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
 Setting Standards for Direct Materials
 Setting Direct Labor Cost
 Setting Standards of Overheads
 Determination of Standard Costs
  1. Determination of Cost Center
  2. Current Standards
  3. Ideal Standard
  4. Basic Standards
  5. Normal Standards
  6. Organization for Standard Costing
  7. Accounting System
Revision of Standards
Summary
Chapter 5 – Variance Analysis
  1. 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. Variable production overhead total variances
     The variable production overhead expenditure variance
     The variable production overhead efficiency variance
  3. Fixed production overhead variances
  4. 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. Selling price variance
     Sales volume variance
     Operating Statement
  6. Reasons for variances
     Idle time
     Labour efficiency
     Overhead expenditure
     Overhead volume
  7. Interdependence between variances
  8. The significance of variances
  9. 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.
  10. Sales mix and quantity variances
     Sales mix variance
     Sales quantity variance
VARIANCES ANALYSIS PRACTICE QUESTIONS

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