Management Accounting and Cost Accounting - costs, break-even and variances
This domain tests cost and management accounting in the vocabulary used in Algerian practice - coûts complets, coûts variables, seuil de rentabilité, imputation rationnelle des charges fixes - together with standard-cost variances and short-run decision rules. The questions ask you to build a cost or take a decision, not to recite a definition.
Building a full cost
- Direct charges are allocated to the product or order; indirect charges pass through centres d'analyse: répartition primaire across all centres, répartition secondaire from auxiliary centres to main centres, then imputation through a unité d'œuvre (hour, machine hour, unit produced).
- The chain runs coût d'achat → coût de production → coût de revient → résultat analytique. Each stage absorbs only the charges of the stage it closes; a cost built by skipping a stage is wrong even if the arithmetic is clean.
- Keep variable and fixed costs separate: only variable costs are relevant to a capacity decision, and fixed costs are period costs in that analysis.
Decision tools
- Seuil de rentabilité (value) = charges fixes ÷ taux de marge sur coût variable.
- Point mort (months) = seuil de rentabilité ÷ chiffre d'affaires annuel × 12.
- Imputation rationnelle: coefficient d'activité = activité réelle ÷ activité normale. It reallocates fixed costs to expose the cost of under-activity; it does not change the total real cost.
- Variances on cost: écart sur prix = (prix réel − prix standard) × quantité réelle; écart sur quantité = (quantité réelle − quantité standard) × prix standard. State your sign convention before computing.
Worked example
Turnover 5,000,000 DA, variable costs 3,000,000 DA, fixed costs 1,200,000 DA. MCV = 2,000,000 DA, so taux de MCV = 40%. Seuil de rentabilité = 1,200,000 ÷ 0.40 = 3,000,000 DA. Marge de sécurité = 5,000,000 − 3,000,000 = 2,000,000 DA. Point mort = (3,000,000 ÷ 5,000,000) × 12 = 7.2 months, reached during the eighth month. A special order priced at 4,500,000 DA for the same volume and with spare capacity still adds 1,500,000 DA to the result, because the 3,000,000 DA of variable cost is the only incremental cost.
Traps
- Dividing fixed costs by the unit margin instead of the MCV rate.
- Loading absorbed fixed overhead into a special-order price.
- Forgetting that a variance's sign must be read against its nature: an adverse price variance is favourable for revenue items.
- Confusing imputation rationnelle with an actual reduction of fixed costs.