Audit &

Accounting

New trends
in Business
management valuation
control
Performance
management

Sustainable IS project &

management management
control control

2
 COURSE OBJECTIVES
…to provide you with theoretical and practical bases of performance management.
You will have a good knowledge of basic
tools and techniques of performance measurement that you will be able to implement in
real situations, within your own organization.

SKILLS
Identify suitable information for decision making and control
Analyze the information and use it as relevant bases for measuring and managing performance
Understand pricing and product decisions
Understand the principles underlying the budgeting process
Understand how to manage performance using budgets
Understand strategic orientation through BSC
Understand the consequences of performance measurement and management systems on
individual and group behavior in a specific organization
Pitching, oral and written communication, teamwork

3
Nov. Session 1: Introduction
Syllabus (on K2)
Strategic management accounting
Balanced scorecard (BSC)
Strategy map

Session 1: Fundamentals of Planning, Zero-Based Budgeting & Activity-Based-Budgeting

Cost allocation
Dec. Cost volume profit relationship
Job-costing system
Activity-based costing (ABC)
Exercises & Teamwork Midterm:
Planning and Budgetary Control
OVAR
Budgeting process
Jan. Master budget
Flexible budgets

Planning and Budgetary Control (cont.)

Variance analysis
Beyond budgeting
Zero-based budgeting (ZBB), Activity-Based-Budgeting (ABB)
Toward Integrated Reporting
Case studies & teamwork
Feb.
Final test on Forms
Nov. Session 1: Introduction
Syllabus (on K2)
Strategic management accounting
Balanced scorecard (BSC)
Strategy map

Session 1: Fundamentals of Planning, Zero-Based Budgeting & Activity-Based-Budgeting

Cost allocation
Dec. Cost volume profit relationship
Job-costing system
Activity-based costing (ABC)
Exercises & Teamwork Midterm:
Planning and Budgetary Control
OVAR
Budgeting process
Jan. Master budget
Flexible budgets

Planning and Budgetary Control (cont.)

Variance analysis
Beyond budgeting
Zero-based budgeting (ZBB), Activity-Based-Budgeting (ABB)
Toward Integrated Reporting
Case studies & teamwork
Feb.
Final test on Forms
ASSESSMENT
Measuring & managing…your individual and collective performance

50 % MIDTERM
50% FINAL TEST

6
 more than a definition

PLACE & ROLE

in the curricula of the
MS ECGAGSI

7
 GLOSSARY

Cost object – anything for which a separate measurement of costs is desired

Cost pool – a grouping of individual cost items.

Direct cost – Costs that are related to the particular cost object and that can be traced to it in an
economically feasible way.

Indirect cost – Costs that are related to the particular cost object but cannot be traced to it in an
economically feasible way.

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DIRECT VS. INDIRECT COST

▸ Relationship of direct and indirect costs to a cost object*

▸ * Source: Bhimani et al, 2015, textbook, p.32

 GLOSSARY

Variable cost - Cost that changes in total in proportion to changes in a cost driver.

Fixed cost - Cost that does not change in total despite changes in a cost driver.

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▸ Examples of simultaneous direct/indirect and variable/fixed cost classifications (*)

▸ * Source: Bhimani et al, 2015, textbook, p.37

 GLOSSARY

Process-costing system – Costing system in which the cost of a product or service is obtained by using broad
averages to assign costs to masses of similar units.

Job-costing system – Costing system in which the cost of a product or service is obtained by assigning costs to a
distinct unit, batch or lot of a product or service.

Cost-allocation base – a factor that is the common denominator for systematically linking an indirect cost
of group to a cost object. Can be financial or non-financial. Companies often seek to use the cost
drivers of the indirect costs as the cost-allocation base.

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COST-VOLUMN PROFIT
ANALYSIS
COST-VOLUMN PROFIT
ANALYSIS
METHOD 1 - CONTRIBUTION MARGIN METHOD
▸Contribution margin represents the amount of revenues minus variable costs that
contributes to recovering fixed costs. Once fixed costs are fully recovered, the
remaining contribution margin increases operating income

▸Contribution margin = Revenues– variable costs

▸Contribution margin per unit = Selling price per unit – variable cost per unit
COST-VOLUMN PROFIT
ANALYSIS
METHOD 2 - EQUATION METHOD:
▸Revenues – Variable costs – Fixed costs = Operating Income

▸Operating income

= [Selling price – Variable cost per unit) x (quantity of output units sold)] – Fixed costs

= (Contribution margin per unit x Quantity of output units sold) – Fixed costs
COST-VOLUMN PROFIT
ANALYSIS
METHOD 3 - GRAPH METHOD:

(Exhibit 8.1 in Bhimani et al , 2015, p. 220)

BREAKEVEN POINT AND
TARGET INCOME
▸ Breakeven number of units = Fixed costs / Contribution margin per unit

▸ Revenues - Variable costs – Fixed costs = Target operating income

▸ Quantity of output units required to be sold

= (Fixed costs +Target operating income) / Contribution margin per unit