NEW YORK UNIVERSITY



NEW YORK UNIVERSITY

STERN SCHOOL OF BUSINESS

C10.0002 PRINCIPLES OF MANAGERIAL ACCOUNTING

Professor K. R. Balachandran

KMEC 10-78; Tel: 212-998-0029

E-mail: kbalacha@stern.nyu.edu Fall 2008

Office Hours: Tuesdays and Thursdays 5:00 -6:00P.M. and by appointment

This first course on cost management begins with explaining how data is structured for use by decision-makers inside a firm. The data should enable the management to determine product costs accurately so that it can be used effectively for strategic managerial decisions. Towards this end, we discuss the traditional and current practice and discuss how the system can and should be improved. Beyond the traditional approaches to product costing in a manufacturing setting, we consider the activity-based analysis as a methodology to improving the accuracy and making the data useful for financial and other service industries.

A cost management system should also provide information that is useful for decision making such as pricing of individual products, make or buy decisions for components of products, continue or discontinue further processing and special order decisions. Approaches to determine relevance of data for specific decision making situations will be considered. The relationships among cost, production volume and profit will be developed and analyzed.

Cost management is a dynamically evolving field and the course will bring in the changes that have taken place to accommodate the changing business environment due to globalization of competition in pricing and quality of products.

Course material:

Hansen and Mowen, Management Accounting, Thompson Learning, Custom Publishing.

Evaluation:

Makeup of Course Grade:

Final Exam 50 %

Quizzes 30%

Attendance & Class-blackboard Participation 10%

Homework Assignments 10 %

Undergraduate Grading Guideline for Core Courses:

At Stern, we want to ensure fair and consistent grading across core courses. As such, grades for this course will be distributed following the Stern Grading Guidelines for Core Courses at the Undergraduate College.

25-35% A’s – awarded for excellent work

50-70% B’s – awarded for good or very good work

5-15% C’s (or below) – awarded for adequate or below work

Reading/Homework

Students are expected to come to class prepared having read the text and assigned readings prior to class. Assigned problems in the text are not home work problems for submission. They are, instead, for your practice. Homework and other assignments are expected to be completed and handed in on time. Exams and quizzes must be taken at the time given. Quizzes will be for 20 minutes at the start of the class on the dates stated. Late comers will not be given any additional compensatory time. I will count the best two scores out of the three quiz scores towards the final grade. Absences from quizzes may be excused only in the case of documented serious illness, family emergency, religious observance, or civic obligation. If you will miss a quiz for religious observance or civic obligation, you must inform me no later than the first week of class. In case of an approved absence from a quiz, the other two quizzes will be counted for the final grade. If you miss more than one quiz, a zero will be assigned for the missed quizzes. No make up quizzes are given.

Late Assignments and Make-up Policy

Late assignments will not be accepted unless due to documented serious illness or family emergency.

Exceptions will be made for religious observance or civic obligation only when the assignment cannot reasonably be completed prior to the due date and the student makes arrangements for late submission with the professor in advance.

ETHICAL GUIDELINES

Student Code of Conduct

All students are expected to follow the Stern Code of Conduct ()

A student’s responsibilities include, but are not limited to, the following:

A duty to acknowledge the work and efforts of others when submitting work as one’s own. Ideas, data, direct quotations, paraphrasing, creative expression, or any other incorporation of the work of others must be clearly referenced.

A duty to exercise the utmost integrity when preparing for and completing examinations, including an obligation to report any observed violations.

STUDENTS WITH DISABILITIES

Students whose class performance may be affected due to a disability should notify the professor immediately so that arrangements can be made in consultation with the Henry and Lucy Moses Center for Students with Disabilities to accommodate their needs.

Blackboard Participation

Solutions to selected problems from the text (not necessarily those listed on the schedule) are placed on the blackboard. In addition to using the solutions provided, you are encouraged to participate on the blackboard by writing class summaries after my class lectures. You can also use this media to raise questions about points that were not clear in the lecture and/or the homework problems and answering other students’ questions. Power point slides related to lectures are posted on the blackboard.

Class Attendance

Class attendance is mandatory and part of a student’s grade. Absences may be excused only in the case of documented serious illness, family emergency, religious observance, or civic obligation. If you will miss class for religious observance or civic obligation, you must inform me no later than the first week of class. Recruiting activities are not acceptable reasons for class absence.

Course Schedule

Session 1:

September 2

• Moving from Financial to Managerial accounting focus

• Overview of managerial functions

• Managerial informational needs

• Management accounting's role in servicing these needs

• Differences between the informational needs of managers and outsiders

Assignment: HM – chapter 1

Session 2:

September 4

• Product definition for manufacturing, service and retail industries

• Need for accurate determination of product costs

• Tracing costs to activities – direct traceability and indirect traceability

• Cost concepts: directly traceable, indirectly traceable with reference to cost objects

• Cost drivers for activities

• Definitions of product costs – inventoriable product costs, whole product (or value chain) cost, lifetime product cost, customer’s view of product cost

• Product cost and period costs for external reporting

• Direct vs. Indirect Costs

• Product vs. Period Costs

• Manufacturing cost concepts

Assignment: HM – chapters 2: Problems: 2-1, 2. 6, 7, 10, 11

Session 3:

September 9

• Cost of goods manufactured, cost of goods sold and inventory balances

• Manufacturing product cost calculations

• Simple income statements

Assignment: HM – chapters 2: Problems: P2-13, 17, 18, 19, 20, 22

HOME WORK 1 DUE

Session 4:

September 11

• Product cost calculations for external reporting

• Unit product costs

Assignment: HM-Chapter 6 (up to page 225); Problems: 6- 3, 4, 6, 7, 8, 9

Session 5:

September 16 QUIZ 1

• Cost behavior- fixed, variable and mixed

• Flexible and committed resources

• Concept of unused capacities and their importance in applying fixed costs to products.

Assignment: HM- chapter 3 (omit the sections from least squares method) Problems: 3-1, 4, 5, 7, 9, 10

HOME WORK 2 DUE

Session 6:

September 18

• Overhead cost application

• Over and under applied overhead costs and their accounting

• Activity based costing systems

Assignment: HM-Chapter 4. Problems: 4-1, 4, 5

Session 7:

September 23

• Accumulating activity costs

• Determining cost driver rates

• Simplifying using cost pools

• Determining product costs

Assignment: HM-Chapter 4. Problems: 4- 2, 6, 7, 11, 12

HOME WORK 3 DUE

Session 8:

September 25 QUIZ 2

• Approximations to ABC systems – combining batch level, product sustaining level and facilities level into one overhead pool

• Plant wide and departmental wide rates for cost application

Assignment: HM-Chapter 4. Problems: 4-14, 16, 21, 22

Session 9:

September 30

• Absorption format income statement for financial reporting

• Variable (Direct) costing format income statement for decision making

Assignment HM-chapter 10 (pages 422-427): Problems: 10-2, 3, 4, 5,18.

Session 10:

October 2

• Analyzing survivability and profit maximization

• Assumptions behind elementary breakeven analysis

• Breakeven formula derivation and significance

Assignment: HM- chapter 11: Problems: 11-2, 3, 4, 5, 6, 7, 8, 9, 10, 13.

HOME WORK 4 DUE

Session 11: QUIZ 3

October 7

• Profit- volume graphs and its usefulness

• Contribution margin and contribution margin ratio- interpretations

• Multiple products

Assignment: HM-chapter 11: Problems: 11- 11, 14, 17, 19, 20, 21, 22

Session 12:

October 9

• Relevance of past costs, present costs and future costs for decision making

• Effects of taxation , time value of money and opportunity costs on the concept of relevance

• How to choose alternatives and decide on the minimal information needed for decision making

Assignment: HM- chapter 12; Problems: 12-2, 3, 4, 5

Session 13:

October 16

• Typical keep or sell and make or buy decisions- information needs

• Role of cost allocation in product costing and the need for better decision making

• Decisions using incremental analysis, contribution margin per unit and contribution margin per unit resource consumed

• Historical costs, sunk costs, opportunity costs

Assignment: Problems: 12-6, 7, 9, 10, 12, 13, 20, 24

HOME WORK 5 DUE

Session 14

October 21

FINAL EXAMINATION

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download