Cost Accounting: Decision Making

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Cost Accounting: Decision Making

This course is part of Cost Accounting Specialization

Instructors: Gunther Friedl

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3 modules

Gain insight into a topic and learn the fundamentals.

128 reviews

Intermediate level

Recommended experience

8 hours to complete

Flexible schedule

Learn at your own pace

3 modules

Gain insight into a topic and learn the fundamentals.

128 reviews

Intermediate level

Recommended experience

8 hours to complete

Flexible schedule

Learn at your own pace

What you'll learn

You will learn methods that help to figure out how costs will behave if you adjust produced or sold quantities.
You will learn how cost information can support business decisions best.
You will learn to distinguish costs that are relevant for business decisions from costs that are irrelevant.

Skills you'll gain

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Assessments

21 assignments

Taught in English

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This course is part of the Cost Accounting Specialization

When you enroll in this course, you'll also be enrolled in this Specialization.

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There are 3 modules in this course

In the third course, you will learn how to use information from cost accounting to improve managerial decision-making. We discuss business decisions and suggest how cost information can support them best. For example, how will costs change if managers adjust cost drivers? How many units do companies need to sell in order to avoid losses or to achieve a targeted profit? How can managers improve pricing or product programs with information from cost accounting?

Cost accountants want to support decision making. To do so, they should not only calculate current costs and income, but they should also be able to tell managers how costs might change depending on managers' decisions. "How would costs change if we produced more or less products? How would they change if we produce more or less variants of products? How would they change if we increase the quality of our products?" Cost functions help to answer these questions and in this module, we make you familiar with them. First, we show you some typical cost functions and, second, we introduce a variety of methods that cost accountants can use to determine cost functions. Finally, we show you how accountants can document cost forecasts.

What's included

8 videos6 readings5 assignments2 plugins

8 videos Total 42 minutes

Introduction to the Technical University of Munich 3 minutes
Elementary cost functions 4 minutes
Combinations of elementary cost functions 5 minutes
Cost function, cost drivers, and the time horizon 5 minutes
Simplifying cost functions and the relevant range 5 minutes
Analytical methods 2 minutes
Statistical methods 11 minutes
Documenting cost forecasts 6 minutes

6 readings Total 79 minutes

Course Overview 2 minutes
Introduce yourself! 10 minutes
Lecture slides for this course 2 minutes
Outlook: How to apply ‘sticky costs’ in advisory services 10 minutes
Practical example: Statistical cost determination in a hospital 10 minutes
Deriving and visualizing cost functions in Excel 45 minutes

5 assignments Total 35 minutes

Identifying typical cost functions 5 minutes
Determining cost functions 6 minutes
Calculating planned cost-allocation rates 4 minutes
Statistical methods for determining cost functions 10 minutes
Documenting cost forecasts for varying capacity levels 10 minutes

2 plugins Total 30 minutes

Identification of cost-behavior patterns 15 minutes
Test your understanding 15 minutes

When companies consider offering a new product, they might want to know how many units they need to sell in order to avoid losses or to achieve a targeted profit. Cost-volume profit analysis is a simple tool that helps answer these questions. It illustrates how costs, revenues, and profits depend on sold quantities.

What's included

9 videos1 reading10 assignments1 plugin

9 videos Total 40 minutes

Objectives of cost-volume profit analysis 3 minutes
CVPA for a single product 8 minutes
Considering target profits in CVPA 5 minutes
Cost-volume profit analyses for multiple products 6 minutes
Cost-volume profit analyses with a constant sales mix 4 minutes
Assumptions of cost-volume profit analysis 3 minutes
Sensitivity analysis 4 minutes
Margin of safety percentage 3 minutes
Insourcing versus outsourcing 4 minutes

1 reading Total 2 minutes

Operating leverage 2 minutes

10 assignments Total 91 minutes

Introduction to cost-volume profit analysis 4 minutes
CVPA for a single product 6 minutes
CVPA and target profits 9 minutes
CVPA for multiple products 10 minutes
Cost-volume profit analysis 10 minutes
CVPA with uncertain input parameters 5 minutes
Case study: RFID labels 15 minutes
CVPA and cost-structure flexibility 5 minutes
Repeat CVPA 15 minutes
CVPA in a company with two products 12 minutes

1 plugin Total 10 minutes

Test your understanding 10 minutes

In the beginning of this course, you learned that companies use Cost Accounting to support managers' decision-making. In this module, we outline some business decisions and discuss how cost information can support them best. For example, we discuss pricing decisions and product-mix decisions under capacity constraints.

What's included

11 videos4 readings6 assignments1 plugin

11 videos Total 45 minutes

The decision making process 3 minutes
Planning objects, horizon, objectives and constraints 4 minutes
Quantitative and qualitative information 4 minutes
Characteristics of decisions under uncertainty 2 minutes
Requirements for information from accounting 1 minute
Sunk costs, opportunity costs and operative decisions 3 minutes
The effects of using full-cost information 5 minutes
Determining the optimal product mix 11 minutes
Price setter vs. price taker 2 minutes
Lower price limits for negotiations and tenders 7 minutes
Long-term pricing decisions 3 minutes

4 readings Total 35 minutes

Deep dive: Opportunity costs in medical treatments 10 minutes
Absorption costing and make-or-buy decisions 10 minutes
More on outsourcing and offshoring 5 minutes
What do I learn in the other courses of the Specialization? 10 minutes

6 assignments Total 71 minutes

The decision making process for operative decisions 10 minutes
Opportunity and sunk costs 10 minutes
Choosing the optimal product mix 5 minutes
Basics of pricing decisions 6 minutes
Pricing decisions 10 minutes
Product-mix decision at Bryan's Bakery 30 minutes

1 plugin Total 15 minutes

Test your knowledge: Flash cards 15 minutes

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Instructors

Instructor ratings

(28 ratings)

Gunther Friedl

Technical University of Munich (TUM)

4 Courses 33,773 learners

Offered by

Technical University of Munich (TUM)

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Reviewed on Aug 15, 2025

Very Good and explanation made easy understanding

Reviewed on Mar 9, 2022

This course has everything a well-done course should have! Very good recordings, great quizzes and interesting readings.

Reviewed on Jul 14, 2022

Follows my impression of the high quality Germany is known for. Clear, to the point, step by step.

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