Management Accounting

Explore cost classification and cost behavior in management accounting, covering fixed, variable, and semi-variable costs, plus methods to derive fixed and variable costs from total cost.

Distinguish capital expenditure from revenue expenditure by detailing non-current assets such as machinery, land, and buildings and their long-term benefits, plus day-to-day costs that affect the P&L.

Classify costs by function into production and non-production categories, including admin and finance, selling and distribution, and distinguish direct and indirect costs such as material, labor, and overhead.

Explore cost behavior in management accounting, distinguishing fixed, variable, and semi-variable costs (mixed costs), and understanding stepped costs and how total and per-unit costs change with activity levels.

Apply the high-low method to separate fixed and variable costs from total cost by using the highest and lowest activity levels, calculating variable cost per unit, then fixed cost.

Decide which items are capital expenditure versus revenue expenditure, and analyze cost behavior using fixed, variable, and step costs, plus the hielo method to predict costs.

Learn the three inventory types: raw materials, work in progress, and finished goods, and how to value them using FIFO, LIFO, and AVCO, plus basics of inventory control.

Learn how to order and receive raw materials, manage inventory through purchase requisitions, purchase orders, delivery notes, and the material control t account to track work in progress.

Examine direct versus indirect costs, including direct materials and labor, indirect materials and labor, and production overhead, with the materials control account and work in progress transfers.

Explore how holding costs and ordering costs shape inventory management, including economic order quantity (EOQ), just-in-time, buffer stock, and key formulas for reorder level, minimum, and maximum inventory.

Explore how the economic order quantity minimizes total inventory costs by balancing purchase, ordering, and holding costs, illustrated by an EOQ of 160 units.

compare fifo, lifo, and avco inventory valuation methods, noting fifo assigns oldest costs to issued inventory and latest costs to remaining stock, while avco uses a weighted average.

Apply the first in, first out method to calculate closing inventory value and total issues from an opening balance with receipts.

Demonstrates the LIFO cost flow with a practical inventory scenario, tracing purchases and issues to show how clothing inventory value differs under LIFO and FIFO.

This lecture demonstrates AVCO weighted average cost for inventory, showing how to calculate the issuance price after each purchase and determine the closing inventory value.

Select FIFO inventory valuation to achieve the highest reported first-year profit in a rising-cost environment.

Practice inventory valuation by calculating material issues and closing stock using FIFO and AVCO methods, with balance updates, requisitions, and nearest penny accuracy.

Explore labor costs, including salaried and time-based systems, hourly wages, overtime premiums, idle time, productive hours, and bonuses like profit-sharing and discretionary pay; examine piecework and guaranteed minimum wages.

Explore how labor costs split into direct and indirect, and how overtime and premium rates are calculated under time-based pay, including overtime treatment rules.

Explore piecework payment that links earnings to output with differential rates (50p up to 100 units, 75p for 100–200, 90p beyond 200) and compare it with time-rate pay.

Explore bonus and incentive schemes, classify bonuses as indirect costs, and calculate weekly wages with standard hours, overtime at time and a half, and bonuses equal to half of the hourly rate.

Record labor costs using timesheet assessments, calculating basic pay, overtime rates, and bonuses to determine total labor cost and cost per unit.

Explore how the wages control account tracks payroll, deductions, and liability to HMRC and welfare schemes, while allocating direct and indirect labor to work in progress and overhead.

Calculate gross pay from basic pay, overtime and double time, apply time and a half, weekend rates, and piecework; distinguish direct versus indirect labor and overhead implications.

Explore allocation and apportionment of service and production costs, identify direct versus indirect costs, and apply the direct and step-down methods of absorption costing to determine the cost per unit.

Explains absorption costing by combining direct and indirect costs into a cost per unit, including production and non-production overheads, and introduces allocation, apportionment, reapportionment, and step-down and direct methods.

Learn how to allocate direct costs to cost centers and apportion shared costs using bases like floor area, headcount, usage, and net book value, with practical examples.

Learn how to allocate and apportion factory overhead using bases such as floor area, volume, and employees, including depreciation and insurance on equipment, across production and service departments.

Explore reapportionment using the direct method and step-down approach to allocate stores, maintenance, and general admin costs between production departments X and Y and service departments.

Allocate and apportion overheads across production and service departments, perform reapportionment using bases like floor area, machine value, supervisors, and volume to determine final budgets.

Introduce absorption costing fundamentals, including over and under absorption, cost per unit, and allocation, apportionment, and reapportionment, with a preview of activity based costing (ABC) and its pros and cons.

Master absorption costing basics by learning how overhead is absorbed into cost units using budgeted overhead divided by budgeted activity, with labor and machine hour bases.

Compute overhead absorption rates for mixing and machine bases, explore predetermined rates, and assess over and under absorption, with service sector bases like labor, miles, or nights.

Explore over and under absorption of overheads, based on budgeted versus actual activity and machine hours, and see how they affect profit in cost accounting.

Learn how to compute overhead absorption rates using labor hours and machine hours, apply fixed and variable overheads, and analyze over- and under-absorption in a highly automated painting division.

Learn how to account for overhead absorption by recording direct and indirect costs in work in progress, applying production overhead absorption, and reconciling over or under absorption into finished goods.

Explore activity based costing as a modern alternative to absorption costing, identifying cost drivers (setups, production runs, maintenance, and materials handling), and compare per unit costs under ABC and absorption.

Apply activity-based costing to four products by calculating total materials and direct labor, then allocate overhead using drivers—setup costs, production runs, stores receiving, inspection, and materials handling—to derive unit cost.

Advance your understanding of overhead absorption in management accounting by evaluating budgeted versus actual overheads, computing absorption rates from machine hours, and identifying over and under absorption.

Explore job, batch, and service costing by calculating material, labor, and overhead costs, including fixed and admin overhead, plus rework and overtime with markup for selling price.

Learn batch costing and service costing by calculating batch cost per unit, exploring perpetual and periodic inventory valuation, and applying composite and true cost units in service departments.

Explore practical cost estimation in management accounting, calculating material and direct labor costs, overheads, and profit margins, then apply cost units and service costing to real-world scenarios.

Explain normal loss and scrap value in process costing, compute normal loss as a percentage of input, and derive cost per unit from scrap value and input minus normal loss.

Explore abnormal and normal losses, scrap value, and cost per unit in process costing with a 10 percent normal loss, and illustrate T-account treatment.

Explore abnormal loss and abnormal gain in process costing, calculating normal loss, cost per unit, and process accounts to analyze deviations between actual and expected output.

Explore process costing by calculating normal and abnormal losses, scrap values, and cost per unit. Use a process account to reconcile output, losses, and total cost.

Learn process costing with work in progress and equivalent units, determine the cost per equivalent unit, and value completed versus half-completed output during the month of May.

Explore the different stages of completion in process costing, evaluating material, labor, and overhead, and computing equivalent units and cost per unit for finished goods and work in progress.

Explore opening work in progress under fifo and avco methods, calculating equivalent units and costs for materials, labor, and overhead in a process costing framework.

Apply activity-based costing to calculate equivalent units and cost per unit using Pfeifle and Avco methods, including opening work in progress, started output, and material, labor, and overhead allocations.

Compute equivalent units for closing work in progress in a process costing setting, using material and labor percentages to derive cost per equivalent unit.

Learn budgeting basics in management accounting, including fixed and flexible budgets, variance analysis, and planning and control, with practical unit-based budgeting examples.

Learn to differentiate fixed and variable costs using cost schedules and high-low analysis. Apply these insights to fixed and flexible budgets and profit calculations.

Test your learning by building a flexible budget for a production company, distinguishing fixed and variable costs, calculating variances, and assessing impact on gross and operating profit.