Course Overview
In today’s changing business conditions and intense competition, there is a need for businesses to understand essential budgeting and costing techniques. Purpose is to prepare effective annual budgets, forecast profitability on new products, initiatives, tender preparation and also whether is worth to reduce certain costs for decision making.
This course workshop exposes hands sample preparation of company annual costing and budget forecast which important in decision making tools. Participants will be required to understand, apply best practice for budget and forecast of sources of business revenue, costs, operating expenses, assets purchase, cash budget and forecast financial statements. It addresses practical challenges faced by professionals in accurately determining product or service costs and setting competitive yet profitable prices.
Course Objectives
On completion of the programme, participants will be able to:-
- Understand the importance of a well-defined budget process
- Understand costing components and techniques for products and services for pricing decisions.
- Understand and able to apply best practices in doing bottoms up monthly and annual budgeting based on top-down budget
- Learn how actual cost and budgeted cost analysis is monitored
- Apply cost allocation methods to assess product and service profitability.
- Distinguish between fixed, variable, direct, indirect costs, sunk cost, future costs and incremental costing for business decision making.
Who Should Attend
Entrepreneurs, business professionals, accounting and finance managers, senior & junior executives who are involved in an annual budget, doing costing of products and services for pricing decisions and project tender submission. Managers and Directors that wish to use costing and budgeting knowledge to makes a better business decision. This can be extended to all levels of employees who involved in budgeting and costing roles.
Training Approach
Where appropriate, training delivery approaches will include the following:
- Online Lecture & Videos
- Online faciliated Group Discussions & Spot Quizzez
- Pre and Post Test Quiz
- Practical exercises and case studies.
Note: Laptop is needed for excel financial costing and budgeting exercises
Course Content
Module 1: Financial Basics, Costing concepts and types of costs
- Essentials financial terms
- Cost center versus profit center
- Categories of costs
- Cost behaviour which is fixed costs and variable costs
- Costs classification in an organization
- Direct costs versus indirect costs for material costing, labour costing and overheads costing.
- Controllable costs versus uncontrollable costs
- Absorption costing versus Marginal Costing methods.
Module 2: Product and Services costing
- Techniques on costing of raw materials based on Bill of Material (BOM) concept for products
- Stock control methods and valuation (First In First Out (FIFO), LIFO (Last In First Out) and Weighted Average Method)
- Inventory Costing relating to capacity Levels.
- Gross Profit impact analysis under inventory costing method
Module 3: Labour Costing & Overhead Costing and Accumulation Systems
- Manpower planning and resources costing
- Calculation of labour cost per unit – direct cost
- Calculation of Indirect labour costs per unit
- Calculation of Overhead Absorption rate
- Cost drivers and activity pools analysis as cost management and reduction techniques
Module 4: Costing Methods & Pricing Strategies
- Job costing calculation – customized orders
- Batch costing – Batch production orders
- Process costing for joint products and by products with calculation of weighted average costs
- Costing strategies for made-to-order and export-specific orders and dealing with small-batch, high-variety production with INCO (Shipping) terms, Freight, export duties, currency risks, tariffs risks.
- Market-based pricing vs cost-plus pricing advantages and disadvantages
Module 5: Essential Annual Budget
- Types of budgets for annual budget process
- Understanding company strategies and SWOT analysis
- Learning activity: Excel hands on template for bottoms up costing and setting of pricing with financial ratios
Module 6: Essential budget monitoring tools.
- Understanding types of variance analysis reports: Actual versus Budget, Actual versus Forecast
- Understanding specific finance variance report for business managers
- Revenue categories variance report
- Cost and expense variance
Module 7: Financial Statements Forecast Simulation
- Calculate break-even units with target profit calculations and margin of safety units
- Analysis costing profit or loss statements for cost monitoring and control
- Analysis of key profitability ratios: Margin analysis based on profit and loss as baseline for budget simulation
- Value costing analysis report on product continuation and discontinuation
