Course responsible: Chris Chapman, Professor, PhD Instructor: Chris Chapman, Professor, PhD
Place: Rvarebygningen, Porcelnshaven Time: Please see schedule for term 1 or lecture plan
Objectives The purpose of this course is to provide students with an understanding and appreciation of the strengths and limitations of an organizations accounting systems in regard to management. The course provides a framework for analysing and understanding these accounting systems (like budgeting, reporting, analysis and management of cost, responsibility accounting and transfer pricing as well as the design of comprehensive approaches to performance management). Furthermore, the course reflects on the internal accounting systems role in keeping the firm and its members honest, responsible, and able to actively engage in activity that is both economically, environmentally and socially sustainable (ie. Manage the triple bottom line).
Class preparation The material for this course consists of one textbook, selected other readings and cases. It is expected that all students prepare all readings and cases for each class.
Where cases require calculations there will be spreadsheets available containing the exhibits. It will significantly enhance your learning in the course if you have been able to identify the kind of management accounting decision that each case addresses and made an attempt at applying the appropriate technique to the questions presented using a spread sheet before coming to class.
Given the centrality of spreadsheets as a working tool for management accounting we will address some basic matters of good spread sheet design as we look at the calculations and decisions in the Caribbean internet caf case in MA1.
Class participation The lectures will be conducted in a dialogue manner. Issues and models will be presented, and their potential merits will be open for a dialogue. Cases will also take up a good part of the teaching, and a thorough analysis of case issues, and suggestions for their solution, will be expected. 2 The participants job experience can often be a useful source for adding to our mutual understanding, and is therefore most welcome.
Literature:
Text book: Wouters, M. Selto, F., Hilton, R. & Maher, M. (2012) Cost Management: Strategies for Business Decisions, International Edition
Please note that the text book is intended mainly as a resource that you might find most useful after completion of the course since I find it to be particularly good at offering in-depth analysis of individual topics that goes beyond the level that it is sensible to try and incorporate into a general introductory course such as this one.
With this more limited role during the course please note that in terms of covering the calculative basics necessary to the course it is most likely that any introductory management accounting text book will be quite adequate since the technical analysis required will be covered in detail in the slides and class discussion.
More important as the class proceeds are the following assigned readings that situate how and why the calculations we cover might be managerially relevant in practice.
Assigned reading: Barwise, P., Marsh, P., & Wensley, R. (1989). Must finance and strategy clash? Harvard Business Review, 67(5), 85-91. Cooper, R., & Kaplan, R. S. (1988). Measure costs right: Make the right decisions. Harvard Business Review (September/October), 96-103. Ittner, C., & Larcker, D. (2003). Coming Up Short on Nonfinancial Performance Measurement. Harvard Business Review, 81(11), 88-95. Kaplan, R. S., & Anderson, S. R. (2004). Time-Driven Activity-Based Costing. Harvard Business Review (November), 131-138. Kovac, E., & Troy, H. (1989). Getting transfer prices right: What Bellcore did. Harvard Business Review (Sep/Oct), 148-154. Libby, T. & Lindsay, M. (2010). Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice, Management Accounting Research (21), 56-75 Sharpe, P., & Keelin, T. (1998). How Smithkline Beecham makes better resource-allocation decisions. Harvard Business Review (March-April), 45-57.
Cases: See lecture plan
3 Learning Objectives (to achieve grade 12) At the end of the course the students are expected to be able to:
Read and interpret management accounting reports concerned with economic analysis of multi-product or multi-segment organizations and ask significant questions regarding the costing practices used to prepare such reports Describe and understand different management accounting systems and discuss their strengths and limitations from a decision making as well as a control perspective Analyse the cost of improving accounting systems decision making ability and effectiveness as a control device and reflect upon the trade- off between the use of accounting for different purposes Critically reflect on and assess the value and relevance of specific management accounting and control systems in a particular organizational setting.
Exam A final 3-hours sit-in exam on PC (individual, closed book), scheduled for Monday 20 th October 2014. The time and place will be announced on CBSLEARN a week before the exam.
The examination will be structured into three parts
Part A Calculation (Weighting 20%)
This section is designed to test your basic calculative abilities across the range of techniques addressed in the course. It will comprise 10 compulsory multiple choice questions.
Various of the sessions (as indicated on the outline below) will be followed by MCQ homework quizzes following class in order to act as a tool for consolidating your learning and to demonstrate the nature of the section A questions that you will see in the examination. The quizzes will not be formally assessed.
Part B Theory (Weighting 30%)
This section is designed to test your understanding of the theoretical implications and potentials of the techniques and systems discussed in the course. The questions are designed and will be evaluated on the basis that a strong answer would be containable to one clear and well-structured page of text rather than several pages of less structured and focussed writing.
You will be presented with five questions and must choose to answer three.
Indicative questions:
4 Question 1 Explain briefly the central concepts underlying activity based costing. In what ways are these superior to full costing?
Question 2 Explain briefly how cost volume profit analysis might sensibly inform management decision making. What are some of its limitations?
Part C Bringing the calculation and theory together (Weighting 50%)
Real organizations contain packages of most (if not all) of the management controls discussed in the course. In considering how these interact and cohere to help the organization define and pursue its strategic objectives, we leave the realm in which there is an optimal answer. This section will comprise single case analysis that will require you to draw on the knowledge tested in the first two sections and to creatively work to construct a coherent explanation of a management control solution.
Grading All grading elements will be graded on the Danish 7-point scale.
Outstanding A 12 B 10 Satisfactory C 7 D 4 Acceptable E 02 Unacceptable F 00 F - 03
5 Lecture plan
Lecture
Time Topics Reading Cases Text Book MA 1
Wednesday 24-09-2014 13.00-16.15 Introduction to management accounting and the nature of costs
Barwise et al. (1989) Caribbean Internet Cafe
Wouters et al. Chapters 1 and 2 MA 2 Friday 26-09-2014 09.00-12.15 Short and Long Term Decision Making (CVP+NPV) (MCQ Homework quiz to follow class)
Sharpe & Keelin (1989) Wouters et al. Chapters 7 and 8 MA 3 Thursday 02-10-2014 13.00-16.15 Activity Based Costing (MCQ Homework quiz to follow class) Cooper & Kaplan (1988) Wilkerson Wouters et al. Chapters 4 and 5 MA 4 Friday 03-10-2014 13.00-16.15 Time Driven Activity Based Costing (MCQ Homework quiz to follow class) Kaplan & Anderson (1994) Mid West Paper Products
Wouters et al. Chapter 6 MA 5 Tuesday 07-10-2014 09.00-12.15 Budgeting and Financial Planning Libby & Lindsay (2010) Codman & Shurtleff
Wouters et al. Chapter 9 and 14 MA 6 Wednesday 08-10-2014 13.00-16.15 Transfer Pricing Kovac & Troy (1989) San Francisco Bay Consulting
Wouters et al. Chapters 12 and 15 MA 7 Thursday 09-10-2014 09.00-12.15 Single (Operational Control) and Double (Strategic Performance Measurement) Loop Learning (MCQ Homework quiz to follow class) Ittner & Larcker (2003) Hereford Steak Houses Wouters et al. Chapters 13 and 16 MA 8 Friday 10-10-2013 13.00 -14.30 Review of all topics +preparation for exam All
Aspatore Books,.Inside The Minds - The Art of Public Relations - Industry Visionaries Reveal The Secrets To Successful Public Relations. (2002.ISBN1587620634)