There are no prerequisites.

Course Description

One of management’s primary responsibilities is to ensure that costs are appropriately managed. This means that costs are focused on the primary needs of a business and that controls are in place to keep other expenditures from taking place. This course addresses a number of tools that can be used to examine the cost structure of a business, including analyses for cost objects, constraints, and processes. Instructor Steven Bragg addresses how to reduce costs in all of the major areas of a corporation, including compensation, sales, production, procurement, and administration. In addition, there is extensive information regarding asset reduction techniques as well as cost management reports and measurements.


Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).

Course Specifics

Dec 5, 2017
There are no prerequisites.

Compliance Information

Qualifies for CA Fraud: No

Learning Objectives

Upon successful completion of this course, participants will be able to:

 Chapter 1

  • Recognize the concept of cost management, identifying an example of a cost management system as well as advantages and dangers of having an active cost management program
  • Specify ways in which control over costs can slip away from the management team, identify the environment needed to bring costs back under control, and cite the effects of cutting costs too deep

 Chapter 2

  • Identify the various types of costs a business can incur, noting the characteristics of each type and how they are used

 Chapter 3

  • Recognize the concept of direct costing, noting the difference between contribution margin and gross margin
  • Cite the applications to which direct costing analysis can be put as well as any limiting factors

 Chapter 4

  • State the components and derivation of the cost-volume-profit concept, and how it is used
  • Determine the amount of units a company must sell to make a profit given a set of circumstances

 Chapter 5

  • Recognize the concept of target costing, identifying the uses to which this tool can be put as well as how costs can be altered to meet target costing goals

 Chapter 6

  • Identify the costs that are associated with cost objects, and the decisions that can arise from cost object analysis

 Chapter 7

  • Identify the key components of constraint analysis, recognizing how profits can be improved under this type of analysis

 Chapter 8

  • Identify the tools used to conduct a process analysis, citing their appropriate usage and effectiveness

 Chapter 9

  • State the components of a zero-base budgeting system, citing examples, advantages and disadvantages, and situations in which zero-base and conditional budgeting can be used

 Chapter 10

  • State the analysis tools to use for different cost-reduction strategies, noting the characteristics of each as well as their applicable effect on cost reduction

 Chapter 11

  • Cite the types of cost reduction methods available when reducing compensation costs, identifying potential side effects of using these methods as well as strategies to combat any negative effects

 Chapter 12

  • Identify methods used to reduce benefit costs, citing the potential impacts and resulting side effects of using these methods

 Chapter 13

  • Identify the techniques available for increasing the effectiveness of sales and marketing activities and the side effects of using these methods

 Chapter 14

  • Identify the cost reduction techniques that can be used to reduce the costs of production and maintenance operations, citing the characteristics of each technique as well as potential side effects of using these methods

 Chapter 15

  • Cite the key procedural steps and forms needed to maintain a proper system of procurement, noting internal techniques used to manage suppliers and spending

 Chapter 16

  • Recognize the range of methods available for the reduction of costs for accounting, human resources, legal services, and other areas of administration

 Chapter 17

  • Identify cost reduction tactics for managing facilities costs and strategies that help to offset long-term fixed costs

 Chapter 18

  • Identify the methods used to reduce the costs of banking, cash management, leasing, and insurance, noting key similarities and differences between each method

 Chapter 19

  • Identify techniques used to reduce the investment in accounts receivable, citing the characteristics of each technique and the situations in which they are most applicable

 Chapter 20

  • Recognize the cost reduction concepts used to reduce the level of inventory, identifying their characteristics, key advantages, and the situations in which they are most applicable

 Chapter 21

  • Identify the analysis methods used to evaluate prospective investments in fixed assets as well as alternative forms of payment for these assets
  • Recognize the reasoning behind having a post-implementation review

 Chapter 22

  • Identify the key reports and report formats needed to support a system of cost management, noting the characteristics and usage of each as well as situations in which these reports might be used

Chapter 23

  • Identify the most essential measurements used to evaluate the cost structure of a business and specify the situations in which these measurements might be used

Table of Contents

Chapter 1 – Overview of Cost Management

Learning Objectives


The Economics of Cost Management

How Costs Increase

Advantages of Cost Management

The Cost Management Environment

The Customer Service Conundrum

The Effects of Cutting Too Deep


Chapter 1 Review Questions

Chapter 2 – Types of Costs

Learning Objectives


Fixed Costs

Variable Costs

Mixed Costs

Step Costs

Marginal Costs

Differential Costs

Discretionary Costs

Committed Costs

Sunk Costs


Chapter 2 Review Questions

Chapter 3 – Direct Costing as an Analysis Tool

Learning Objectives


Overview of Direct Costing

Contribution Margin versus Gross Margin

Direct Costing as an Analysis Tool

Automation Investments

Cost Reporting

Customer Profitability

Profit-Volume Relationship


Direct Costing Pitfalls

Increasing Costs


Chapter 3 Review Questions

Chapter 4 – Cost-Volume-Profit Analysis

Learning Objectives


Contribution Margin

Contribution Margin Income Statement

Breakeven Point

Margin of Safety

Cost-Volume-Profit Analysis

Sales Mix


Chapter 4 Review Questions

Chapter 5 – Target Costing

Learning Objectives


The Basic Steps of Target Costing

Value Engineering Considerations

The Cost Reduction Program

The Milestone Review Process

Problems with Target Costing

The Members of a Design Team

The Role of the Accountant in Target Costing

Data Sources for Target Costing

The Product Life Cycle and Target Costing


Chapter 5 Review Questions

Chapter 6 – Cost Object Analysis

Learning Objectives


Factors in Cost Object Analysis

The Assignability of Costs

The Customer Cost Object

The Employee Cost Object

The Product Cost Object

The Product Line Cost Object

The Sales Channel Cost Object

Cost Object Termination Issues

Which Cost Objects to Track


Chapter 6 Review Questions

Chapter 7 – Constraint Analysis

Learning Objectives


Constraint Analysis Operational Terminology

Overview of Constraint Analysis

The Cost of the Bottleneck

Local Optimization

Constraint Analysis Financial Terminology

Constraint Analysis from a Financial Perspective

The Constraint Analysis Model

The Decision to Sell at a Lower Price

The Decision to Outsource Production

The Capital Investment Decision

The Decision to Cancel a Product


Chapter 7 Review Questions

Chapter 8 – Process Analysis

Learning Objectives


Process Analysis Tools


Run Charts

Check Sheets

Root Cause Analysis

Traffic Analysis


Chapter 8 Review Questions

Chapter 9 – Zero-Base Budgeting

Learning Objectives


Overview of Zero-Base Budgeting

The Zero-Base Budgeting Process

Step 1 - Develop Decision Packages

Step 2 - Rank Decision Packages

Advantages of Zero-Base Budgeting

Problems with Zero-Base Budgeting

Conditional Budgeting


Chapter 9 Review Questions

Chapter 10 – Cost-Reduction Strategy

Learning Objectives


Failing Business Scenarios

Dealing with Unrelated Business Segments

Failing Business Model: Remain in the Same Business

Failing Business Model: Shift to New Model

Dealing with Expense Drift

Incorrect Cost Reduction Strategies


Chapter 10 Review Questions

Chapter 11 – Compensation Cost Reduction

Learning Objectives


Proactive Hiring Solutions

Temporary Cost Reductions

Permanent Cost Reductions

Productivity-Based Solutions

Total Labor Cost Analysis

Timing of Compensation Changes

The Downsizing Process


Chapter 11 Review Questions

Chapter 12 – Benefits Cost Reduction

Learning Objectives


Benefit Cost Sharing

Benefit Reductions

Benefit Limitations

Benefit Exclusions

Benefit Swaps

Benefit Aggregation Concepts

Benefit Terminations

Workers’ Compensation Issues

Corporate Wellness Programs

Training Benefits

Eligibility Audits

Benefit Cost Administration

Other Cost Management Concepts


Chapter 12 Review Questions

Chapter 13 – Sales and Marketing Effectiveness

Learning Objectives


Sales Effectiveness Improvements

Marketing Effectiveness Improvements

Customer Service Issues

Raise Prices


Chapter 13 Review Questions

Chapter 14 – Production and Maintenance Cost Reduction

Learning Objectives


Production Cost Reduction

Complexity Reduction

Manufacturing Systems

Production Cells

Production Line Issues

Quality Issues

Bottleneck Analysis

Outsourcing Issues

Inventory Reduction

Administrative Issues


Maintenance Cost Reduction

Equipment Maintenance

Maintenance, Repair, and Operations Procurement


Chapter 14 Review Questions

Chapter 15 – Procurement Cost Reduction

Learning Objectives


Purchase Requisition Procedure

Purchasing Procedure

Procurement Process Changes

Procurement Centralization

Supplier Relations

Consolidation Activities

Standardize Supplier Dealings

Integrate with Suppliers

Other Cost Management Opportunities

Total Cost Concept

Outsourcing Concepts

Spend Management


Chapter 15 Review Questions

Chapter 16 – Administration Cost Reduction

Learning Objectives


General Administration Cost Reduction

Accounting Cost Reduction

Accounts Payable



Cost Accounting

Customer Billing

Fixed Assets




Human Resources Cost Reduction

If Human Resources is Supported

If Human Resources Is Not Supported

Legal Services Cost Reduction

Information Technology Cost Reduction

Travel and Entertainment Cost Reduction


Chapter 16 Review Questions

Chapter 17 – Facilities Cost Reduction

Learning Objectives


Facility Location

Lease Rates

Facility Costs

Facility Usage

Furniture and Office Equipment

Projecting Future Usage


Chapter 17 Review Questions

Chapter 18 – Finance Cost Reduction

Learning Objectives


Banking Cost Management

Debt Management

Cash Management Cost Reduction

Investment Strategy

Leasing Cost Reduction

Insurance Cost Reduction

How to Operate with Zero Working Capital


Chapter 18 Review Questions

Chapter 19 – Accounts Receivable Reduction

Learning Objectives


Credit Risk Reduction

Payment Guarantees

Title Retention

Credit Insurance


Letters of Credit

Export-Import Guarantees

Outside Financing

Distributor Sales

Adjustment of Days to Pay

Collection Tactics

Dunning Letters

Take Back Merchandise

Hold Orders

Split Payments

Postdated Checks

Promissory Note


Attorney Letters

Issue Small Claims Court Complaint

Collection Agency

Money Judgment Collection Activities


Chapter 19 Review Questions

Chapter 20 – Inventory Reduction

Learning Objectives


The Cost of Inventory

Product Planning

Purchasing and Receiving

Inventory Storage




Inventory Disposition

Inventory Management Practices


Chapter 20 Review Questions

Chapter 21 – Capital Budgeting Decisions

Learning Objectives


Overview of Capital Budgeting

Bottleneck Analysis

Net Present Value Analysis

The Payback Method

Capital Budget Proposal Analysis

The Outsourcing Decision

The Post-Installation Review

The Lease or Buy Decision


Chapter 21 Review Questions

Chapter 22 – Cost Management Reports

Learning Objectives


Expense Reporting

Payroll Reporting

Margin Reporting

Spend Reporting

Responsibility Reporting

Cost Reduction Opportunity Reporting


Chapter 22 Review Questions

Chapter 23 – Cost Management Measurements

Learning Objectives


Compensation Measurements

Profit per Person

Proportion of Pay at Risk

Employee Turnover

Benefits Measurements

Benefits to Base Pay Ratio

Sales Measurements

Sales Productivity

Sales Effectiveness

Quote to Close Ratio

Production and Maintenance Measurements

Manufacturing Effectiveness

Throughput of Post-Bottleneck Scrap

Order Cycle Time

Procurement Measurements

Procurement Card Usage Percentage

Proportion of Spend Managed

Proportion of Spend with Preferred Suppliers

Administration Measurements

Administration FTEs per $1,000,000 Revenue

Administration Cost as Percent of Revenue

Transaction Error Rate

Facilities Measurements

Square Feet per Person

Cost per Square Foot

Finance Measurements

Proportion of Cash Invested

Average Interest Rate Paid in Excess of Prime Rate

Asset Measurements

Receivables Turnover

Inventory Turnover

Fixed Asset Turnover


Chapter 23 Review Questions

Review Question Answers and Rationales



Final Examination

Answer Sheet

Course Evaluation


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