Cost Management Strategies and Skills for Business and Industry

Introduction:

Cost management is a crucial aspect of accounting and finance, influencing all aspects of a firm’s operations and significantly affecting its financial stability. This course delves into various aspects of cost management, including job and batch orders, absorption costing, and the pivotal role of Activity-Based Costing (ABC) in enhancing decision-making. Participants will learn how to make informed decisions about product discontinuation, production offshoring, and equipment replacement. The course also addresses the allocation of service department costs, cost estimation, transfer pricing, performance evaluation, and the balanced scorecard approach to managing limited resources.

Objectives:

By the end of this Cost Management Strategies and Skills for Business and Industry course, participants will be able to:

• Identify the importance and impact of cost analysis and management.
• Utilize essential tools for planning and decision-making.
• Define and apply Activity-Based Costing (ABC) and Activity-Based Management (ABM).
• Accurately estimate and allocate costs.
• Evaluate and manage performance with a focus on strategic cost management.

Training Methodology:

• Case Studies
• Simulations
• Interactive Exercises
• Group Discussions
• Role Plays

Course Outline:

Unit 1: Strategic Need for Analyzing and Managing Costs

• Definition and dimensions of cost management
• Product costing systems: concepts and design issues
• Cost behavior, types, and structure
• Cost accumulation: job shop and batch production
• Variable vs. absorption costing

Unit 2: Cost Management Decisions

• Decision-making process and relevance cost analysis
• Value analysis
• Outsourcing decisions: make or buy
• Add or drop product or business line
• Equipment replacement
• Pricing decisions for special orders

Unit 3: Activity-Based Management

• ABC systems and their application
• Evaluating value-adding vs. non-value-adding activities
• Activity-Based Management (ABM)
• Customer profitability and quality management
• Time management to enhance value

Unit 4: Cost Estimation and Transfer Pricing

• Cost estimation techniques
• Defining and selecting cost drivers
• Regression analysis (basic and multiple)
• High-low method
• Application in Excel
• Cost allocation methods: direct, step, and reciprocal
• Intergroup transfer pricing issues

Unit 5: Evaluating and Managing Performance

• Breakeven analysis and its significance
• Budgeting: predetermined expenditure levels and activity-based budgeting
• Resource allocation among competing projects
• Strategy formulation and performance measurement through balanced scorecards

Conclusion:

This cost management techniques and skills course equips participants with a solid foundation in cost management, enhancing their ability to address cost-related challenges within organizations. By mastering various cost management strategies and tools, participants will improve business activities and contribute to organizational sustainability.