Cost management

In this lesson

1. 0:00 Cost and management accounting overview
2. 1:21 Role of cost accounting in organisations
3. 2:03 Strategic cost management approach
4. 4:39 Activity-based costing and standard costing
5. 6:46 Variance analysis and performance measurement
6. 9:21 Limitations of standard costing systems

About this lesson

You'll learn the key frameworks including cost control, pricing analysis, performance measurement, and strategic cost planning, along with essential techniques like Activity-Based Costing, standard costing, and variance analysis. This is core content for SBL, where you need to understand cost management concepts at a strategic level rather than as a technical accountant. The lesson emphasises practical application: you may be asked to use cost information in an exam scenario to demonstrate your understanding, but won't necessarily need to compile complex calculations yourself. The lesson covers four main areas: cost management fundamentals, forecasting, budgeting, and relevant costing. You'll learn how cost accounting provides the data organisations need to allocate resources effectively, evaluate performance, and inform strategic options. Key techniques include standard costing (using predetermined cost benchmarks based on quantity and price standards) and variance analysis, which compares actual performance against those standards to identify where costs are higher or lower than expected. Understanding cost drivers—the factors that cause costs to arise—is essential for managing them strategically. You'll also explore the limitations of standard costing in modern business environments. While valuable, rigid predetermined standards can quickly become outdated, require significant resources to maintain, and may stifle innovation during new product development or process changes. The lesson encourages you to think about cost management as part of your overall strategic toolkit, helping you align cost decisions with organisational objectives and competitive positioning.

Duration: 11m