Cost and management
From product cost to management decisions
Connect cost flows, standards, CVP, decisions, and performance evaluation.
Draw the cost flow
Follow material, labour, and overhead through work in process and finished goods to cost of sales.
Split variances into quantity and price
Compare actual quantity and price against standards and check whether the result is favourable or unfavourable.
Use only relevant costs for decisions
For CVP, special orders, and make-or-buy cases, include future amounts that differ and exclude sunk cost.