BUSMGT713 Financial Reporting and Control
The Complete Study & Assessment Guide · Quarter Four 2026BUSMGT713 Overview
- 15 points
- University of Auckland
- Quarter Four 2026
- Master of Management
- Campus workshops
BUSMGT713 Financial Reporting and Control is a 15-point postgraduate course in the University of Auckland Graduate School of Management, listed in the catalogue under the Master of Management.
- Assessed by Two individual on-campus tests at 35% each, a 25% group assignment and 5% from five quizzes
- Hardest step Turning numbers into a recommendation: the practice paper asks for causes, decisions and a qualitative reason
- How to prepare Rebuild each workshop method on fresh numbers, then rehearse a three-question paper against the clock
How BUSMGT713 is assessed
| Component | Weight | Format |
|---|---|---|
| Quizzes | 5% | Individual coursework: five quizzes due on Wednesdays at 13:00, from Quiz 1.2 on 30 September to Quiz 5.2 on 4 November 2026 |
| Test Mid-term | 35% | Individual secure test on campus on Friday 23 October 2026. The practice version is set for 120 minutes across three questions: cost-volume-profit and operating risk, budget and variances, overhead allocation and relevant costs |
| Test Final | 35% | Individual secure test on campus on Friday 20 November 2026; confirm its coverage and format on Canvas |
| Assignment | 25% | Group coursework with an Excel submission and a report submission, both due on Saturday 5 December 2026 at 23:59 |
What BUSMGT713 covers
The chapters follow the first three workshop weeks: cost behaviour and cost-volume-profit analysis, then budgeting and cost control, then overhead allocation, job costing and relevant costs. Each chapter pairs the calculation with the management judgement the solutions model.
Cost behaviour, contribution and the high-low method
Fixed, variable and mixed costs, contribution margin and variable cost ratios, and a cost equation estimated from the highest and lowest activity monthsWeek 1 of the course is titled cost behaviour, cost management and the elements of costing, and this chapter covers its foundation: telling fixed costs from variable ones and splitting a mixed total into the two parts.
- Fixed, variable and mixed costs and why ledgers record mixed totals
- The high-low method: choosing the periods by activity, not by cost
- Writing and checking a monthly cost equation
- Contribution per unit, the contribution margin ratio and the variable cost ratio
- Operating income from a cost equation at a planned volume
- The relevant range and when a cost line stops being reliable
Break-even, margin of safety and target profit
Break-even units and sales dollars, margin of safety in units and as a ratio, target-profit volume and sensitivity to price, cost and fixed-cost changesThis chapter turns the contribution per unit from Chapter 1 into the cost-volume-profit answers the Week 1 workshop and the practice mid-term ask for.
- Break-even units from fixed costs and contribution per unit
- Break-even revenue and the contribution margin ratio shortcut
- Margin of safety in units, in dollars and as a ratio
- Volume needed for a target profit and how to check it
- Judging a price cut on total contribution
- Sensitivity of break-even to price, variable cost and fixed cost
Operating leverage and cost structure risk
Profit-volume lines for two cost structures, the volume at which profits are equal, fixed costs as a share of total costs and what that means for riskThe second Week 1 activity compares two companies that pay for the same work in different ways: one with low fixed and high variable costs, the other with high fixed and low variable costs.
- Low fixed and high variable cost against high fixed and low variable cost
- Drawing a profit-volume graph from two points
- The volume at which two cost structures earn equal profit
- Operating leverage as fixed costs over total costs
- Margin of safety as a second risk measure
- Choosing a structure from a demand forecast
Flexible budgets and flexed budget variances
Original budget, flexed budget and actual results, favourable and adverse flexed variances, the sales volume variance and the overall budget varianceWeek 2 of the course is titled budgeting and cost control, and its two numerical workshop solutions follow one layout: an original budget column, a flexed budget column rebuilt at the volume actually achieved, an actual results column and a column of flexed variances, each labelled F for favourable or A for adverse.
- Why an original budget cannot judge performance when volume changes
- Budget rates per unit and the flexed budget at actual volume
- Flexed variances for revenue, materials, labour, variable and fixed overhead
- Signing each variance F or A by its effect on profit
- Sales volume variance and the overall budget variance reconciliation
- Reading a profit bridge from original budget to actual profit
Explaining variances and responsibility for results
Causes behind linked variances, why a favourable variance can signal trouble, budget slack and who controls what in a responsibility reportThe second half of Week 2, budgeting and cost control, turns variance numbers into explanations and decisions.
- Why a favourable variance is not automatically good news
- Tracing several variances back to one operational event
- Separating control from influence in a responsibility report
- Writing a short memo that assigns each variance to an owner
- Favourable results that come from comparing with the original budget
- Timing gaps when a cost has not yet been recorded
Overhead application rates and job costing
Predetermined rates from cost pools and allocation bases, one plant-wide rate against departmental rates, test costs under a flat fee and which work to promote or repriceWeek 3 of the course covers overhead allocation, relevant costs and job costing, and this chapter takes the first of those.
- Cost pools, allocation bases and predetermined overhead rates
- One plant-wide overhead rate on labour hours
- Departmental rates for an instrument bench and a preparation room
- Building a job cost sheet line by line
- Profit per test under a flat fee
- Reasons to allocate overhead with care: pricing, profitability and control
Refined costing systems and cost cross-subsidisation
Activity cost pools and driver rates, product-line profitability under a revenue-based allocation and a refined system, and what changes for an expansion planThis chapter follows a Week 3 costing activity in which a supermarket's support costs, first spread across product lines on one broad base, are reassigned through a refined system.
- Sharing support costs on a broad base such as revenue
- Activity cost pools, drivers and activity rates
- Charging each product line by its own activity usage
- Comparing margins under the two systems and reconciling the totals
- Cost cross-subsidisation: which line pays for which
- Testing an expansion or pricing plan on refined figures
Relevant costs for keep or discontinue decisions
Avoidable and unavoidable fixed costs, why allocated costs stay, the contribution from the best alternative use of released capacity and the qualitative factors that complete a recommendationThe Week 3 title includes relevant costs, and the course learning outcomes ask students to use relevant costing together with qualitative factors to support decisions.
- Relevant and irrelevant costs in a keep or discontinue decision
- Avoidable fixed costs against allocated fixed costs
- Sunk costs and why depreciation on past spending stays out
- Valuing the alternative use of released capacity, net of its own costs
- The volume at which the decision switches
- Qualitative factors that complete or reverse a recommendation
Its prescription is short: essential accounting knowledge for allocating resources well and for measuring, judging and communicating how healthy an enterprise is. The learning outcomes run in two directions. One direction faces outward: the principles behind accrual and cash accounting, the accounting cycle that turns transactions into financial statements, and the reading of annual reports.
The other faces inward, toward managers: separating fixed from variable costs, break-even analysis, flexible budgeting and variance analysis, cost allocation and relevant costing for decisions. The course also asks students to bring Māori knowledge, values and principles, and Te Tiriti o Waitangi, into financial decision-making, and it uses Xero for hands-on recording.
In Quarter Four 2026 the weekly rhythm is pre-workshop study, an on-campus workshop and a set of suggested solutions released afterwards. Week 1 dealt with cost behaviour, cost management and the elements of costing; Week 2 with budgeting and cost control; Week 3 with overhead allocation, relevant costs and job costing; Week 4 was revision built around a practice mid-term.
The chapters here follow those three teaching weeks in order and work every method through original numbers, so a student can rebuild each calculation by hand and then explain what it means for a manager. The practice paper asks for both halves of that skill: the arithmetic and the recommendation that follows from it. Practice questions with full answers close every chapter.
Worked example · free
Riverbend Kayak Tours: break-even, safety margin and a profit target
- +1Contribution per seat = selling price minus variable cost per seat = $85 minus $34 = $51.
- +2Break-even volume = fixed costs divided by contribution per seat = $30,600 divided by $51 = 600 seats.
- +2Margin of safety = expected seats minus break-even seats = 900 minus 600 = 300 seats; as a ratio, 300 divided by 900 = 33.3%, so March sales could fall by a third before a loss appears.
- +2Seats for the target = (fixed costs plus target profit) divided by contribution per seat = ($30,600 plus $15,300) divided by $51 = $45,900 divided by $51 = 900 seats.
Key terms
- Contribution margin
- Sales revenue less all variable costs; per unit it is the amount each sale adds toward fixed costs and then profit.
- Contribution margin ratio
- Contribution expressed as a fraction of sales revenue, so that variable cost ratio plus this ratio always equals 100%.
- Variable cost ratio
- Total variable costs divided by sales revenue, showing how many cents of each sales dollar are consumed by variable costs.
- Break-even point
- The sales volume or sales value at which total contribution exactly covers fixed costs and profit is zero.
- Margin of safety ratio
- Planned or actual sales minus break-even sales, divided by planned or actual sales: the share by which sales may fall before a loss.
- High-low method
- A cost estimation technique that draws a straight cost line through the periods with the highest and lowest activity levels.
- Operating leverage
- The degree to which costs are fixed rather than variable; in the practice mid-term solution it is measured as fixed costs over total costs.
- Flexed budget
- The original budget recalculated at the actual level of activity, with variable items rescaled and fixed items left unchanged.
- Sales volume variance
- Flexed budget profit minus original budget profit, isolating the effect of selling more or fewer units than planned.
- Budget slack
- A deliberately easy target built into a budget, which can make ordinary performance look favourable.
- Overhead application rate
- Budgeted overhead for a cost pool divided by the budgeted quantity of its allocation base, such as labour or machine hours.
- Cost cross-subsidisation
- Over-costing some products while under-costing others because a broad allocation base ignores how each uses support activities.
- Allocated fixed cost
- A share of shared or head-office fixed cost assigned to a segment, which continues whether or not that segment is kept.
- Opportunity cost
- The benefit given up from the best alternative use of a resource, such as rent forgone on space that could be leased out.
BUSMGT713 FAQ
How is Financial Reporting and Control assessed?
The University course catalogue lists four components: Quizzes worth 5%, a mid-term test worth 35%, a final test worth 35% and a group assignment worth 25%. Both tests are individual and held on campus. The assignment has two parts, an Excel file and a report, submitted together on 5 December 2026. Check Canvas for any change announced during the quarter.
When are the two tests in Quarter Four 2026?
The Canvas course schedule lists the mid-term test on Friday 23 October 2026 and the final test on Friday 20 November 2026. The course outline states that attendance on campus is required for the tests, and the University runs secure tests under its examination regulations, so bring your University ID card and arrive early.
What does the practice mid-term ask?
The practice paper is set for 120 minutes and has three questions. The first combines cost-volume-profit work with operating risk, the second asks for flexed budget variances and their causes, and the third covers overhead application rates followed by a relevant-cost decision on whether to keep a loss-making line. Treat that structure as the shape to rehearse against.
How do the course solutions measure operating leverage?
The practice solutions divide fixed costs by total costs for each product and call the product with the higher share the one with higher operating risk, alongside the margin of safety ratio. The workshop notes add the reasoning: with more fixed cost, a change in volume moves profit more than proportionately, upward and downward.
Is a favourable variance always good news?
No. The budgeting workshop warns that a favourable result can come from a target set too low, from buying cheaper materials that later cost extra labour, or from managers postponing repairs to stay under budget. Treat every large variance, favourable or adverse, as a reason to investigate before praising or blaming anyone.
Should allocated fixed costs count when deciding to drop a product?
Not in the comparison itself. Allocated fixed costs continue whichever option is chosen, so the practice solution removes them, compares the product's remaining profit with the income from the best alternative use of the released resources, and then adds one qualitative reason, such as losing customers who buy both product lines.
How much study time does the course expect each week?
The outline describes a standard 15-point course with 15 hours of work each week: about 40 hours of workshops across the course and 110 hours of self-study, covering readings, videos, case studies, problem-solving and preparation for assessments. Pre-workshop study is designed to be completed before each in-person session.
Questions students ask in each BUSMGT713 chapter
- Which months does the high-low method use?
- It uses the period with the highest level of activity and the period with the lowest level of activity. The cost figures only come in afterwards. A month with an unusually high cost but middling activity, such as a repair month, is ignored, because using it would tilt the line and distort the variable rate. Chapter 01 · Cost behaviour, contribution and the high-low method
- How do you calculate break-even units?
- Divide total fixed costs by contribution per unit, where contribution is selling price minus variable cost per unit. If the result is fractional, round it up, because selling one unit fewer would still leave a loss. The practice mid-term does exactly this, turning 2,333.3 units into 2,334. Chapter 02 · Break-even, margin of safety and target profit
- How is operating leverage calculated in this course?
- The practice mid-term solution divides fixed costs by total costs for each product, reporting the result to two decimal places, and treats the product with the higher figure as carrying the higher operating risk. It pairs that measure with the margin of safety ratio, so give both when a question asks which option is riskier. Chapter 03 · Operating leverage and cost structure risk
- What is a flexed budget in management accounting?
- It is the original budget redrawn at the activity level actually reached. Variable revenue and cost lines are multiplied out at their budgeted rate per unit, while fixed costs stay at their planned totals. Comparing actual results with this redrawn budget isolates spending and pricing performance from the effect of selling more or fewer units. Chapter 04 · Flexible budgets and flexed budget variances
- Why can a favourable variance be bad news?
- A favourable figure only says the period differed from plan. It may come from a target that was easy to beat, from comparing with a budget that was not flexed, from a cost not yet recorded, or from a failure such as an idle machine using less power. The course treats favourable and adverse variances alike as prompts for investigation. Chapter 05 · Explaining variances and responsibility for results
- What is an overhead application rate?
- It is a budgeted cost pool divided by the budgeted quantity of the activity chosen to share it out, such as hours or projects. Each job is then charged that rate times its own use of the activity. The practice mid-term asks for three such rates, each on a different base, before costing two kinds of project. Chapter 06 · Overhead application rates and job costing
- What is wrong with allocating support costs on a broad base such as revenue?
- It assumes each product line uses every support activity in the same proportion as its share of the base. Lines rarely behave that way: a cheap, bulky product can need far more receiving and delivery per dollar of sales than a compact one. Some lines then carry other lines' costs and their margins mislead. Chapter 07 · Refined costing systems and cost cross-subsidisation
- Why are allocated fixed costs irrelevant to a discontinue decision?
- They are shares of costs the business pays anyway, such as head-office salaries or building rent. If the line closes, the cost is simply reallocated to the remaining lines, so including it makes a line look worse than the true effect of closing. The practice solution removes allocated fixed costs before comparing options. Chapter 08 · Relevant costs for keep or discontinue decisions
How to prepare for the assessments
Work the course in the order it was taught and keep one sheet of methods. For Week 1, write the contribution line before anything else in every problem: price, variable cost, contribution per unit and fixed costs, each with its unit. Break-even, target profit, margin of safety and the equal-profit volume all fall out of that single line.
For Week 2, build the three columns in sequence, original, flexed and actual, and write F or A beside every variance only after checking whether the difference raises or lowers profit. Then practise the written part: a short cause for each variance and a recommendation, inside the word limit the question sets.
For Week 3, calculate rates by dividing each cost pool by its own allocation base, cost each job line by line, and in any keep-or-drop decision strike out the allocated fixed costs before comparing options. Finish with timed practice: one question at a time, then a full mid-term rehearsal at the 120 minutes the practice paper uses, marking your work against the solution method rather than only the final number.
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