Course

A Level Accounting: Cost and Management Accounting (9706)

Name: A Level Accounting: Cost and Management Accounting (9706)
Price: 1799 BDT

Every cost and management accounting point of the 9706 syllabus, AS and A Level, taught step by step through one small bakery: costs, absorption and marginal costing, break-even and decisions, ABC, standard costing, budgets and investment appraisal.

100 lessons17h 31mEnglishPart 2 of 2

What you'll learn

Classify costs as direct or indirect and as fixed, variable, semi-variable or stepped, and calculate labour costs
Value closing inventory using FIFO and AVCO (perpetual and periodic) and explain the principles of JIT
Allocate, apportion and absorb overheads, find under or over absorption, and cost units, jobs and batches
Prepare absorption and marginal costing statements and reconcile their profits
Calculate break-even, the contribution to sales ratio, target profit output and margin of safety, and interpret a break-even chart
Decide on special orders, make or buy, closure and limiting factors, weighing non-financial factors
Cost products and set prices using activity based costing and compare the result with absorption costing
Calculate material, labour, fixed overhead and sales variances and reconcile budgeted and actual profit
Prepare functional, cash and master budgets and flexible budget reconciliation statements
Appraise investments using payback, ARR, NPV and IRR and make a reasoned recommendation

Requirements

The accounting equation, profit statements and basic percentages
A calculator; spreadsheet experience is useful but not required

Course content

100 lessons · 17h 31m

2.1, 2.1.1 · Costs and cost behaviour

Split a business cost into materials, labour and expenses, sort it as direct or indirect, see how it behaves as output changes, and calculate wages paid by time or by piece.

0/10

Elements of cost: materials, labour and expenses

Every cost in the bakery is materials, labour or other expenses. Sort last month’s bills into the three.

Preview12m 2.

Direct and indirect costs

A direct cost can be traced to one product; an indirect cost is shared. Add them to get prime cost and total cost.

Preview12m

Fixed and variable costs

Flour rises with every loaf baked; rent stays the same. See both on a graph and work out total cost at any output.

12m

Semi-variable costs

The electricity bill has a fixed charge plus a charge for every unit used. Split it with the high-low method.

12m

Stepped costs

One supervisor can manage six bakers. The seventh baker makes the cost jump to a new step.

11m

Labour costs: time rate and piece rate

Omar is paid for his hours; the decorators are paid for each cake. Calculate both kinds of wage.

12m

Labour costs: overtime and bonus schemes

Extra hours at time and a half, and a bonus for time saved. Which part is a direct cost?

12m

Costs and cost behaviour: practice

A timed drill of mixed questions: direct or indirect, fixed or variable, high-low and wages.

Costs and cost behaviour: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

10.

Costs and cost behaviour: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

2.1.2-2.1.3 · Materials: inventory valuation and just in time

Record flour coming in and going out, value what is left using FIFO and AVCO, see how the choice changes profit, and judge when just in time makes sense.

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Accounting for materials: the inventory record

Every sack of flour in or out goes on the inventory record. Read and complete one.

Preview12m 2.

FIFO (first in, first out)

Issue the oldest flour first and value what is left at the latest prices.

Preview12m

AVCO (weighted average cost): perpetual method

After every delivery, work out a new average cost per sack and issue at that average.

12m

FIFO and AVCO: the periodic method

Value the closing inventory once, at the end of the month, instead of after every issue.

12m

The effect of FIFO and AVCO on profit

When prices rise, FIFO leaves a higher closing inventory and a higher profit. See why.

12m

Just in time (JIT) management of inventory

Fresh butter arrives every morning, so the storeroom stays nearly empty. Weigh the gains and the risks.

12m

Inventory valuation: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

Inventory valuation: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

Inventory valuation: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

2.2.1-2.2.2 · Absorption costing

Share overheads over cost centres, absorb them into products, find under or over absorption, then cost units, jobs and batches, set a price and prepare an absorption costing profit statement.

0/14

Cost centres and cost units

Mixing, Baking and Decorating are cost centres; a loaf or a cake is a cost unit.

Preview12m 2.

Allocating and apportioning overheads

Give each department the overheads that are clearly its own, then share the rest on a fair basis.

Preview12m

Reapportioning service department overheads

Stores and Cleaning make nothing to sell, so their costs move to the production departments.

12m

Overhead absorption rates

Divide each department’s overheads by oven hours or labour hours, choosing the basis that fits the work.

12m

Under absorption and over absorption of overheads

The rate is set in advance, so the overhead absorbed rarely equals the overhead spent. Find the gap.

12m

Unit costing and job costing

Cost one cake, then cost the school sports-day lunch as a job with its own job cost sheet.

12m

Batch costing

Bread is baked 200 loaves at a time. Cost the batch, then divide to cost one loaf.

12m

Unit and job costing in a service business

Lena’s Saturday baking class is a service. Find the cost of one class and one student place.

12m

Setting a selling price: mark-up and margin

Add a percentage to the full cost to set a price, and do not mix up mark-up and margin.

12m

10.

Costing and profit statements using absorption costing

Value inventory at full production cost and prepare the profit statement for the month.

12m

11.

Uses and limitations of absorption costing

Full cost helps set prices and value inventory, but it can mislead a decision. Weigh non-financial factors too.

12m

12.

Absorption costing: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

13.

Absorption costing: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

14.

Absorption costing: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

2.2.3 · Marginal costing and break-even analysis

Find contribution, prepare marginal costing statements, reconcile them with absorption profit, then use break-even, the contribution to sales ratio, target profit and margin of safety.

0/12

Marginal cost and contribution

Contribution is selling price minus variable cost. It pays the fixed costs first, then makes profit.

Preview12m 2.

Costing and profit statements using marginal costing

Value inventory at variable cost only and charge all the fixed costs in the month they arise.

Preview12m

Reconciling marginal and absorption profits

The two profits differ by the fixed overhead carried in the change in inventory.

12m

The break-even point

Divide fixed costs by contribution per unit to find the output with no profit and no loss.

12m

The contribution to sales ratio

Contribution as a fraction of price gives break-even in dollars of sales.

12m

Output for a target profit

Add the profit you want to the fixed costs, then divide by contribution per unit.

12m

Margin of safety

How far can sales fall before the bakery makes a loss? In units, dollars and a percentage.

12m

Interpreting a break-even chart

Read fixed cost, total cost, revenue, break-even, profit and margin of safety from the chart.

12m

Uses and limitations of marginal costing and break-even analysis

Straight lines and one selling price make CVP quick but rough. Know when to trust it.

12m

10.

Marginal costing and break-even: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

11.

Marginal costing and break-even: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

12.

Marginal costing and break-even: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

2.2 · Decision-making using marginal costing

Use relevant costs and contribution to decide on special orders, make or buy, closing a product line and the best plan when a resource is scarce, then weigh the non-financial factors.

0/10

Relevant and irrelevant costs

Only future costs that change with the decision count. Money already spent does not.

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Special orders

A café wants 400 boxes of cupcakes below the normal price. Accept if contribution is positive and capacity is free.

Preview12m

Make or buy decisions

Compare the supplier’s price with the variable cost of making, plus any fixed costs saved.

12m

Closure of a business unit

The cookie line shows a loss after shared overheads. Would closing it raise or lower profit?

12m

Limiting factors: contribution per unit of scarce resource

When oven hours run short, rank products by contribution per oven hour, not per unit.

12m

Limiting factors: the best production plan

Fill demand in rank order until the hours run out, then find the maximum profit.

12m

Non-financial factors in costing decisions

Quality, staff, customers and reliability can outweigh a small gain in contribution.

12m

Marginal costing decisions: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

Marginal costing decisions: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

10.

Marginal costing decisions: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

4.1, 4.1.1-4.1.3 · Activity based costing (ABC)

Group overheads into activity cost pools, pick the cost driver for each, calculate driver rates, cost a unit and its price with ABC, and compare the result with absorption costing.

0/9

What is activity based costing?

One rate per labour hour hides what really causes overheads. ABC follows the activities instead.

Preview12m 2.

Cost pools and cost drivers

Oven set-ups, deliveries and design meetings each have a cost driver. Match each pool to what causes it.

Preview12m

Cost driver rates and the total cost of a unit

Divide each pool by its number of drivers, charge each product for the drivers it uses, then cost one unit.

12m

Using ABC to set a selling price

Add the mark-up to the ABC cost. Wedding cakes need a higher price than the old rate suggested.

12m

The effect of ABC and absorption costing on cost and profit

The same overheads, shared two ways, give different unit costs and different product profits.

12m

Uses and limitations of ABC, and decisions

ABC gives better costs for varied products, but it takes time and data. Use it to recommend a decision.

12m

Activity based costing: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

Activity based costing: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

Activity based costing: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

4.2.1-4.2.2 · Standard costing: materials and labour variances

Build the standard cost card for a celebration cake, flex it to actual output, and calculate direct material price and usage and direct labour rate and efficiency variances.

0/10

A system of standard costing

A standard is what one cake should cost. The standard cost card lists each part of it.

Preview12m 2.

Advantages and disadvantages of standard costing

Standards help plan, control and motivate, but they take effort and go out of date.

Preview12m

Variances: favourable and adverse

Compare actual cost with the standard for the ACTUAL output. Favourable raises profit; adverse lowers it.

12m

Direct material price variance

Paying $4.20 instead of $4.00 a kilogram costs money on every kilogram bought.

12m

Direct material usage variance

Using more cake mix than the standard allows for the cakes made, valued at the standard price.

12m

Direct labour rate variance

Paying bakers more per hour than the standard rate, on every hour paid.

12m

Direct labour efficiency variance

Taking more hours than the standard allows for the cakes made, valued at the standard rate.

12m

Standard costing: cost variances: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

Standard costing: cost variances: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

10.

Standard costing: cost variances: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

4.2, 4.2.3-4.2.4 · Standard costing: overhead and sales variances

Calculate fixed overhead and sales variances, reconcile budgeted profit with actual profit, explain the causes and links between variances, and use them to improve performance.

0/10

Fixed overhead expenditure variance

Budgeted fixed overhead against actual fixed overhead: did the bakery spend more than planned?

Preview12m 2.

Fixed overhead volume variance

Making fewer cakes than budgeted leaves fixed overhead under-absorbed.

Preview12m

Fixed overhead capacity and efficiency sub-variances

Split the volume variance: hours worked against budget, and hours worked against hours allowed.

12m

Sales price and sales volume variances

Selling below the standard price, and selling fewer cakes than budgeted, each change profit.

12m

Reconciling budgeted profit with actual profit

Start from budgeted profit, add favourable and subtract adverse variances, and land on actual profit.

12m

Causes of variances and their relationship to each other

Cheap cake mix can save on price but waste more in usage. Read the variances together.

12m

Using standard costing to improve performance

Decide which variances to investigate, recommend action and weigh non-financial factors.

12m

Standard costing: overheads and sales: practice

A timed drill of mixed questions, then worked practice questions from easy to exam level.

Standard costing: overheads and sales: exam practice

Exam-style questions with marks, mark schemes and full worked solutions.

15m

10.

Standard costing: overheads and sales: summary

The key points, formulas and common mistakes on one screen, with cards to revise from.

4.3.1-4.3.3 · Budgeting and budgetary control

Explain budgetary control, then prepare the sales, production, purchases, labour, trade receivables, trade payables and cash budgets and the budgeted financial statements that make the master budget.

0/7

Budgets and budgetary control

A budget is a plan in numbers. Budgetary control compares the plan with what happens.

Preview12m 2.

Advantages and disadvantages of budgetary control

Budgets plan, coordinate and control, but they cost time and can be set badly.

Preview12m

The sales budget

Units to sell times the price gives the sales budget. Every other budget starts here.

12m

The production budget

Sales plus closing inventory minus opening inventory gives the units to make.

12m

The purchases budget

Flour needed for production plus closing flour minus opening flour gives the flour to buy.

12m

The labour budget

Units to make times hours per unit times the rate gives the labour cost.

12m

The effect of limiting factors on budgets

If oven hours or flour run short, the scarce resource sets the budget, not sales.

12m

About the creator

Reckonry