Cost Management Guidebook

Upon successful completion of this course, participants will be able to:

Chapter 1

• Recognize the concept of cost management, identifying an example of a cost management system as well as advantages and dangers of having an active cost management program;
• Specify ways in which control over costs can slip away from the management team, identify the environment needed to bring costs back under control, and cite the effects of cutting costs too deep;

Chapter 2

• Identify the various types of costs a business can incur, noting the characteristics of each type and how they are used;

Chapter 3

• Recognize the concept of direct costing, noting the difference between contribution margin and gross margin;
• Cite the applications to which direct costing analysis can be put as well as any limiting factors;

Chapter 4

• State the components and derivation of the cost-volume-profit concept, and how it is used;
• Determine the amount of units a company must sell to make a profit given a set of circumstances;

Chapter 5

• Recognize the concept of target costing, identifying the uses to which this tool can be put as well as how costs can be altered to meet target costing goals;

Chapter 6

• Identify the costs that are associated with cost objects, and the decisions that can arise from cost object analysis;

Chapter 7

• Identify the key components of constraint analysis, recognizing how profits can be improved under this type of analysis;

Chapter 8

• Identify the tools used to conduct a process analysis, citing their appropriate usage and effectiveness;

Chapter 9

• State the components of a zero-base budgeting system, citing examples, advantages and disadvantages, and situations in which zero-base and conditional budgeting can be used;

Chapter 10

• State the analysis tools to use for different cost-reduction strategies, noting the characteristics of each as well as their applicable effect on cost reduction;

Chapter 11

• Cite the types of cost reduction methods available when reducing compensation costs, identifying potential side effects of using these methods as well as strategies to combat any negative effects;

Chapter 12

• Identify methods used to reduce benefit costs, citing the potential impacts and resulting side effects of using these methods;

Chapter 13

• Identify the techniques available for increasing the effectiveness of sales and marketing activities and the side effects of using these methods;

Chapter 14

• Identify the cost reduction techniques that can be used to reduce the costs of production and maintenance operations, citing the characteristics of each technique as well as potential side effects of using these methods;

Chapter 15

• Cite the key procedural steps and forms needed to maintain a proper system of procurement, noting internal techniques used to manage suppliers and spending;

Chapter 16

• Recognize the range of methods available for the reduction of costs for accounting, human resources, legal services, and other areas of administration;

Chapter 17

• Identify cost reduction tactics for managing facilities costs and strategies that help to offset long-term fixed costs;

Chapter 18

• Identify the methods used to reduce the costs of banking, cash management, leasing, and insurance, noting key similarities and differences between each method;

Chapter 19

• Identify techniques used to reduce the investment in accounts receivable, citing the characteristics of each technique and the situations in which they are most applicable;

Chapter 20

• Recognize the cost reduction concepts used to reduce the level of inventory, identifying their characteristics, key advantages, and the situations in which they are most applicable;

Chapter 21

• Identify the analysis methods used to evaluate prospective investments in fixed assets as well as alternative forms of payment for these assets;
• Recognize the reasoning behind having a post-implementation review;

Chapter 22

• Identify the key reports and report formats needed to support a system of cost management, noting the characteristics and usage of each as well as situations in which these reports might be used; and

Chapter 23

• Identify the most essential measurements used to evaluate the cost structure of a business and specify the situations in which these measurements might be used.