Accounting 460 Advanced Managerial Spring 2008



Accounting 460 A Advanced Cost Accounting Spring 2010

Room BLM 205; M & W, 1:30—2:50 pm

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Instructor: Larry L. DuCharme, Ph.D. Office: M-259

Office hours: M & W (3:00 - 4:00 pm) and by mutual arrangement.

Office phone: 543-8194 / 543-4368; Home phone: (425) 640-3025; e-mail: lducharm@u.washington.edu

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TEXTs: S. Mark Young, Readings in Management Accounting, Prentice Hall, 5d edition, 2007 (referred to below as M.Y.Readings).

John K. Shank, Cases in Cost Management: A Strategic Emphasis, Thomson South-Western, 3d edition (referred to below as J.S.Cases)

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Class Schedule:

DATE

03/29 Introduction to the course;

Strategic Cost Analysis

Prepare: Baldwin Bicycle Company (J.S.Cases) for Wednesday

This case should give you an example of the kind of analysis you need to do with cases.

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03/31 Prepare: Baldwin Bicycle Company for in-class discussion today.

Read: 1.1 “Be Data Literate…” in M.Y.Readings

1.2 “Cost/Management Accounting.…” in M.Y.Readings

1.3 “Management Accounting in the Era of….” in M.Y.Readings

I will call on you to answer questions about the readings.

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04/05 ABC/ABM

Read: 4.1 “Is ABC Suitable for Your Company?” In M.Y. Readings

4.2 “Measuring and Managing Customer Profitability” In M.Y.Readings

4.3 “ABM Lifts Bank’s Bottom Line” In M.Y.Readings

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04/07 Prepare: Morrissey Forgings, Inc. [J.S.Cases, pp. 197-200]

Formulate an action plan for the company. You must go further than just ABC!

The assignment questions set up a business perspective for the case situation, looking at the recent past, the present, and the near future.

Question 7a: Estimate what income and ROA would be if Tim implemented your advice…so what now?

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04/12 ABC and Value Chain Analysis: Strategic Decisions

Read: “A Note on Value Chain Analysis” [J.S. Cases, pg. 112-123]

2.1 “Strategic Cost Management and the Value Chain” In M.Y.Readings

6.3 “Distribution Channel Profitability” In M.Y.Readings

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04/14 Prepare: Chalice Wines [J.S.Cases]

This is a hard but very fun case. The repeal of prohibition granted states the power to separate manufacturing., distribution, and retailing of alcoholic beverages (so called 3-tier laws). There has been recent activity in this state related to mfg. and sale of wines. What is the issue?

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04/19 Target Cost

Read: 6.4 “Smart Pricing.” In M.Y.Readings

7.1 “Control Tomorrow’s Costs through Today’s Designs.” In M.Y.Readings

7.2 “The use of Target Costing….” In M.Y.Readings

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04/21 Prepare: Montclair--The Deep Color Grades [J.S.Cases]

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04/26 Budgeting, variance analysis

Review variance analysis from your Cost Accounting course.

Read: 10.2 “Budgeting Gamemanship” In M.Y.readings

10.3 “Budgeting Made Easy” In M.Y.readings

10.4 “Corporate Budgeting….” In M.Y.readings

10.5 “Beyond Budgeting” In M.Y.readings

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04/28 Prepare and hand in: Boston Creamery [JSCASES, p. 59-68] ***This is your first written assignment.***

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05/03 Transfer Pricing

Read: “Control with Fairness in Transfer Pricing” [HBR, Nov/Dec 1983, No.83606]

12.1 “Transfer Pricing with ABC.” In M.Y.Readings

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05/05 Prepare: Birch Paper Company [Harvard Case # 9-158-001]

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05/10 Measuring and Driving Performance

Read: 9.1 “Using the Balanced Scorecard as….” In M.Y.Readings

9.2 “Transforming the….I” In M.Y.Readings

9.3 “Transforming the….II” In M.Y.Readings

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05/12 Prepare: Citibank: Performance Evaluation [Harvard Case #9-198-048]

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05/17 Compensation System Design

Read: 8.2 “Why Incentive Plans Cannot Work.” In M.Y.Readings

8.3 “Six Dangerous Myths About Pay” In M.Y.Readings

8.5 “Pay Without Performance:…….” In M.Y. Readings

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05/19 Prepare: Jones Ironworks, Inc. [J.S.Cases]

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05/24 Strategic Risk-Control Problems

Read: “…The 7-S Model.” [Harvard #497045]

“How Risky is Your Company?” [HBR, May-June 1999; reprint #99311 at web site]

Prepare: Kidder Peabody [Harvard Case #9-197-038]

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05/26 Finish Kidder Peabody case

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05/31 Study day (Memorial Day)

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06/02 Strategic Positioning

Prepare: Levi’s Personal Pair Jeans (A) [J.S.Cases] Research current info. on Levi’s.

Final reading: “Transforming Cost Management into a Strategic Weapon” This article summarizes and

integrates many of the important themes in Management Accounting. It will be handed out before class.

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06/07 Final Exam.: Wellington Chemicals [J.S.Cases] (2:30 – 4:20 pm)

***This is your second and final written case analysis***Check my web site for more details.

Read: 3.3 “The Outsourcing Decision,” in M.Y. Readings

You might also find it helpful to read, Venkatesan, R., “Sourcing: To Make or Not to Make,” Harvard Business Review, Nov.-Dec., 1992, pp. 98-107. No. 92610 at the Harvard website.

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Course materials: M.Y.Readings is available in the University Bookstore.

The Harvard cases and readings are available on the web at:



Refer to the managerial text that you used in Acctg.225 or Acctg. 311

I will hand out some additional readings in advance of class sessions.

I will also post case questions on my web site several days prior to the class discussion in which we will discuss the case.

I will frequently leave messages for students on my web page:

Course Overview

This course allows students to reinforce their understanding of and their ability to use some key tools and thinking patterns of management accounting. The focus is on maximization of the overall performance of an organization (both for- and not-for-profit).

A manager must not only master techniques (tools), he/she must also be able to evaluate the relevance of the tools/approaches and know when to use them appropriately for decision making.

The purpose of management accounting (an essential part of the managerial information system) is to support the value creation process and the growth of the organization. Many of the cases in this course challenge students to diagnose a whole situation, to lend order to a somewhat unstructured picture, and then apply useful analytical frameworks to deal with the issues. Answering the questions that arise in the cases should go beyond the application of techniques and help students work through the whole connection between raw data, data analysis, and management’s particular information needs.

Case Method

“Analyzing cases is really a process of asking and answering questions. In studying cases, the art and skill of asking the right questions is as important as being able to answer them. Some of the case questions will be obvious, but for most questions there will be more questions to explore than were at first apparent. You need to make a list of questions for yourself. After you have answered these questions, you might ask: What things might be done to improve the enterprise? What seems most promising? And so on. The process is like peeling an onion to get at the heart of the matter. This will help you think about the management part of management accounting.”—William Rotch

A case typically contains several issues. Some issues are evident, but most of the time you will have to identify the key issues. You have to identify the issues before getting into your tool bag of techniques for analysis. Cases provide specific context in which to answer some interesting questions. Data available for formulating a solution to a complex situation are never orderly and systematically presented. In the real world you have billions of pieces of information available and at times are missing some critical information (information overload with missing critical pieces). Missing information is especially present in cases. It is your responsibility to identify the missing information and research for the info or make some reasonable assumptions to make up for missing information.

No case has a single solution. The important part is that all students have a rigorous, logical, and well articulated method of analysis. For a manager, the decision (even if prepared with a group of peers, partners or subordinates) is a personal commitment.

One approach to preparing for a case discussion:

First, read the case quickly completely through—What is this case all about?

Carefully read the case with underlining and note taking; make some notations/computations.

Develop your own view about the case.

Discuss your ideas with your small study group; purpose is NOT for a group solution.

The final discussion of a case takes place in the scheduled class session, where, with the assistance of the instructor, the collective views and opinions and judgments of everyone in the class are explored. It is the goal of the class session to identify strong or weak analysis NOT to say what (or who) is right or wrong. Remember, what actually happened or what one person thought ought to be done is of no great significance; what is important is the analytical process that you followed as you developed your own answers to the case!

Course Grade

Your final grade will be based on the following weights:

% of grade

First-case analysis 35

Class participation 30

Final-case analysis 35

100%

Class Procedures

The learning process in this course relies on the active participation and contribution of everyone.

Raising questions or suggesting answers are equally important. Listening to others and building on prior observations are key to a constructive discussion in the class room. I want you to challenge ideas and not people--behave professionally at all times.

In order to contribute to the class, you need to be present. Please e-mail me about any planned absence from class. You are expected to submit any work done in class that you missed (by e-mail or hardcopy, before or after missed class, individual typewritten analysis of the assignment for that session—problems, case analysis, summary of readings). Failure to submit missed class material may lead to reduction in your “individual participation” score.

Academic Honesty

As a student in Accounting 460 you acknowledge that you are a member of a learning community in the Foster School of Business that is committed to the highest academic standards. As a member of this community, you agree to uphold the fundamental standards of honesty, respect, and integrity, and you accept the responsibility to encourage others to adhere to these standards.

Office Hours / Meeting Times

If you have questions about anything in the course, career, other concerns, or just want to chat, please stop by my office during office hours (M & W 3:00-4:00 pm) or contact me to arrange a meeting. I am around campus many hours each week. If my office door is open, then I am available to see you. Above, I have included my home phone number if you need to reach me and are unable to get me at my office.

“Procrastination is like a credit card: it’s a lot of fun until you get the bill.”—Christopher Parker

Good luck--Larry

ver.: March 2010

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