About this video

• Video Title: ACCA F5 - Performance management - Chapter 1 - Revision of MA (Part 1)
• Channel: ACCA with Anshul
• Speakers: Sonu Mittal
• Duration: 43:51

Overview

This video is the first part of a revision series for ACCA F5 Performance Management, focusing on the MA (Management Accounting) topics. Sonu Mittal explains fundamental concepts of costing, the purpose of costing, and introduces standard costing, its benefits, and different types of standards. The video also includes a practical example of calculating standard costs and selling price.

Key takeaways

• Purpose of Costing: Costing is used to calculate the cost per unit of products and inform decision-making, such as identifying products with rising costs or opportunities to increase quality by reducing costs.
• Standard Costing: Standard costing involves setting predetermined costs for products, which helps in budgeting, planning, and performance management by comparing actual costs to standard costs.
• Benefits of Standard Costing: It aids in cost control, budgeting, planning, and performance evaluation by highlighting variances between standard and actual costs.
• Applicability of Standard Costing: Standard costing is most effective for organizations with mass production of homogeneous products and limited human intervention, such as assembly lines. It is less suitable for custom or job-based work where each project is unique.
• Types of Standards: The video discusses different types of standards:
  • Attainable Standards: Realistic targets set considering normal losses and operating conditions.
  • Basic Standards: Long-term, unchanging benchmarks used for historical comparison.
  • Current Standards: Standards set based on current working conditions, which can change with market dynamics.
  • Ideal Standards: Standards set under perfect operating conditions with no losses or inefficiencies, often used for pinpointing areas for improvement.
• Practical Application: A detailed example demonstrates how to calculate prime cost, variable production cost, total production cost, and total cost per unit using given data, and how to determine the selling price when profit is a percentage of the selling price.

This ACCA F5 revision video dives into the fundamentals of Performance Management, starting with a recap of MA concepts. Key topics include the purpose of costing, the benefits and application of standard costing for planning and control, and a deep dive into different types of standards (attainable, basic, current, ideal). A practical example walks through calculating standard costs and setting selling prices. #ACCA #F5 #PerformanceManagement #Costing #StandardCosting