Cost Analysis to Support Strategic Decisions

Introduction

Cost control is one of the most widely used tools for planning and monitoring organizational activities, as well as to support the future strategic decision. Importantly, cost analysis is inextricably linked with strategy formulation, the budgetary process, and performance management. It is crucial to interpret how costs behave so that realistic budgets and plans can be produced, and appropriate financial and non-financial resources can be made available to the business. This training session will allow you to explore the traditional tools of cost analysis and control as well as new advanced approaches, which reflect and respond to the current complex business environment. In particular, you will learn:

• The cause-and-effect relationship among business strategy, operational objectives, measures and targets, and Systems of performance measurement and reporting
• Traditional techniques of cost analysis and control
• Advanced costing and management techniques (ABC, ABB, ABM, target costing)
• Overhead cost allocation & reduction
• The balanced scorecard construction and implementation

Objectives

• Enhance cost awareness and its relationship with strategy
• Describe specific cost analysis and performance measurement techniques
• Select the costing measurement system that works
• Select the systems of performance measurement that works
• Discuss real case studies
• From cost to strategy to performance measurement
• Broadening the management accounting knowledge
• Deliver more timely and useful information to decision makers
• Identify & manage key financial and non-financial indicators for the business  

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

• All business disciplines and sectors of industry, irrespective of functional responsibilities, where personnel have to plan and cost and who are responsible for strategic analysis
• Other professionals who would benefit from having the opportunity to consider new ideas and methods and personnel on a fast-track development

Course Outline

Day 1: Introducing the Linkages between Strategy and Costing

• Managing contemporary organization
• Strategic Plan, Budgeting, Costing and Management Control
• Management accounting for organizational control systems
• Responsibility accounting and the process-view
• The context for costing
• The Budget and its role for achieving organizational targets
• What is the situation in your organization?

Day 2: Cost Analysis and Classifications

• Cost terms and classification
• Inventoriable vs. period costs
• Manufacturing vs. non-manufacturing costs
• Variable vs. Fixed costs (CVP analysis)
• Direct vs. indirect cost
• Under-costing and Over-costing problems
• Problems and Examples - Case study illustration

Day 3: From Cost Accounting to Management Control

• Cost allocation: traditional costing and activity-based costing (ABC)
• From traditional budgeting to Activity-based budgeting (ABB)
• Activity-based management
• Decentralized organizations
• Cost/Profit/Investment centers
• Transfer-pricing issues
• Problems and Examples - Case study illustration

Day 4: Flexible Budgets and Variance Analysis

• The features of budgetary control
• Define the master budget and explain its major benefits to an organization
• Describe the difference between a static budget and a flexible budget
• Compute flexible-budget variances and sales-volume variances
• Explain why standard costs are often used in variance analysis
• Integrate continuous improvement into variance analysis
• Case study, problems, and exercises

Day 5: Linking Strategy to Actions: Beyond Costing

• Shortcomings of traditional approaches to measurement
• The Balanced Scorecard: linking Strategy to Performance Measurement
• Financial perspective, Customer perspective
• Internal Business Process perspective, Learning and growth perspective
• Developing and adapting scorecard
• Case study illustration

Shortcomings of Traditional Approaches to Measurement

• The Balanced Scorecard: linking Strategy to Performance Measurement
• Financial perspective, Customer perspective
• Internal Business Process perspective, Learning and growth perspective
• Developing and adapting scorecard
• Case study illustration