Cost Accounting: Profit and Loss Calculation

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Cost Accounting: Profit and Loss Calculation

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.

97 reviews

Intermediate level

Recommended experience

4 hours to complete

Flexible schedule

Learn at your own pace

3 modules

Gain insight into a topic and learn the fundamentals.

97 reviews

Intermediate level

Recommended experience

4 hours to complete

Flexible schedule

Learn at your own pace

What you'll learn

You will learn different methods of preparing an income statement.
You will learn to explain why different methods yield different profit numbers.
You will learn to choose the best-suited method for your decision situation.

Skills you'll gain

Tools you'll learn

Inventory Management System

Details to know

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Assessments

11 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

Companies do not only need to know the costs of different products, but they also need to know whether they gain a profit or realize a loss. We explain how companies use cost information to calculate their profit and assess their profitability. Depending on how companies account for changes in inventories, we distinguish "absorption costing" and "variable costing". In addition, some companies structure their income statement according to the "nature of expense method", while others structure it according to the "cost-of-sales method". We explain both methods and discuss their advantages and disadvantages.

Companies do not only need to know costs of different products, but they also need to know their operating income - did we make a profit or did we face a loss? To calculate the operating income, companies prepare an income statement that compares total revenues and total costs. In this module, we show you how companies prepare income statements to link costs and revenues and to assess the company’s profitability.

What's included

4 videos4 readings4 assignments

4 videos Total 20 minutes

Introduction to the Technical University of Munich 3 minutes
Tasks of profit and loss calculation 5 minutes
Nature of expense method 7 minutes
Cost-of-sales method 4 minutes

4 readings Total 24 minutes

Course Overview 2 minutes
Introduce yourself! 10 minutes
Lecture slides for this course 2 minutes
The triple bottom line 10 minutes

4 assignments Total 28 minutes

Cost-of-sales vs. nature of expense method 6 minutes
The tasks of profit and loss calculation 6 minutes
Nature of expense method 8 minutes
Cost-of-sales method 8 minutes

Depending on how companies account for changes in inventories, we distinguish "absorption costing" and "variable costing". In addition, some companies structure their income statement according to the "nature of expense method", while others structure it according to the "cost-of-sales method". We explain both methods and discuss their advantages and disadvantages.

What's included

4 videos4 assignments1 discussion prompt1 plugin

4 videos Total 22 minutes

Comparison of income statements and financial accounting 1 minute
Comparing operating income under absorption and variable costing 10 minutes
Comparing operating income for multiple periods 6 minutes
Incentives for undesirable buildup of inventory under absorption costing 5 minutes

4 assignments Total 54 minutes

Product costing and profit calculation 20 minutes
Income statements and financial accounting 6 minutes
Absorption costing and variable costing 8 minutes
Absorption vs. variable costing in multiple periods 20 minutes

1 discussion prompt Total 10 minutes

Inventory built-up 10 minutes

1 plugin Total 10 minutes

Income statement in financial accounting 10 minutes

Many companies use contribution margin accounting to measure success instead of the income-statement formats. Contribution margin accounting is a special income-statement format that displays variable and fixed costs separately. In this module, we discuss the advantages of contribution margin accounting over traditional income statements. Further, we outline the differences of simple contribution margin accounting and multi-leveled contribution margin accounting.

What's included

2 videos2 readings3 assignments

2 videos Total 7 minutes

Simple contribution margin accounting 4 minutes
Multi-leveled contribution margin accounting 3 minutes

2 readings Total 20 minutes

Contribution Margin: What, how, why? 10 minutes
What do I learn in the other courses of the Specialization? 10 minutes

3 assignments Total 34 minutes

Profit and loss calculation at Mobilist 20 minutes
Contribution margin 10 minutes
Multi-leveled contribution margin accounting 4 minutes

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Instructors

Instructor ratings

(25 ratings)

Gunther Friedl

Technical University of Munich (TUM)

4 Courses 34,372 learners

Offered by

Technical University of Munich (TUM)

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Reviewed on Oct 31, 2023

It's a great course with concise explanation and examples.

Reviewed on Mar 9, 2022

Even better than the first part "Product Costing". Especially enjoyed the quizzes in this one!

Reviewed on Dec 17, 2023

Thank you for giving me the opportunity to learn for free

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When you enroll in the course, you get access to all of the courses in the Specialization, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page - from there, you can print your Certificate or add it to your LinkedIn profile.

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