Intro

Question 1

Reasons for determining costs

Answer 1

-inventory valuation
-Profit calculations
-Pricing
-Decision-making
-Planning

Question 2

How can we classify costs?

Answer 2

By Behaviour
They could be fixed, variable or semi variable

By element
They could be materials, labour or overheads

By Nature
They could be direct or indirect costs

Question 3

CGMA cost transformation model (CRUNPS)

Answer 3

CRUNPS - cost reduction usually needs prior support

This model focuses on cost minimisation across an organisation through a change in culture and a focus on what drives costs will result in a better cost competitiveness for an organisation

C - culture - making a cost-conscious culture

R - risks - managing risks inherent in driving cost competition ( normally quality)

U - Understanding cost drivers - knowing the cost and trends

N - new products - maximum value for new products

P - profitability - making sure all items are profitable

S - sustainability - High energy efficient machinery for reduced wastage