Cost Management, Finance & Banking

Strategic Cost Management for Every Manager: CVP & Relevant Costing

This program reviews the concepts and practices the techniques of two powerful short-term decision making approaches, CVP analysis and Relevant Costing, that allow the participants to explore the impact of certain decisions on short-term profitability. Short term decisions involve special order, make/buy and keeping/dropping products decisions.

Cost-Volume-Profit (CVP) analysis focuses on the relationships among costs, volume, and how changes in either of these variables will affect profit. CVP includes break-even analysis and target profit analysis.

Relevant Costing is a framework where managers compare two decision alternatives (e.g. "make or buy" and "keep or drop" decisions) to determine the differential effect on revenues, cost, and short-term profit.

Course Outline:

• Basic concepts of break-even analysis.
• Target profit analysis.
• The limitations of cost-volume-profit analysis.
• Break-even analysis with semi-fixed costs.
• Cost-volume-profit to multi-product scenarios.
• Relevant vs. Irrelevant cost.
• Special order decisions.
• Make or Buy decisions.
• Decisions involving keeping or dropping products.

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