Introduction to financial decision making

Contrasting paradigms and approaches

Cost volume profit analysis and financial decision making

Budgeting and management control decisions

Incremental costing and short term decision making

In this unit we shall explore types of cost classification as a precursor to understanding absorption
based approaches to treatment of overheads. The limitations of this approach when used for short
term decision making are explored.

More sophisticated treatment of overheads through Activity Based Costing (ABC) is then introduced
and its use in decision making is explored. Though more advanced than absorption costing this
technique is not without its limitations and these are explored here.

Understand the classification of costs and its significance for decision making

Understand and be able to apply absorption based approaches to overheads

Understand and apply activity based approaches to overheads Critically evaluate both
absorption and activity based approaches