Knowledge of standard cost and variance analysis is an essential skill to assess and improve the efficiency and effectiveness of many organizations.

While the origins of standard costing are in manufacturing, it can be applied to any situation where there is an expected (standard) amount of materials and or labor, and the actual materials and labor can be identified and compared to the expected. Standard costing is used today in many industries, including distribution, health care and services.

This course explains how standard costs are developed for material, labor, and overhead, and their relationship with the budget. The course then explores contribution margin, how to use contribution margin to develop a flexible budget, and how to adapt the flexible budget for any level of output.

Techniques to analyze the differences between the budgeted and actual levels of sales are explored, followed by in-depth examination of the analysis of standard material and labor versus actual material and labor.

The course ends with a discussion of integrating indirect overhead costs into the standard cost of products and services, and how to assess the utilization of overhead costs based on the actual level of output.

The course content covers Performance Management topics tested in the Certified Management Accountant (CMA) Part 1 examination as outlined by the CMA Part 1 exam content specification outline.

Topics include:

• Standard Costs
• Introduction to Variance Analysis
• Contribution Margin
• Flexible Budgets
• Sales Variances
• Direct Material Variances
• Direct Labor Variances
• Overhead Variances

Course Key Concepts: Standard costing, variance analysis, management by exception, contribution margin, static budget, master budget, direct material variances, direct labor variances, overhead variances, sales variances, flexible budgets.

Other Performance Management topics tested in the Certified Management Accountant (CMA) Part 1 Examination courses by Tom Coghlan.
Corporate Performance Management