1.1 Classify different types of cost
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Learning outcome 01: Be able to analyse cost information within a business
Assessment criteria
The candidate can:
1.1 Classify different types of cost
1.2 Use different costing methods
1.3 Calculate costs using appropriate techniques
1.4 Analyse cost data using appropriate techniques
Amplification of assessment criteria
1.1 Classify different types of cost
1.1.1 Define cost and its three elements: materials, labour, and expenses
1.1.2 Explain the purpose of a cost centre
1.1.3 Know how to use cost classification for stock valuation and profit measurement,
decision making and control
1.1.4 Explain the importance of cost behaviour
1.1.5 Determine the fixed and variable elements of semi-variable costs
1.2 Use different costing methods
1.2.1 Distinguish between job and contract costing
1.2.2 Distinguish between batch and service costing
1.2.3 Describe service department costing
1.2.4 Explain the relationship between job costing and services
1.2.5 Explain the distinguishing features of process costing
1.2.6 Know how to account for normal loss and abnormal loss or gain
1.2.7 Explain how to deal with scrapped units
1.2.8 Describe how to deal with closing work in progress and closing work in progress
with losses
1.2.9 Know how to identify losses/gains at different stages in the process
1.3 Calculate costs using appropriate techniques
1.3.1 Explain the nature of stock
1.3.2 Describe what is involved in the ordering, receipt and issue of raw materials
1.3.3 Describe what is involved in the storage and recording of raw materials
1.3.4 Know how to use FIFO, LIFO, and AVCO in stock valuation
1.3.5 Apply absorption and marginal costing
1.3.6 Compare marginal with absorption costing
1.3.7 Explain cost-based and market-based approaches to costing
1.3.8 Describe target costing
1.4 Analyse cost data using appropriate techniques
1.4.1 Describe the purpose of sampling and the main sampling groups – random, quasirandom,
and non-random
1.4.2 Demonstrate how to present data in tabular, diagrammatical, and graphical
formats: tables, time series graphs, bar charts, pie charts, histograms and ogives
1.4.3 Apply measures of central tendency
1.4.4 Know how to calculate simple indices
Learning outcome 02: Be able to propose methods to reduce costs and enhance value
within a business
Assessment criteria
The candidate can:
2.1 Prepare and analyse routine cost reports
2.2 Use performance indicators to identify potential improvements
2.3 Suggest improvements to reduce costs, enhance value and quality
Amplification of assessment criteria
2.1 Prepare and analyse routine cost reports
2.1.1 Know how to investigate variances
2.1.2 Explain the significance of variances
2.1.3 Describe appropriate control action
2.1.4 Describe the interdependence between variances
2.2 Use performance indicators to identify potential improvements
2.2.1 Describe the use of performance indicators in performance measurement and
improvement
2.2.2 Distinguish between qualitative and quantitative measures
2.3 Suggest improvements to reduce costs, enhance value and quality
2.3.1 Describe the relationship between cost reduction and value analysis
2.3.2 Explain the importance of quality and value to the customers of a business
2.3.3 Describe the main features of Total Quality Management (TQM)
Learning outcome 03: Be able to prepare forecasts and budgets for a business
Assessment criteria
The candidate can:
3.1 Explain the purpose and nature of the budgeting process
3.2 Select appropriate budgeting methods for the organisation and its needs
3.3 Prepare budgets according to the chosen budgeting method
3.4 Prepare a cash budget
Amplification of assessment criteria
3.1 Explain the purpose and nature of the budgeting process
3.1.1 Describe the purposes and benefits of a budget
3.1.2 Explain the link between organisational objectives, strategy, and budgets
3.1.3 Describe how budgets can act as planning, coordinating, motivating, and control
devices
3.1.4 Describe the behavioural aspects of budgeting – padding the budget, spending to
the budget and creative budgets
3.2 Select appropriate budgeting methods for the organisation and its needs
3.2.1 Explain how to identify the principal budgeting factor
3.2.2 Describe the stages involved in preparing a budget
3.2.3 Explain how to prepare functional budgets
3.3 Prepare budgets according to the chosen budgeting method
3.3.1 Distinguish between fixed and flexible budgets
3.3.2 Construct a flexible budget
3.3.3 Describe incremental and zero based budgeting systems
3.4 Prepare a cash budget
3.4.1 Explain the usefulness of cash budgets
3.4.2 Construct a cash budget
Learning outcome 04: Be able to monitor performance against budgets within a business
Assessment criteria
The candidate can:
4.1 Calculate variances, identify possible causes, and recommend corrective action
4.2 Prepare an operating statement reconciling budgeted and actual results
4.3 Report findings to management in accordance with identified responsibility centres
Amplification of assessment criteria
4.1 Calculate variances, identify possible causes, and recommend corrective action
4.1.1 Describe standard costing, its uses, and importance as a control technique
4.1.2 Calculate direct material and direct labour cost variances
4.1.3 Calculate variable overhead and fixed overhead variances
4.1.4 Calculate sales variances
4.1.5 Describe the possible causes of budget variances and the actions that can be
undertaken to resolve these
4.2 Prepare an operating statement reconciling budgeted and actual results
4.2.1 Prepare an operating statement that reconciles budgeted and actual results
4.3 Report findings to management in accordance with identified responsibility centres
4.3.1 Distinguish between the four categories of responsibility centres: cost, revenue,
profit, and investment centres
4.3.2 Describe the relationship between responsibility centres and budgeting
4.3.3 Describe how to report variances to centres responsible
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