2016

APPLY COSTING PRINCIPLES TO MUNICIPAL OPERATIONAL AND SERVICE-

BASED COSTING
UNIT STANDARD: 116340
NQF LEVEL: 6
CREDITS: 11
NOTIONAL HOURS: 110

FORMATIVE ASSESSMENT
INSTRUCTIONS TO THE LEARNER

 You must complete the classroom activities whilst facilitation is taking place. The facilitator may
stop at regular intervals to give you time to complete the activities.

 Please complete all work in blue or black pen. The assessor will not assess the evidence if
completed in pencil.

 You are not allowed to copy from another learner. Any plagiarism committed will be viewed in a
serious light and disciplinary action may be taken against you. Your work must be authentic i.e.
your own work. Group work is allowed in certain activities but your answers must be your own
original work after discussions in the group.

 You must sign the declaration contained in the assessment preparation and planning document
declaring that all work is your own. If you so not sign this declaration, the assessor will not
proceed with assessment and your results will be delayed.

 Please do not use any correction fluid i.e. tippex. Rather cross your work out and write next to
your mistakes.

 The proficiency level required for each unit standard in the cluster is 50% per specific outcome
per unit standard. If you are deemed Not Yet Competent in a unit standard, you will only be
required to redo (remediate those sections in that unit standard.

 Any remediation must be submitted within 30 working days after you gave received feedback

 If you have achieved any unit standards in this skills programme via another provider, please
neatly draw a line through the section and indicate that a certified certificate has been submitted
and is included in your administration section.

 Answer Section A and Section B in this guide.

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 Assessment Process Flow

C Assessment Plan agreed Observation

A by candidate & Knowledge conducted as per the
N completed by the Questionnaire conducted Assessment Plan
D assessor before the as per the Assessment
I actual assessment Plan
D
A
T
E
A
S Portfolio of
Evidence submitted Portfolio of
S
A detailed Assessor to the training Evidence compiled
E
Report compiled & provider as per the as per the
S
forwarded for Assessment Plan Assessment Plan
S
Moderation M
E
N
T

Feedback Report
Assessment
Completed by Appeal form
Results Moderated Assessor & completed by the Record of Learning
individual feedback candidate in the event Updated
given to the of dispute
candidate

Completed Assessor Report / S

Moderator Report / Record of Learning All records & Action Plan
E evidence filed Completed by
T Assessor
A

Certificate of Register candidates

Competencies issued on the Learner
Approval & Certification
obtained to successful Record Database
candidates

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 Agreed Assessment Plan

Candidate's Name:
Assessor's Name:
Standard Title: Apply costing principles to municipal operational and service-based costing 
EVIDENCE TO BE
EVENT DATE, TIME AND LOCATION RESOURCES REQUIRED
GENERATED
Attend Training Training material, equipment as specified Attendance Register
Complete formative assessment Formative workbook Completed formative workbook
Complete knowledge Completed knowledge
Knowledge questionnaire
questionnaire. questionnaire

Signature of Candidate: ______________________________ Signature of Assessor: ______________________________

Date: ______________________________

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FORMATIVE ASSESSMENT
SECTION A:

Answer all questions in this section

Question 1 (SO 1)

Instructions to the learner

You are required to complete the following questions with regards to application of costing principles to
municipal operational and service-based costing

No Question 1 Area covered

a) Explain the unit costing approach to service delivery in a municipal
service delivery context. (5)
b) Identify the service measurement unit in a municipal service delivery
context. Use examples from own municipality. (5)
c) Discuss the relationship between total cost of and unit cost in terms of
service provision. (5)
d) Discuss ways that can be used to evaluate the method of unit costing
in your municipality. (6)
e) Explain the importance of using marginal costs as part of the decision-
making process. (8)
f) What should you put into consideration when compiling a unit cost
statement in relation to a specific decision problem? (6)

Question 2 (SO 2)
Select an area of service delivery common to most municipalities and,

a) Discuss the concept of efficiency as it pertains to this particular area of service delivery
b) List the most appropriate efficiency indicators to be used and why.
c) Explain which benchmarking methods should be used and why.
d) Explain how a cost effectiveness analysis could be conducted and discuss its usefulness.
e) Identify how the efficiency indicators could be linked to performance management. (30)

Question 3 (SO 3)
Identify a municipal product or service and do the following:
a) Identify the types of overhead costs relating to the delivery of this product / service.

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 b) Comment on the importance of apportioning these overhead costs to the identified product or
service.
c) Discuss the most appropriate allocation bases that could be used for the apportionment of
service department overheads.
d) Discuss the most appropriate allocation bases that could be used to calculate an overhead
recovery rate for this particular product or service.
e) Discuss how the calculated overhead recovery rate can be used to assist in decision-making.
f) The group must report back to the class on their discussions.
g) Discuss the extent to which SLAs have been used in your municipalities to deliver support
services.
h) Discuss the extent to which the use of SLAs has solved the overhead costing problem.
(40)
Question 4 (SO 4)

a) Make a comprehensive list of all the services offered by your municipality. (8)

b) Identify the cost drivers / activities which cause costs to change for each service. (10)

c) Select ONE of the services and do the following:

i. Make a list of all the costs associated with the delivery of the identified service.
ii. Identify the cost drivers for each of those costs
iii. Classify each of the costs according to whether they are variable, fixed or mixed.
iv. Discuss how the cost behaviour and cost drivers can be interpreted for decision making
purposes.
v. Discuss the relationship between the cost driver and the specific municipal service level.
(40)
Question 5 (SO 5)

Select a municipality and discuss the following:

a) What is the budgeting format being used by the municipality?
b) What is the costing system being applied at the municipality?
c) What cost control approaches are being employed at the municipality?
d) How do the cost control approaches differ or support the budget control process or vice versa?
e) What changes to the financial management system and the budgeting system can be
recommended to support effective cost classification? (25)

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Question 6 (SO 6)

Decide on a service and a particular decision that needs to be made relating to the provision of the
service. This will be the frame of reference in terms of which you need to have the following discussion:
a) What is the cost information that is needed in order to facilitate the decision?
b) Produce a costing matrix to assist with classifying the various costs incurred in providing the
identified service.
c) Why is that information valuable, i.e. how will it assist with the decision?
d) How much of this information is readily available in the current costing system?
e) How would classifying the various costs assist with the decision?
f) What are the limitations of cost classification for financial management within the municipality?
(30)

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SECTION B: PRACTICAL ASSESSMENT

Complete all activities in this section

Task 1 (SO 1, AC 1, AC 3, AC 5; SO 2, AC 1, AC 2, AC 3, AC 5, AC 8; SO 3, AC 1, AC 2, AC 3, AC 7;
SO 5, AC 1, AC 2, AC 4; SO 6, AC 3; EEK; CCFO) - Presentation

You are to plan, prepare and conduct a 30 minutes presentation in the presence of your peers and
facilitator on the topic, application of costing principles to municipal operational and service-based
costing. As you present ensure that you clearly;
 Explain the unit costing approach to service delivery in a municipal service delivery context.

 Discuss the relationship between total cost of and unit cost in terms of service provision.

 Explain the importance of using marginal costs as part of the decision-making processIdentify and
discuss legislation and standards governing auditing in municipalities.

 Interpret the concept of efficiency within the framework of service delivery in municipalities.

 Identify and list efficiency indicators for appropriate use in a municipal context.

 Identify and explain the importance of benchmarking within a municipal context.

 Critically discuss benchmarking methods in terms of their strengths and weaknesses for process in
a municipal service provision context.

 Compare efficiency indicators and performance management terms of the links between the two.

 Comment on the importance of apportioning overhead costs to a specific service in relation to the
decision-making context.

 Comment on the allocation bases in terms of apportioning service overheads.

 Identify types of overhead costs in relation to delivering a specific service.

 Explain the use of Service Level Agreements to solve the problem of costing in support and
administrative service sections of a municipality using examples where the situation was improved
by the practice.

 Explain the relationship between the budgeting format and the costing system within a municipal
context.

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  Discuss the differences between budget control and cost control for a municipal service delivery
process.

 Explain classifying costs by behaviour in a municipal financial management system in terms of the
difficulties of using this approach.

 Discuss the relationship between the purpose of decision-making and cost behaviour with specific
reference to municipality operational circumstances. (40)

NOTE: The facilitator or assessor shall complete the following presentation and facilitation skills
assessment form as you present.

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 TASK 1: PRESENTATION AND FACILITATION SKILLS ASSESSMENT FORM

LEARNER: _________________________________________________

DATE: _______________________ TOTAL SCORED: _______/40

Delivered his/her instructional presentation according to the following criteria:

Mark questions in the following manner:

ITEM DESCRIPTION MARKS

1 PREPARATION
1.1 Research and gathering of relevant information

/10
2. INTRODUCTION
2.1 Gains attention properly
2.2 Gives brief overview and purpose of the presentation
/6
3. PRESENTATION
3.1 Gives clear explanation or demonstration
3.2 Actively involves learners
3.3 Allows for practice and application
/8
4. TECHNIQUES
4.1 Good flow and sequencing
4.2 Proper questioning and feedback
4.3 Appropriate integration of media
/6
5. CONCLUSION
5.1 Proper summary and consolidation
5.2 Evaluates for outcomes
5.3 Links with subsequent topic
/5
6 GENERAL
6.1 Proper time management
6.2 Body language
6.3 Relationship with learners
6.4 General atmosphere
/5
TOTAL 40

/20

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General comments:

_____________________
Signature of the assessor

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 ASSESSMENT DECISION & EVIDENCE EVALUATION RECORD
Candidate's Name: -

Assessor's Name: -

Practical assessment
I declare that this assessment is my own demonstration.

Marks: The learner is either “Met requirements” or “did not meet requirements”. If the learner did not meet requirements in an area, then he or
she must be reassessed.
Learner achieved: Met requirements/Did not meet requirements
Apply costing principles to municipal operational and service-based costing 
Overall outcome:
The learner must be able to Apply costing principles to municipal operational and service-based costing 

Note: When learner do practical assessments ensure that they meet the overall outcome.

Did not meet

Specific Outcome Met requirements Comments
requirements

Did not meet

Specific Outcome Met requirements Comments
requirements

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 Did not meet
Specific outcome Met requirements Comments
requirements

Did not meet

Specific outcome Met requirements Comments
requirements

Did not meet

Specific outcome Met requirements Comments
requirements

OVERALL ASSESSMENT DECISION

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Assessors Comments:

Signature of Assessor:

Date:

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