This is a title slide titled "Costing Techniques," with the main text "Introduction to Costing Techniques." The subtitle outlines key topics: Costs & Cost Behaviour, Absorption and Marginal Costing, and Managerial Decision Making.

Introduction to Costing Techniques

Costs & Cost Behaviour, Absorption and Marginal Costing, Managerial Decision Making

This agenda slide outlines a presentation on cost accounting topics. It covers an introduction to costs and behaviour, absorption costing, marginal costing, key differences and applications, and a conclusion.

Presentation Agenda

1. Introduction to Costs & Behaviour

Overview of cost concepts and behavioural patterns.

2. Absorption Costing

Full costing method allocating fixed and variable costs.

3. Marginal Costing

Variable costing emphasizing contribution and margins.

4. Key Differences & Applications

Comparisons, decision-making uses, examples, and case studies.

5. Conclusion

Summary of advantages, limitations, and key takeaways.

This section header slide for "Costing Techniques" introduces Section 01: "Introduction to Costs." It highlights understanding the foundation of costing in business.

Costing Techniques

01

Introduction to Costs

Understanding the foundation of costing in business.

Source: PPT on Costing Techniques

Fixed costs, such as rent and salaries, remain constant regardless of output levels, while variable costs like materials and labor fluctuate directly with production volume. Semi-variable costs blend elements of both fixed and variable types.

Types of Costs

• Fixed costs (e.g., rent, salaries) remain constant regardless of output.
• Variable costs (e.g., materials, labor) vary directly with output levels.
• Semi-variable costs combine fixed and variable elements.

Cost behaviour explains how costs respond to changes in activity levels, with fixed costs staying constant in total and variable costs varying proportionally with volume. This analysis supports effective planning and control.

Cost Behaviour

• Costs respond to changes in activity levels
• Fixed costs remain constant in total amount
• Variable costs vary proportionally with volume
• Cost behaviour analysis supports planning and control

This slide illustrates cost behavior, with fixed costs remaining constant regardless of production volume and variable costs rising proportionally with output. It also shows total costs as the combination of both, along with the break-even point where revenue equals total costs.

Cost Behaviour Illustration

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• Fixed costs remain constant regardless of volume.
• Variable costs rise proportionally with production.
• Total costs combine fixed and variable elements.
• Break-even point: revenue equals total costs.

Source: cost volume profit analysis

This slide serves as the header for Section 02, titled "Absorption and Marginal Costing." It includes the subtitle "Comparing Traditional vs. Contribution Approaches."

Absorption and Marginal Costing

02

Absorption and Marginal Costing

Comparing Traditional vs. Contribution Approaches

Absorption costing allocates all manufacturing overheads (fixed and variable) to products via a predetermined rate, making it essential for GAAP-compliant external reporting and inventory valuation. Unit product costs include direct materials, direct labor, variable overhead, and fixed overhead, providing a full view of total production expenses.

Absorption Costing

The slide compares Absorption and Marginal Costing in a table across three aspects: fixed costs, profit, and use. Absorption absorbs fixed costs into inventory (affecting profit) for financial statements, while Marginal treats them as period costs with contribution-based profit for decisions.

Absorption vs Marginal Costing

{ "headers": [ "Aspect", "Absorption", "Marginal" ], "rows": [ [ "Fixed Costs", "Absorbed", "Period cost" ], [ "Profit", "Inventory affected", "Contribution-based" ], [ "Use", "Financial statements", "Decisions" ] ] }

This slide serves as the header for Section 3, titled "Applications of Marginal Costing." Its subtitle emphasizes leveraging marginal costing techniques for managerial decision making.

Applications of Marginal Costing

3

Applications of Marginal Costing

Leveraging Marginal Costing Techniques for Managerial Decision Making

Source: Costing Techniques PPT

This workflow slide outlines decision making using marginal costing through four steps: calculating contribution (sales minus variable costs), prioritizing products by contribution per limiting factor, make-or-buy analysis comparing avoidable costs to buy prices, and special pricing decisions based on total contribution impact. Each step focuses on optimizing profitability, such as identifying per-unit profits, maximizing product mix, minimizing outsourcing costs, and accepting orders that cover variables and contribute to fixed costs.

Decision Making with Marginal Costing

{ "headers": [ "Step", "Key Activity", "Purpose" ], "rows": [ [ "Calculate contribution", "Sales revenue minus variable costs", "Identify profitability per unit and product contribution" ], [ "Prioritize products", "Rank by contribution per limiting factor", "Optimize product mix for maximum profit" ], [ "Make or buy analysis", "Compare relevant avoidable costs vs. buy price", "Decide on outsourcing to minimize costs" ], [ "Special pricing decisions", "Evaluate impact on total contribution", "Accept special orders if they cover variable costs and contribute to fixed costs" ] ] }

The "Key Benefits & Stats" slide highlights three metrics: 20-30% improved decisions confirmed by studies, and 100% focus on relevant costs by ignoring sunk and fixed costs. It also covers break-even analysis, where sales minus variable costs equals contribution margin.

Key Benefits & Stats

• 20-30%: Improved Decisions

Studies confirm better outcomes

• 100%: Relevant Costs Focus

Ignores sunk and fixed costs

• Sales - VC: Break-even Analysis

Equals contribution margin Source: Industry Studies