Summary Accounting and finance for non-specialists

,Finance
In this summary, chapters from the textbook McLaney, E. and Atrill, P. (2019).
Accounting and Finance for Non- Specialists (11th Ed.). Pearson will be
summarized. It includes an exercise at the end of every session.
The following subjects will be covered:
Relevance and Behaviour of Costs, Full Costing, Budgeting and Managing Working
Capital, Pricing Strategies and Types of Pricing, INCOTERMS and Pricing Strategies, and
International pricing.




SESSION 1 & 2 CHAPTER 7: THE RELEVANCE AND BEHAVIOR OF COSTS
CHAPTER 8: FULL COSTING............................................................................................................................
CHAPTER 7: THE RELEVANCE AND BEHAVIOR OF COSTS ....................................................................................................................
CHAPTER 8: FULL COSTING........................................................................................................................................................
TEST EXERCISE COSTS................................................................................................................................................................
SESSION 3 & 4 BUDGETING & MANAGING WORKING CAPITAL......................................................................
CHAPTER 9 BUDGETING............................................................................................................................................................
CHAPTER 12 WORKING CAPITAL AND MANAGING WORKING CAPITAL.................................................................................................
TEST EXERCISE BUDGETING........................................................................................................................................................
SESSION 5 & 6 INCOTERMS & INTERNATIONAL PRICING................................................................................
INCOTERMS.........................................................................................................................................................................
INTERNATIONAL PRICING...........................................................................................................................................................
Table of contents




TEST EXERCISE INCOTERMS........................................................................................................................................................
TEST EXERCISE COST FLUCTUATION..............................................................................................................................................
REVISION EXERCISES.....................................................................................................................................
EXERCISE 1.............................................................................................................................................................................
EXERCISE 2.............................................................................................................................................................................
EXERCISE 3.............................................................................................................................................................................
EXERCISE 4.............................................................................................................................................................................

, Session 1 & 2
Chapter 7: the relevance and behavior of costs
Chapter 8: full costing

Chapter 7: the relevance and behavior of costs
Key topics
1. Cost, Relevant and Irrelevant Cost
2. Cost Behaviour, Fixed and Variable Cost
3. Break-Even Analysis, Contribution, Margin of Safety
4. Marginal Analysis


Profitability: comparing incomes and outcomes.

Financial accounting:
Objective: reporting outsiders on what is happening in the company.
Highly regulated and are uniform, and historical.

Managerial accounting:
Objective: to find out information for internal use, decision making, decide on goals, strategic planning.
Not regulated, companies make their own rules, systems, procedures.

Cost and irrelevant cost
Cost/outcomes = resources, usually presented in monetary terms, that needs to be spend/sacrificed to achieve
business goals/objectives.

Costs are relevant and irrelevant costs for decision making
Historical costs = irrelevant
Opportunity costs / outlay costs = relevant

What makes a cost relevant: important when making a decision
1. Related to the business objective
2. Must be a future cost
3. Varies with decision / outcome will vary. The cost will change depending on the decision I take.

Cost. Behavior, fixed and variable cost
1. Vary with the volume of activity= variable cost
2. Does not vary of volume of the activity= fixed cost

Semi-fixed /semi-variable cost = foxed up to some level of activity, then variable

Break-even analysis, contribution, margin of safety
Break-even point: level of activity at which total cost = total sales revenue
Total cost= total fixed costs + total variable costs
BEP formula:
¿ cost
x=
Price per unit−variable cost per unit

Contribution per unit = sales revenue per unit (price) – variable cost per unit

¿ cost
Bep ( ¿units )=
Contribution per unit