Advanced Cost Accounting

Cost accounting is no longer just a tactical overhead allocation function. It’s a tool that can help you determine true product cost information. In this five-day course, you’ll learn to incorporate Activity-Based Costing with advanced traditional costing methodologies and transform yourself into a real strategic partner within your organization.

## Course Objectives

Upon successful completion of this course, the delegates will be able to:

• Learn How to Perform an ABC-Based Product and Customer Profitability Analysis
• Effectively Allocate Factory and Corporate Overhead—and Prevent Over- or Under-Costing of Products
• Perform Capacity Analysis to Ensure Effective Development of Plant-Wide Standards
• Evaluate Variances to Identify the True Cause of Less Than Optimal Performance
• Improving processes by analyzing the true causes of product cost variances
• Effectively determining joint- and by-product costs
• Assigning service department costs to calculate total product costs
• Developing the target cost model
• Transfer pricing and product cost determination
• Capacity analysis: understanding the true cost of incremental manufacturing

## Course Outline

*THE INTERNATIONAL BUSINESS ENVIRONMENT *

• Discuss the Strategic, Tactical, and Operational Aspects of Today's Global Buiness Entity
• Use the Organizational Planning Framework© to Develop Unique Business Models
• See How the Changing Role of Cost Accounting in the Global Business Entity Applies to Your Organization
• Understand How Cost Information Is Critical as a Decision Support Tool
• Use the Product/Decision Cycle© to Evaluate the Effectiveness of Your Current Cost Reporting System

EVALUATING YOUR COMPANY'S COSTING TECHNIQUES

• Discuss the Responsibility Accounting Process
• Understand the "Profit-Enhancement" Perspective: Looking Beyond Cost Savings
• Identify the Challenges Facing a Multi-Product Company
• Determine the Challenges Facing the Multinational Company
• View Cost Accounting as a Value-Added Resource
• Understand the Needs of the Internal Customer
• Determine the Informational Needs of the Internal Customer

ACTIVITY-BASED COSTING AS AN EFFECTIVE COST ACCOUNTING TOOL

• Discuss the Theory of Activity-Based Costing (ABC)
• Use ABC as a Forecasting Tool
• Define the "Process" as Used in ABC
• Identify the Products of a Specific Process
• Project Cost as a Product Rather Than an Entity
• Define the Elements of Cost Including Activity, Resource, and Consumption Rates
• Identify the Key Processes in the Conversion Cycle
• Identify the Key Activities in Each Process
• Identify the Resources Consumed as Each Activity Is Performed
• Determine the Cost of Each Activity
• Project the Cost of the Activity, Process, and Product
• Define the Differences between ABC and GAAP
• Integrate ABC Concepts into Traditional Cost Accounting Systems
• Use ABC to Develop Cost Standards

DEVELOPING STANDARDS AS A TOOL FOR VALUATION AND STRATEGIC DECISION SUPPORT

• Discuss the Nature and Purpose of Standards
• Use Standards as a Process Management as Well as Financial Management Tool
• Define Standards in a Manufacturing Environment
• Define Standards in a Service Environment
• Develop Standards for Tactical Planning: The Budget
• Develop Standards for Strategic Planning: The Business Plan
• Design Standards Development to Support Product Continuation Decisions
• Establish Standards Development to Support New Product Introduction Decisions
• Develop Standards Using ABC Concepts

VARIANCE ANALYSIS AS A PROCESS IMPROVEMENT TOOL: ANALYZING THE TRUE CAUSES OF PRODUCT COST VARIANCES

• Perform Variance Analysis
• Calculate Material Price and Usage Variances
• Calculate Material Mix and the Material Yield Variances
• Calculate Labor Rate and Efficiency Variances
• Calculate Labor Mix and Labor Yield Variances
• Calculate Overhead Rate and Efficiency Variances
• Calculate Sales Volume, Mix, and Price Variances
• Calculate the Price Recovery Variance
• Calculate the Productivity Variance
• Calculate Market Share and Size Variance
• Use Variance Analysis as an operational Analysis Tool

EFFECTIVE DETERMINATION OF JOINT- AND BY-PRODUCT COSTS

• Define Joint Products
• Define By-Products
• Determine the Split-Off Point
• Identify Separable Costs
• Determine the Cost Impact of Joint Products
• Calculate the Proper Allocation of Joint Product Costs
• Discuss the Cost Impact of By-Products
• Analyze the Cost Impact of Scrap and Waste
• Determine the Cost Impact of Rework

ASSIGNING SERVICE DEPARTMENT COSTS TO DETERMINE TOTAL PRODUCT COST

• Define What Comprises Service Department Costs
• Identify the Purpose for Allocation of Service Department Costs
• Define the Strategic and Tactical Decisions Supported by Allocation of Service Department Costs

• Develop Allocation Alternatives for Distribution of Service Department Costs Using:

• Direct Allocation Method

• Step-Down Allocation Method

• The ABC Consumption Method

• Developing the Target Cost Model

• Define Target Costing

• Identify the Strategic and Tactical Applications of Target Costing

• Profit Maximization

• Capacity Utilization

• Define the Components of the Target Costing Model

• Variable Costs (Product vs. Process)

• Fixed Costs (Product vs. Process)

• Define Scarce Resources

• Perform a Scarce Resource Analysis

• Discuss the Application of Scarce Resource Analysis as an Integral Part of the Target Costing Model

• Develop Standards Using Target Costing and Scarce Resource Analysis

• Analyze Standards Using Target Costing and Scarce Resource Analysis

TRANSFER PRICING AND PRODUCT COST DETERMINATION

• Define Transfer Pricing
• Identify the Tax Implications for Off-Shore Manufacturing
• Discuss the Product Pricing Implications for Inter-Divisional Transfers of Sub-Components

• Apply the Impact Of:

• The Uniform Tax Code Section 482

• FASB 94

• Accounting Research Bulletin Nos. 43 and 51

Communicate the Informational Requirements of the Cost Information System

CASH FLOW AND COST ACCOUNTING

• Define Cash as the Fuel That Drives the Organization
• Discuss the Difference between Cost and Cash

• Determine the Impact of Cash Decisions on the Total Cost of the Production and Overhead Operations

• Payable and Receivable Cycles

• Inventory Levels

• Recovery of Investments in R&D

CAPACITY ANALYSIS: UNDERSTANDING THE TRUE COST OF INCREMENTAL MANUFACTURING

• Define Capacity Analysis
• Calculate the Impact of the Weighted Average Cost of Capital (WACC)
• Develop the Capacity Analysis Model

• Apply the Capacity Analysis Model To:

• Production Units

• Service Units

• Investment Decisions

• Product and Sales-Related Decisions

• Scarce Resource Analysis

CUSTOMER PROFITABILITY: THE KEY TO PROFIT ENHANCEMENT

• Discuss Customer Profitability Analysis
• Develop the Customer Profitability Analysis Model
• Define the Informational Requirements for the Customer Profitability Analysis Model

• Identify the Applications for the Customer Profitability Model

• Use with Scarce Resource Analysis

• Use with Capacity Analysis

• Use with Fixed Asset Investment Decisions

• Use the Customer Profitability Model Concept to Support Other Decision Types:

• Product Continuance

• Selection of Preferred Suppliers

• Determination of Asset Continuation