Effective Cost Control & Variance Analysis

The course

Accounting information is the lifeblood of the organization as it facilitates and influences operational and strategic decisions intended to achieve organizational goals.

All business decision making involves analysing situations and assessing alternatives, risks and benefits.controlling & reducing cost represent essential activities to be performed and monitored by organizations as they implement their key processes, activities and operations. In addressing these issues, this course is relevant for those professionals & analysts facing the difficult challenge of improving performance while reducing costs of those processes for which there are accountable. By combining techniques analysis, problems and examples with real case studies the course provides delegates with key cost awareness and budgetary skills, which is essential managing and controlling processes/projects in times of increasing global competition where the budgets are inextricably linked with both strategy formulation and cost analysis.

This seminar offers an opportunity to acquire and then deploy new skills and ideas to achieve improved financial operations and strategies. The knowledge acquired will enhance the budget process and control processes through a variety of strategies and techniques that will provide new insights to how financial performance can be enhanced.

OBJECTIVES

• Identify key cost indicators for the business, and how and when to monitor them
• Understand the importance of a well-defined budget processand create budgets relevant to your organisation
• Acquire costing and budgeting terminology and techniques
• Master methods for risk, payback and cost-benefit analysis
• Discuss the problems and limitations of budgetary control and look for alternative tools
• Interpret budgets and performance measurement as communication tools
• Link budgetary processes with quality issues and business process improvement

TRAINING METHODOLOGY

You will learn by active participation during the programme through the use of exercises, case studies, practical workshops, syndicate and group discussions.

OUTLINE

Day One

Introduction in cost control

• Cost accounting – its scope and definition.
• Cost accounting techniques and relationship to budgeting.
• Appraisal of benefits and methods of cost accounting.
• Cost accounting terminology; classification of costs, overheads, direct costs, total costs.
• Dealing with cost centres and cost units.

Day Two

Cost analysis

• Cost behaviour in different circumstances, distinguishing differences between types of costs.

• Classes of costs, prediction and analysis of costs, methods and models for handling costs.
• Labour costs, remuneration methods for workers, output, hours, direct and indirect costs.
• Material costs; pricing methods, FIFO, LIFO, AVCO, replacement costs .
• Stock valuation, just-in-time stocks.

Day Three

Advanced techniques in cost-control

• Absorption costing; overheads, rates of absorption, application to cost units and centres.

• Absorption costing for non-manufacturing organisations.
• Activity based costing; overheads, AMT, cost drivers, activities, the business environment.
• Marginal costing, revenue statements, contribution, ratios, breakeven analysis, safety margin.

Day Four

Advanced techniques in cost-control

• Marginal costing short-term decision making, make or buy, single orders, shortages, factors.
• Planning, budgeting; framework, process, control, integration, data, zero-based, activity-based.
• Standard costing and variance analysis, investigation, causes, appraisal.
• Applications

Day Five

Master Budget, Flexible budgets and Variance Analysis

• Describe the difference between a static budget and a flexible budget
• Compute flexible-budget variances and sales-volume variances
• Discuss the behavioral implication of budgeting
• The budgeting process in your organization: how to improve it?
• Which tools shall we use to complement budgeting and costing?
• Case study