Ramon Llull University - Barcelona
IQS School of Business (AACSB Accredited)
Forum-Nexus Program
Undergraduate Division
Introduction
This course provides an introduction to concepts and methods which assist management in the evaluation of the business enterprise and aid in its planning, organizing, and controlling functions. This course will provide the functional accounting and technical competencies or tools necessary to create value and optimize competitive advantage. Functional competencies covered in this course are categorized as follows: decision modeling, risk analysis, measurement and reporting. In addition, technology will be leveraged to develop and enhance these functional competencies. There will be a focus on the use of financial information in managerial decision-making; as well as an emphasis on cost systems, a determination and allocation of overhead, analysis of cost, variance analysis, direct costing, preparation of flexible budgets, break-even analysis and capital budgeting. Ethical considerations and international management accounting issues including transfer pricing will also be addressed.
Course Description
This course is designed to provide students with the theory and skills necessary to identify information relevant for management decision-making in business organizations and public institutions. It will focus on the appropriateness and form of reports that can be constructed for management use, as well as the ethical issues underlying their development. The successful completion of this course will provide students with foundation knowledge in managerial accounting while providing exposure to ethical issues, social responsibility, and current business trends in the context of managerial accounting. Students' analytical, critical thinking and oral and written communication skills will be developed throughout the course.
Course Objectives
To develop and enhance the functional competencies, identified below, which are most closely aligned with the value contributed by accounting professionals.
Decision Modeling
Individuals preparing to enter the accounting profession must be able to use strategic and critical approaches to decision-making. They must objectively consider issues, identify alternatives, and choose and implement solution approaches in order to deliver services and provide value.
Elements include:
Identifies problems and potential solution approaches
Uses quantitative techniques to determine relative importance and likelihood of
alternative scenarios
Employs model-building to quantify problems or test solutions
Evaluates the cost/benefit of alternative solutions
Organizes and evaluates information, alternatives, cost/benefits, risks and rewards
Links data, knowledge, and insights together for decision-making purposes
Objectively identifies strengths, weaknesses, opportunities, and threats associated with a specific scenario, case, or business activity.
Risk Analysis
Risk analysis and control is fundamental to professional service delivery. The understanding of business risk (that is, the risk that an entity - either a client or the prospective accounting professionals employer - will fail to achieve its objectives) affects how business strategy is created and implemented.
Elements include:
Identifies risks of negative outcomes
Communicates the impact of identified risks and recommends corrective action
Measurement
Measures used should be both relevant (that is, bear on the decision to be made) and reliable (consistently measure what they purport to measure). Various measurement and disclosure criteria used by the accounting profession, as well as other performance measures are used.
Elements include:
Identifies what needs to be measured.
Determines an appropriate, relevant and reliable measure for the intended use.
Measures items using appropriate methods of measurement.
Presents the measurement results objectively using applicable standards of disclosure or reporting.
Resolves ambiguities when estimates are required
Reporting
Communicating the scope of work and findings or recommendations is an integral part of a professional service. Communicating clearly and objectively the work done and the resulting findings is critical to the value of the professional service.
Elements include:
Prepares reports with objectivity, conciseness and clarity.
Describes work performed and conclusions reached in a manner that enhances the reports' usefulness.
Employs appropriate media in report preparation and presentation.
Leverage Technology to Develop and Enhance Functional Competencies
Technology is pervasive in the accounting profession. Individuals entering the accounting profession must acquire the necessary skills to use technology tools effectively and efficiently. These technology tools can be used both to develop and apply other functional competencies.
Elements include:
Accesses appropriate electronic databases to obtain decision-supporting information.
Builds appropriate models using electronic spreadsheets and other software
Course Requirements
The course requires active student participation. Students are expected to read the assigned textbook chapters, cases and articles before every class. Punctual attendance is required. There will be a midterm exam, a final exam, case studies, and a team project. Each student is required to participate in a minimum of four professional visits.
Teaching Procedures and Methodology
Teaching methods used in this course include lectures, case discussions, team assignments, and professional visits. Learning in this course requires the student's constructive participation and active involvement in both class discussions and small group discussions. It is essential to attend all group activities inside and outside classes. The corporate visits will expose the participants to different aspects of the class and will highlight the practical relevance of the concepts learned. The visits will be accompanied by individual or group assignments.
Required Textbook
Cost Accounting: A Managerial Emphasis 12th Ed. by Horngren, Datar and Foster
Prentice Hall, 2006
Plus supplementary articles to be distributed by the professor
Components of Final Grade
Midterm exam
30%
Final exam
30%
Team project
20%
Assignments
20%
Grading Scale
93-100%
A
90-92.9%
A-
87-89.9%
B+
83-86.9%
B
80-82.9%
B-
77-79.9%
C+
73-76.9%
C
70-72.9%
C-
67-69.9%
D+
63-66.9%
D
60-62.9%
D-
below 60%
F
Course Outline
Week 1: The Accountant's Role in the Organization, An Introduction to Cost terms and Purposes and Cost-Volume-Profit (CVP) Analysis
Understanding how management accountants affect strategic decisions.
Distinguishing among the problem-solving, scorekeeping, and attention directing goals of management accountants.
Describing guidelines management accountants follow in supporting managers.
Understanding how management accounting fits into an organizational structure.
Understanding what professional ethics means to management accountants.
Defining and illustrating a cost object.
Distinguishing between direct and indirect costs.
Explaining variable and fixed costs and their importance in management decision-making.
Distinguishing manufacturing, merchandising and service companies.
Identifying and understanding the three types of inventory in a manufacturing company.
Distinguishing between product and period cost.
Understanding the assumptions of CVP analysis.
Determining breakeven points and target profit points.
Understanding income tax affects on CVP analysis.
Applying CVP analysis in a company with different products (sales mix).
Distinguishing between contribution margin and gross margin.
Week 2: Job Costing, Activity-Based Costing (ABC) and Master Budgeting
Describing the building-block concepts of costing systems.
Distinguishing job costing from process costing and hybrid costing.
Distinguishing actual costing from normal costing.
Tracking the flow of costs in a job-costing system.
Disposing of under- or over-applied manufacturing overhead.
Describing weaknesses in job costing systems.
Understanding the value of ABC.
Applying ABC costing in real world situations.
Describing the master budget and its uses and limitations.
Understanding the components of master budgeting.
Preparing production and direct materials budgets.
Understanding the significance of cash flow.
Preparing a cash collections budget.
Midterm Exam
Week 3: Flexible Budgeting, Variance Analysis, Inventory Management, Just-in-Time (JIT) and Backflush Costing, Cost Behavior, and Decision-Making and Relevant Information
Distinguishing a master (static) budget from a flexible budget.
Developing a flexible budget.
Explaining standard costs and how they are derived.
Preparing price and efficiency variances.
Understanding how variances are used by managers.
Explaining difference in income under absorption costing and variable costing.
Understanding the importance of inventory management.
Understanding JIT and trigger points in backflush costing.
Understanding costing as it relates to the linear equations.
Understanding different methods for determining how costs behave and the strengths and weaknesses of each.
Preparing a regression analysis on Excel.
Preparing a cost function using the high-low method.
Predicting costs using the linear equation.
Distinguishing between relevant and irrelevant information in decision situations.
Understanding the differences between quantitative and qualitative factors in a decision-making context.
Developing skills to make the optimal choice in a make-buy, add-drop or special order decision.
Week 4: Allocation of Support Department Costs, Process Costing, Costs of Quality (COQ), Capital Budgeting and Transfer Pricing
Distinguishing between support (service) departments and production (user) departments.
Allocating support department costs using the direct, step and reciprocal methods to production departments.
Identifying situations in which process costing is appropriate.
Calculating equivalent units and understanding how to use them.
Using the weighted average (WA) and FIFO methods of process costing.
Understanding why the FIFO method is superior to the WA method.
Understanding the importance of capital budgeting.
Analyzing a project's viability using discounted cash flow (DCF) analysis.
Understanding the importance of Net Present Value (NPV) in a multiyear project.
Using and evaluating the payback method.
Using and understanding the Internal Rate of Return (IRR).
Describing the benefits and costs of decentralization.
Understanding how transfer pricing can lead to suboptimal decision making.
Understanding how transfer prices are set in the real world.
Final Exam
Schedule of Classes and Professional Visits
The detailed schedule of classes and professional visits for each session is available online at www.forum-nexus.com/schedules
Please note that this course will be offered as a Section 1 class.
Academic Integrity
The Ramon Llull University places a high value on the integrity, good conduct and academic honesty of all students. Students are expected to maintain high standards of academic integrity at all times. Any instance of academic dishonesty, including plagiarism, will result in a grade of F for the course.
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