Course Description
Studies relevant costs for managerial decision making. Includes cost accounting fundamentals used in managerial control functions. (Requirement: Third-year standing in University Alliance.)
Course Description
After completing this course, students will be able to
- Explain the development and use of accounting information for decision making, planning, and control in organizations
- Provide specialized accounting information to support management decision making by providing a basic understanding of costs, their behavior, and methods to use this information for planning and control purposes, cost allocations, and budgeting
Week 1
Lecture: Introduction and Course Overview
Lecture: Types of Accounting, Strategic Decisions, the Value Chain, Decision Making, and Ethics
Lecture: Cost Terms, Total and Unit Costs, and Aspects of Inventory
Lecture: Income Statement and Schedule of Cost of Goods Sold: Different Costs for Different Purposes
Lecture: Cost of Goods Manufactured Problem
Outcomes
After completing this module, students will beable to
- Describe how cost accounting supports management accounting and financial accounting
- Explain how management accountants affect strategic decisions
- Describe the set of business functions in the value chain and identify the dimensions of performance that customers are expecting of companies
- Explain the five-step decision-making process and its role in management accounting
- Describe three guidelines management accountants follow in supporting managers
- Explain how management accounting fits into an organization’s structure
- Explain what professional ethics mean to management accountants
- Define and illustrate a cost object
- Distinguish between direct costs and indirect costs
- Explain variable costs and fixed costs
- Interpret unit costs cautiously
- Distinguish among manufacturing companies, merchandising companies, and service-sector companies
- Describe the three categories of inventories commonly found in manufacturing companies
- Distinguish inventoriable costs from period costs
- Explain why product costs are computed in different ways for different purposes
- Describe a framework for cost accounting and cost management
Week 2
Lecture: Focus on Contribution Margin, Breakeven Point, Target Income, and Cost-Volume-Profit (CVP)
Lecture: Contribution Margin Income Statement Problem
Outcomes
After completing this module, students will beable to
- Explain the features of cost-volume-profit (CVP) analysis
- Determine the breakeven point and output level needed to achieve a target operating income
- Explain how income taxes affect CVP analysis
- Explain CVP analysis in decision making and how sensitivity analysis helps managers cope with uncertainty
- Use CVP analysis to plan variable and fixed costs
- Apply CVP analysis to a company producing multiple products
- Adapt CVP analysis to situations in which a product has more than one cost driver
Week 3
Lecture: Focus on Job Costing
Lecture: Job Costing Problem
Lecture: Focus on Activity-Based Costing Systems (ABC)
Lecture: Activity-Based Costing Problem
Outcomes
After completing this module, students will beable to
- Describe the building-block concepts of costing systems
- Distinguish job costing from process costing
- Outline the seven-step approach to job costing
- Distinguish actual costing from normal costing
- Track the flow of costs in a job-costing system
- Dispose of underallocated or overallocated manufacturing overhead costs at the end of the fiscal year using alternative methods
- Apply variations from normal costing
- Explain how broad averaging undercosts and overcosts products or services
- Present three guidelines for refining a costing system
- Distinguish between simple and activity-based costing systems
- Describe a four-part cost hierarchy
- Explain cost products or services using activity-based costing
- Explain how activity-based costing systems are used in activity-based management
- Compare activity-based costing systems and department costing systems
- Evaluate the costs and benefits of implementing activity-based costing systems
Week 4
Lecture: Focus on Process Costing and the Weighted Average Inventory Costing Method
Lecture: Focus on Process Costing and the Weighted Average Inventory Costing Method with Beginning Inventory
Lecture: Focus on the FIFO Inventory Costing Method, Using Standard Costs, and Transferred-In Costs
Lecture: Process Costing Problem
Outcomes
After completing this module, students will beable to
- Identify the situations in which process-costing systems are appropriate
- Describe the five steps in process costing
- Calculate equivalent units and understand how to use them
- Use the first-in, first-out (FIFO) method of process costing
- Incorporate standard costs into process-costing systems
- Apply process-costing methods to situations with transferred-in costs
Week 5
Lecture: Developing Master Budgets
Lecture: Budgeted Financial Statements, Cash Budgets, and Responsibility Accounting
Lecture: Master Budget Problem
Lecture: Flexible Budgets, Direct Cost Variances, and Management Control
Lecture: Flexible Budget Problem
Outcomes
After completing this module, students will beable to
- Describe the master budget and explain its benefits
- Describe the advantages of budgets
- Prepare the operating budget and its supporting schedules
- Use computer-based financial planning models in sensitivity analysis
- Explain kaizen budgeting and how it is used for cost management
- Describe responsibility centers and responsibility accounting
- Explain how controllability relates to responsibility accounting
- Recognize the human aspects of budgeting
- Distinguish a static budget from a flexible budget
- Develop flexible budgets and compute flexible-budget variances and sales-volume variances
- Explain why standard costs are often used in variance analysis
- Compute price variances and efficiency variances for direct-cost categories
- Understand how managers use variances
- Perform variance analysis in activity-based costing systems
- Describe benchmarking and explain its role in cost management
Week 6
Lecture: Flexible Budgets, Overhead Cost Variances, and Management Control
Lecture: Overhead Flexible Budget Problem
Outcomes
After completing this module, students will beable to
- Explain the similarities and differences in planning variable overhead costs and fixed overhead costs
- Develop budgeted variable overhead cost rates
- Compute the variable overhead flexible-budget variance, the variable overhead efficiency variance, and the variable overhead spending variance
- Develop budgeted fixed overhead cost rates
- Compute the fixed overhead flexible-budget variance, the fixed overhead spending variance, and the fixed overhead production-volume variance
- Show how the 4-variance analysis approach reconciles the actual overhead incurred with the overhead amounts allocated during the period
- Calculate overhead variances in activity-based costing
Week 7
Lecture: Inventory Costing and Capacity Analysis
Lecture: Inventory Costing Problem
Lecture: Determining How Costs Behave
Lecture: Linear Cost Estimation Using the High-Low Method Problem
Outcomes
After completing this module, students will beable to
- Identify what distinguishes variable costing from absorption costing
- Compute income under absorption costing and variable costing, and explain the difference in income
- Explain how absorption costing can provide undesirable incentives for managers to build up inventory
- Differentiate throughput costing from variable costing and absorption costing
- Describe the various capacity concepts that can be used in absorption costing
- Examine the key factors in choosing a capacity level to compute the budgeted fixed manufacturing cost rate
- Describe how attempts to recover fixed costs of capacity may lead to price increases and lower demand
- Explain the two assumptions frequently used in cost-behavior estimation
- Describe linear cost functions and three common ways in which they behave
- Understand various methods of cost estimation
- Outline six steps in estimating a cost function using quantitative analysis
- Describe three criteria used to evaluate and choose cost drivers
- Explain and give examples of nonlinear cost functions
- Distinguish the cumulative average-time learning model from the incremental unit-time learning model
- Discuss data problems encountered in estimating cost functions
Week 8
Lecture: Decision Making and Relevant Information
Lecture: Product Selection with Constrained Resources Problem and Special Order Problem
Outcomes
After completing this module, students will beable to
- Use the five-step decision-making process to make decisions
- Distinguish relevant from irrelevant information in decision situations
- Explain the opportunity-cost concept and why it is used in decision making
- Explain how to choose which products to produce when there are capacity constraints
- Discuss factors managers must consider when adding or dropping customers or segments
- Explain why book value of equipment is irrelevant in equipment-replacement decisions
- Explain how conflicts can arise between the decision model used by a manager and the performance-evaluation model used to evaluate the manager
The course description, objectives and learning outcomes are subject to change without notice based on enhancements made to the course. November 2013