Features
Features:

Product Tour >

Edraw AI >

Paid Plans:

Individuals >

Business >

Eduaction >
Resources
Blog

History

How-tos & Tips

Discovery

Biography

Business Analysis

Examples

AI concept Map

Free AI Mind Map Generator

Onenote Mind Map

Bcg Matrix Examples

Nike Marketing Strategy

Unilever SWOT Analysis

Make Mind Maps in Google Docs

Guide

FAQs

What's New

Resource Center
Templates
All Templates

Brain Storming Templates

Strategy and Planning Templates

Project Management Templates

Product Management Templates

Human Resources Templates

Agile Workflow Templates

Marketing Templates

Education Templates

Fun and Games Templates

User Gallery
Download
Pricing
Enterprise

cost management

2024 Intermediate Accounting Examination, Financial Management Exam Preparation Guide. The style is simple and the content is easy to read, helping you clarify your ideas while highlighting important and difficult points. The combination of diagrams and formulas allows you to understand it clearly at a glance, achieve twice the result with half the effort, learn more efficiently, and easily obtain the intermediate certificate, come on! Continuously updating...

Edited at 2023-10-14 21:30:11

PlotWizard

Recent works View more works>>

cost management

PlotWizard

Recent works View more works>>

Recommended to you
Outline

Financial analysis and evaluation
- 34
PlotWizard

cost management

1. Cost Management Overview

Meaning, goals, principles and main content

2. Cost-volume-profit analysis and application

Basic assumptions of cost-volume-profit analysis

The total cost is made up of variable costs and fixed costs. There is a completely linear relationship between sales revenue and business volume Production and sales balance Product production and sales structure is stable

basic formula

Profit before interest and taxes = sales revenue - variable costs = sales revenue x (1 - variable cost rate) = sales revenue x contribution margin rate

Contribution margin = sales revenue - variable costs = sales revenue x (1 - variable cost rate) = sales revenue x contribution margin rate

Marginal contribution rate = total contribution margin/sales revenue = unit marginal contribution/unit price = (unit price - unit price variable cost)/unit price Variable cost contribution margin = 1

single product

Breakeven analysis

meaning

Total revenue equals total cost, business volume or sales when profit is zero

formula

Business volume at break-even point = fixed cost/(unit price-unit variable cost) Sales volume at the break-even point = business volume at the break-even point x unit price = fixed cost/(1-variable cost rate) = fixed cost/contribution margin rate

Ways to lower your breakeven point

(1) Reduce: fixed costs and unit variable costs; (2) Increase: unit price

Break-even point operating rate

=Break-even point business volume (amount)/normal business volume (amount)

safety margin analysis

formula

Margin of safety = actual or expected sales volume (amount) - break-even point sales volume (amount) Safety margin rate = safety margin amount (amount) / actual or expected sales volume (amount) x 100%

The relationship between break-even point operation rate and safety margin contribution rate

Breakeven operation rate Safety margin rate=1

variety of products

Weighted average method

formula

Sales at the break-even point = Total fixed costs Comprehensive contribution margin rate Comprehensive marginal contribution rate = total marginal contribution/total revenue = S (revenue proportion x marginal contribution rate of each product)

joint unit method

Take the smallest proportion of the physical quantity of the product as a joint unit

formula

（1） Joint unit price = S (each unit price x quantity of each product in a consortium) Joint unit variable cost = S (variable cost of each unit x quantity of each product of a joint venture)

（2） Joint breakeven point sales volume = total fixed costs (joint unit price – joint unit variable costs)

（3） Sales volume of a certain product at breakeven point = sales volume at joint breakeven point x quantity of the product in a joint unit

sub-algorithm

Reasonably allocate all fixed costs among various products according to certain standards

formula

Fixed cost allocation rate = total fixed cost, total allocation standard for each product

The amount of fixed costs that should be allocated to a certain product = allocation rate x allocation standard of a certain product

main products act

Target profit analysis

Target profit sales volume = (fixed cost target profit) / (unit price - unit variable cost)

Target profit sales = (fixed cost target profit) / contribution margin rate = target profit sales volume x unit price

Subjective questions

Profit Sensitivity Analysis

meaning

When slight changes occur in the factors that affect profits, the direction and extent of the impact on profits.

formula

Sensitivity coefficient = percentage change in profit before interest and tax, percentage change in factors

The sensitivity coefficient of profit to sales volume is called operating leverage coefficient

If the absolute value of the sensitivity coefficient is greater than 1, it is a sensitive factor.

Sensitivity

Direction unit price ( ); sales volume ( ); unit variable cost (-); fixed cost (-)

Size: largest unit price; sales volume > fixed cost

Application of cost-volume-profit analysis in business decision-making

（1） Product production and pricing strategies

（2） Selection of production process equipment

（3） Choice of new product launch

3. Standard cost control and analysis

Related concepts

ideal standard cost

normal standard cost

Establishment of standard costs

Standard cost per unit product

Establishment of direct material standard costs

Establishment of direct labor standard costs

Establishment of manufacturing overhead standard costs

Calculation and analysis of cost differences

Variable costs

type

direct material costs, direct labor costs, variable manufacturing overhead

calculate

Total difference = actual number - standard number = actual cost - standard cost (under actual output) = price difference quantity difference = A1B1C1-A1B0C0

Volume difference - efficiency difference = (actual working hours or usage under actual output - standard working hours or usage under actual output) x standard distribution rate = (A1B1-A1B0)XC0

Price difference - consumption difference = actual working hours or usage under actual output x (actual allocation rate - standard allocation rate) = A1B1x (C1-C0)

Responsibility

Quality difference

Mainly the production department is responsible for

spread

(1) Direct materials - purchasing department (2) Direct labor - labor and personnel department (3) Variable manufacturing overhead - department manager

fixed costs

Total price difference = actual number - standard number = actual cost - standard cost (under actual output)

Subscript 1: actual; Subscript 0: budget/standard; A: output; B: standard working hours; C: allocation rate

two differences

Consumption difference = actual number - budget number = A1B1C1-A0B0C0

Energy difference = budget number (A0B0C0) - standard number (A1B1C1) = (A0B0-A1B0) x standard allocation rate (C0)

Insert: Budget Products

three differences

Consumption difference = actual number - budget number (same as the difference method)

energy difference

Production variance = budgeted quantity - actual quantity x price tag = A0B0C0-A1B1C0

Efficiency difference = actual quantity x price tag - standard number = A1B1C0-A1B0C0

Insert: actual working hours based on actual output

4. Activity-Based Costing and Responsibility Costing

operating cost

cost drivers

Resources® Jobs® Products

Work center design

Product-level operations: Benefit a single product, the quantity is proportional to the quantity of the product, such as product processing and inspection.

Batch-level operations: Benefit this batch of products, the quantity is proportional to the batch size, such as equipment testing and production preparation.

Variety-level operations: Benefit the product, and the quantity is proportional to the variety, such as product design and product advertising.

Customer-level operations: Implemented to serve customers, regardless of product quantity, such as individual customer consultation activities.

Facility-level operations: Benefit all products, regardless of production and sales, such as overall corporate advertising costs.

Ways to save costs

Job elimination: moving raw materials from warehouse to production department

Job selection: Choose the lowest-cost sales strategy under different sales strategies

Reduced work: Reduce the number of maintenance times

Job sharing: new products using parts from existing products

liability cost

Responsibility center

Cost Center

Features

1. Income is not assessed, only costs are assessed (the lowest level); 2. We are only responsible for controllable costs and not for uncontrollable costs; 3. Responsibility cost: The sum of all controllable costs is the main content of the cost center.

Assessment indicators

(1) Budgeted cost savings = budgeted number under actual production - actual number (2) Budgeted cost savings rate = budgeted cost savings/budgeted number under actual output

Profit Center

Features

Ability to control costs as well as revenue and profits

Assessment indicators

(1) Contribution margin = revenue – variable costs (2) Controllable marginal contribution (department manager’s marginal contribution) = marginal contribution – controllable fixed costs (evaluating manager performance) (3) Departmental contribution margin = controllable marginal contribution – uncontrollable fixed costs (evaluating departmental performance)

investment center

Features

Able to control both costs, revenue and profits, as well as the funds invested (the highest level)

Assessment indicators

(1) Investment rate of return = Profit before interest and tax / Average operating assets = Profit before interest and tax / (Operating assets at the beginning of the period - Operating assets at the end of the period) / 2 (2) Residual income = profit before interest and tax - (average operating assets x minimum investment rate of return)

internal transfer price

price type

Based on market prices, costs and gross profits constitute internal transfer prices.

Scope of application: Generally applicable to profit centers

cost type

Based on relatively stable cost data such as standard costs

Scope of application: Generally applicable to cost centers

Negotiative

The upper limit of the negotiated price is the market price, and the lower limit is the unit variable cost.

Scope of application: Generally applicable to situations with a high degree of decentralization