behavior, types and hierarchy
  • Cost accumulation job shop
  • Batch production operations
  • Variable versus absorption costing
• Cost management decisions
  • Decision making process
  • Identifying relevant costs
  • Evaluating alternatives
  • Outsourcing decisions : make or buy
  • Add or drop product or business line
  • Replacing equipment
  • Special order pricing decisions
• Activity based management
  • Activity-Based Costing (ABC) systems
  • Analyzing value added versus non value added activities
  • Activity-Based Management (ABM)
  • Managing customer profitability
  • Managing quality and time to create value

• Cost estimation and transfer pricing
  • Cost estimation techniques
    • Identifying and choosing a cost driver
    • Simple regression analysis
    • Multiple regression analysis
    • High-Low method
    • Applications in Microsoft Excel
  • Allocating costs of support departments
    • Direct method
    • Step method
    • Reciprocal method
  • Inter-group transfer pricing issues
• Evaluating and managing performance
  • Cost, volume, profit analysis
  • Breakeven point
  • Breakeven point for multiple products
  • Target income
  • Operating leverage
  • Margin of safety
  • Managing scarce resources
  • Flexible budget
  • Activity-based budgeting
  • Strategy, balanced scorecards and performance measurement

Course Target

Financial managers or directors, accountants, financial assistants, budget accountants, analysts, budget and planning managers and coordinators, operations managers, facilities managers and professionals interested in cost management.