Methods of Cost Analysis

This course is aimed to improve the students’ ability to translate managerial questions into economical and financial terms through the acquisition of a set of tools and reasoning skills.

Decision-making is central to managerial activity. Decisions cover a wide range of topics, including launching products, pricing, make-or-buy decisions, dropping a product or an activity, just to name a few.

Managers make their decisions based on a mix of financial, economic and strategic analyses. One of the primary roles of management accounting is to provide useful and structured information for these decisions, assessing the profitability of alternatives.

Course Objectives

At the end of the course, the students must be able to:

  • Understand and manipulate the main techniques of management accounting
  • Determine the relevant costs that should be used for different types of decisions
  • Apply management accounting techniques to usual managerial situations.

Course Content

  1. Cost typology, costing systems and the concept of relevance for decision making
  2. Cost-Volume-Profit analysis, and its applications to decision making (make-or-buy decisions, pricing and product mix decisions, lunching or dropping a product, etc.)
  3. Full Cost methods (two step allocation method, Activity-Based Costing and Activity-Based Management) and their application to products’ and customers’ profitability analysis.