Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Business
Lesson Topic: the uses and limitations of the full costing method
Learning Objective/s:
  • Describe the principle of full (absorption) costing and how all manufacturing costs are allocated.
  • Explain at least three practical uses of full costing in financial reporting, pricing and inventory valuation.
  • Analyse the key limitations of full costing and how they can affect managerial decisions.
  • Compare full costing with variable costing to identify situations where each method is appropriate.
  • Apply a simple calculation to allocate fixed overheads and determine unit cost.
Materials Needed:
  • Projector or interactive whiteboard
  • Slide deck summarising full vs variable costing
  • Handout with cost allocation worksheet
  • Calculator or spreadsheet software
  • Sample product data sheet
  • Whiteboard markers and flip chart
 Introduction:
Begin with a quick poll asking students which cost information they use when setting product prices. Link their responses to the need for a complete cost picture and outline today’s success criteria: identify uses, recognise limitations, and compare to variable costing.
Lesson Structure:
  1. Do‑now (5'): Quick quiz on cost terms from the previous lesson; collect answers.
  2. Mini‑lecture (10'): Explain full costing, formula, and key features using slides.
  3. Guided practice (12'): Work through a sample allocation of fixed overheads on the worksheet; teacher circulates.
  4. Comparison activity (8'): Small groups complete a Venn diagram contrasting full and variable costing.
  5. Case‑study discussion (10'): Analyse a scenario where full costing encourages over‑production; discuss implications.
  6. Recap & check for understanding (5'): Exit ticket – write one advantage and one limitation of full costing.
Conclusion:
Summarise the main uses of full costing and revisit its major drawbacks. Collect exit tickets, highlight common misconceptions, and assign a short homework task: calculate unit cost using full costing for a new product and note any potential decision‑making issues.