| Lesson Plan |
| Grade: |
Date: 03/03/2026 |
| 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:
- Do‑now (5'): Quick quiz on cost terms from the previous lesson; collect answers.
- Mini‑lecture (10'): Explain full costing, formula, and key features using slides.
- Guided practice (12'): Work through a sample allocation of fixed overheads on the worksheet; teacher circulates.
- Comparison activity (8'): Small groups complete a Venn diagram contrasting full and variable costing.
- Case‑study discussion (10'): Analyse a scenario where full costing encourages over‑production; discuss implications.
- 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.
|