Cost and Price Estimation Techniques

This week’s topics

Cost and Price Estimation Techniques

1. Bottom-up should-cost modelling
2. Activity-based costing
3. Supplier margin analysis
4. Price indexation and inflation forecasting
5. CIMA P2 Activity Based Costing & Activity Based Management
6. Activity Based Costing (with full-length example)
7. The ABC Costing Method

What you will be able to do

• 2.1 Explain how costs and prices can be estimated for procurement activities.

Activity

Start with this week’s 3 videos, then: Seminar, guided reading and a short written task: explain how costs and prices can be estimated for procurement activities.

Study materials

Videos

• CIMA P2 Activity Based Costing & Activity Based Management · YouTube · OpenTuition · 40 min · for registered students
• Activity Based Costing (with full-length example) · YouTube · Edspira · 24 min · for registered students
• The ABC Costing Method · YouTube · Galton College · 43 min · for registered students

Further resources

• Should Cost Modelling guidance note (UK Government Commercial Function) · PDF · GOV.UK, guidance; 24 pages · for registered students
• Procurement in the Supply Chain World, ch.: Evaluating Price · Reading · Other, textbook chapter; PDF pp. 84–97 · for registered students
• Principles of Accounting, Volume 2: Managerial Accounting, ch. 6: Activity-Based, Variable, and Absorption Costing · PDF · OpenStax, textbook chapter; pp. 279–326 · for registered students