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Understand the nature and role of costing systems within an organisation (Press the ticks on the left to mark your understanding)

Explain the purpose of internal reporting and providing accurate information to management
Explain the relationship between the various costing systems within an organisation
Identify the responsibility centres, cost centres, profit centres and investment centres within an organisation
Explain the characteristics of different types of cost classifications and their use in costing
Explain the differences between marginal and absorption costing

Record and analyse cost information

Record cost information for material, labour and expenses in accordance with the organisation’s costing procedures

Analyse cost information for material, labour and expenses in accordance with the organisation’s costing procedures

Define the various stages of inventory

Value inventory using these methods:
* First in first out (FIFO)
* Last in first out (LIFO)
* Weighted average

Describe the behaviour of these costs:
* Fixed
* Variable
* Semi-variable
* Stepped

Record cost information using these costing systems:
* Job
* Batch
* Unit
* Process
* Service

Apportion costs according to organisational requirements

Attribute overhead costs to production and service cost centres in accordance with agreed bases of allocation and apportionment:
* Direct
* Step down

Calculate overhead absorption rates in accordance with suitable bases of absorption:
* Machine hours
* Labour hours

Make adjustments for under or over recovered overhead costs in accordance with established procedures

Review methods of allocation, apportionment and absorption at regular intervals, implementing agreed changes to methods

Communicate with relevant staff to resolve any queries in overhead cost data

Analyse deviations from budget and report these to management

Compare budget costs with actual costs, noting any variances

Analyse variances for management reports

Provide information for budget holders of any significant variances, making valid suggestions for remedial action

Prepare management reports in an appropriate format, presenting these within the required timescales

Be able to use information gathered from costing systems to assist decision-making

Prepare estimates of future income and costs for decision making using:
* Relevant costs
* Break-even analysis
* Margin of safety
* Target profit
* Profit-volume analysis
* Limiting factors
* Payback
* Discounted cash flow

Explain the effect of changing activity levels on unit costs

Calculate the effect of changing activity levels on unit costs

Identify factors affecting short-term and long-term decision making

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