Class: Costs Applied to Business Model

Teacher – J. David Rodriguez

Email-jose.ra@sna.edu.cn

Course Description:
This semester course provides students with an introduction to Costs Applied to Business Model.
Students will learn and apply key concepts to understand how to successfully start, manage and expand a
cost model. This course focuses on the following key areas: Introduction to cost model applied to business
including different financial planning, structures and methods of cost. Introduction to principles and
techniques to prepare personal financial management including categories of expenses, personal budgets
and the corporate financial management. Personal investment decisions and marginal and absorption
costing. Measuring the risk management including marginal and absorption costing, profit and loss and
cashflow statements. Students will give presentations at the end of each quarter based on real cases of
corporations, Entrepreneurs personal projects that they have developed during the semester to demonstrate
their understanding of the core concepts and critical thinking and application of their newfound knowledge.
Not only will this course prepare students for tertiary business studies but through the focus on critical
thinking they will be empowered and better equipped to succeed in all their other areas of study and life.

Curriculum Subject: Costs Applied to Business Model

1st Quarter
i. Be your own Financial Planner
Duration 2 weeks lessons

Learning Objectives:
1. Explain the concept of personal financial planning.
2. Understand the importance of personal financial planning in controlling personal finance.
3. Apply the basic principles and techniques in preparing personal budgets.
4. Develop a proper attitude towards personal finance.

Overview of Contents:
 How much money do you spend every week?
 How to prepare a personal budget?
 Categories of expenses.
 Wants Vs Needs.

Resources:
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
 ii. Personal Financial Management - Principles and Techniques to Prepare Personal Budgets.
Duration 2 weeks lessons

Learning Objectives:
1. To understand the importance of personal budget in controlling their personal finance.
2. To grasp the principles and techniques of preparing personal budgets.
3. To analyze personal expenses and applying the data into a realistic personal budget.

Overview of Contents:
 Personal Spending.
 Preparing a Personal Budget.
 Develop a positive attitude in personal finance.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.

iii. Fundamentals of Financial Management - Time Value of Money.

Duration 2 weeks lessons

Learning Objectives:
1. To understand the fundamental concepts of time value of money.
2. To calculate future value and present value of a single and a series of cash flows.
3. To distinguish between nominal and effective rate of return.
4. To apply the concepts and calculations of time value of money in personal and corporate
financial management.

Overview of Contents:
 Future Value, Simple and Compound Interest.
 Present Value and Rule of 72.
 Annuity.
 Uneven Cash Flows, Nominal and Effective Interest Rate.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
iv. Personal Consumer Credit
Duration 2 weeks lessons

Learning Objectives:
1. To understand and differentiate the different types of personal loans.
2. To understand the 4 Cs of credit – i.e. capacity, character, capital and collateral.
3. To compare and analyze different credit products so as to help apply suitably in personal
financial management.

Overview of Contents:
 Personal Loans.
 Mortgage Loan and Credit Card.
 The importance of maintaining a good personal credit record in personal finance
management.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.

v. Personal Investment Decisions

Duration 1 week lesson

Learning Objectives:
1. To understand the characteristics of financial products such as deposits, bonds and stocks.
2. To identify the risks of common financial products.
3. To understand the relationships between risks and returns of specific financial products.
4. To apply the concepts of risk and return in making sound investment decisions.

Overview of Contents:
 Deposits (Part I).
 Deposits (Part II) and Bonds.
 Stocks and Making Investment Decisions.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
 vi. Financial Reporting for Different Forms of Business Ownership.
Duration 1 week lesson

Learning Objectives:
1. To reinforce students’ understanding of the differences in establishing business entities
using sole proprietorship, partnership and limited company.
2. To understand how financial statements are formatted to serve the different types of
business entities.
3. To describe the Hong Kong accounting regulatory framework.

Overview of Contents:
 Profit Distribution and Appropriation Account.
 Capital or Owner’s Equity and Regulatory Framework of Accounting.
 Net profit is distributed to company owners under different types of business structures.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.

2nd Quarter
vii. Financial Analysis
Duration 2 weeks lessons

Learning Objectives:
1. To understand the major types of accounting ratios.
2. To calculate different accounting ratios.
3. To evaluate financial performance through accounting ratios.
4. To improve the financial performance.
5. To describe the limitations on using accounting ratios.

Overview of Contents:
 Major Types of Accounting Ratios and Their Calculations.
 Evaluation of Financial Performance through Accounting Ratios.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
viii. Application of Costing Concepts and Techniques in Decision Making
Duration 2 weeks lessons

Learning Objectives:
1. Explain the general nature of cost accounting and its importance for financial decision-
making.
2. Distinguish between direct and indirect costs, fixed and variable costs, and factory and
administrative overheads.

Overview of Contents:
 Introduce cost accounting and explain the cost concepts and terminology.
 Understand different cost classifications used for preparing financial statements.
 Understand the cost classification used for cost decision-making.

Resources:
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.

ix. Cost Classification, Concepts and Terminology

Duration 2 weeks lessons

Learning Objectives:
1. Explain the meaning of cost behavior.
2. To identify fixed, step, variable and mixed costs.
3. To separate mixed costs into the fixed and variable components using high-low method.
4. To calculate the cost of goods manufactured and the cost of goods sold for manufacturing
companies.
5. To distinguish between direct and indirect costs, factory and selling and administrative
overheads.

Overview of Contents:
 Cost classification, concepts and terminology.
 Fixed, step, variable and mixed costs terminology.
 Direct cost on manufacturing process and administrative over heads.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
x. Marginal and Absorption Costing
Duration 2 weeks lessons

Learning Objectives:
1. Prepare income statements under absorption costing and marginal costing.
2. Compare the advantages and disadvantages of adopting absorption costing and marginal
costing.

Overview of Contents:
 Compute the predetermined production overhead absorption rate and apply the rate to the
products under absorption costing.
 Discuss the nature of absorption costing and prepare an income statement under absorption
costing.
 Discuss the nature of marginal costing and prepare an income statement under marginal
costing.
 Explain the differences between absorption costing and marginal costing.
 Compare the advantages and disadvantages between absorption costing and marginal
Costing.

Resources:
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.

xi. Risk Management

Duration 1 week lesson

Learning Objectives:
1. To identify different types of risks faced by business.
2. To review the risk management strategies implemented in a company.
3. To suggest appropriate risk management strategies for business.
4. To describe various types of business insurance protection.

Overview of Contents:
 Types of Risk.
 Risk Management Process and Strategies.
 Surfing on the NET for information of Insurance products.

Resources:
 Problem Solving (Company Study Case).
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.
xii. Basic Ratio Analysis
Duration 1 week lesson

Learning Objectives:
1. Understand the concept and general function of accounting ratios.
2. Understand the calculation and interpretation of following financial ratios: gross profit margin,
net profit margin, return on capital employed, working capital, current ratio and acid test ratio.
3. Use accounting ratios to evaluate a company’s profitability and liquidity.

Overview of Contents:
 Concept of Financial Statement Analysis.
 Concept and General Function of Accounting Ratios.
 Calculation and Interpretation of Profitability Ratios.
 Working Capital and Its Management.
 Liquidity Position and Liquidity Problems.
 Calculation and Interpretation of Liquidity Ratio.
 Evaluation on the Liquidity and Profitability of a Business Using Accounting Ratios and Its
Limitation.

Resources:
 Problem Solving (Company Study Case).
 Topic Overview and Teaching Plan.
 PowerPoint Presentation.
 Student Worksheet with Answer.

Suggested Activities:
 In-class discussion / exercise.
 Classwork.
 Homework.
 Quiz.