Chapter 1 – Basic Cost Concepts Chapter 2 – Marginal Costing and Absorption Costing

Learning Objectives Introduction Marginal costing - definition Theory of Marginal Costing The principles of marginal costing The principles of marginal costing are as follows. Features of Marginal Costing 1. Cost Classification Advantages and Disadvantages of Marginal Costing Technique Advantages Disadvantages Presentation of Cost Data under Marginal Costing and Absorption Costing Reconciliation Statement for Marginal Costing and Absorption Costing Profit Marginal Costing versus Absorption Costing
1. Over and Under Absorbed Overheads 2. Difference in Stock Valuation

The features which distinguish marginal costing from absorption costing are as follows. Limitations of Absorption Costing Summary Questions

Chapter 3 – Breakeven Analysis
MARGINAL COSTS, CONTRIBUTION AND PROFIT Cost-Volume-Profit (C-V-P) Relationship Objectives of Cost-Volume-Profit Analysis Assumptions and Terminology Limitations of Cost-Volume Profit Analysis Sensitivity Analysis or What If Analysis and Uncertainty Marginal Cost Equations and Breakeven Analysis Limitations and Uses of Breakeven Charts Breakeven Point in Sales Revenue Quick quiz Answers to quick quiz

Chapter 4 – Standard Cost
Learning Objectives Introduction Meaning of Standard Definition Advantages Limitations of Standard Costing

2. 7. Variable production overhead total variances The variable production overhead expenditure variance The variable production overhead efficiency variance 3. 3. Reasons for variances Idle time . 4. Fixed production overhead variances 4. Selling price variance Sales volume variance Operating Statement 6. The fixed production overhead variances are calculated as follows: Fixed production overhead variance Fixed production overhead expenditure variance Fixed production overhead volume variance Fixed production overhead volume efficiency variance Fixed production overhead volume capacity variance 5. Variable cost variances Direct material variances The direct material price variance The direct material usage variance Direct labour total variance Direct labour rate variance The direct labour efficiency variance 2. 6.Setting Standards for Direct Materials Setting Direct Labor Cost Setting Standards of Overheads Determination of Standard Costs 1. 5. Determination of Cost Center Current Standards Ideal Standard Basic Standards Normal Standards Organization for Standard Costing Accounting System Revision of Standards Summary Chapter 5 – Variance Analysis 1.

10. Sales mix and quantity variances Sales mix variance Sales quantity variance VARIANCES ANALYSIS PRACTICE QUESTIONS . Interdependence between variances 8. The significance of variances 9.Labour efficiency Overhead expenditure Overhead volume 7. Materials mix and yield variances Solution 1: individual prices per kg as variance valuation cases Solution 2: budgeted weighted average price per unit of input as variance valuation base.

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