Upon successful completion of the course the student will be able to:
1. Explain the difference between financial and managerial accounting, the role of managerial accounting and the primary informational needs of managers.
2. List the different types of ethical codes of conduct and acts such as those adopted by Institute of Management Accountants (IMA), individual companies, International Federation of Accountants Codes (IFAC), and the Sarbanes-Oxley Act of 2002 explaining the necessity of each in light of recent financial scandals.
3. Define various cost terms and explain their use for different decision purposes and prepare and explain the differences between a traditional and contribution margin income statement.
4. Compare job-order costing and process costing system designs for manufacturing or service departments including calculating predetermined overhead rates, overhead cost application, equivalent units, etc.
5. Distinguish between and define product and period costs and calculate product costs through preparing a schedule of cost of goods manufactured, cost of goods sold, and the income statement.
6. Explain cost behavior and perform cost-volume-profit analysis from information provided on the contribution income statement and use as a predictive tool.
7. Identify the steps in developing activity based costing (ABC) systems and explain the difference between traditional and ABC product costs.
8. Contrast variable and absorption costing related to internal and external reporting and decision making.
9. Examine segment reporting and decentralization as major determinates in responsibility accounting for wide applications in making decisions and evaluating performance of segments.
10. Complete operational budgets including the flexible budget and explain their roles in planning and controlling operational costs; calculate and explain activity, revenue and spending variances.
11. Describe the development of standard costs and calculate and interpret direct material, direct labor, variable overhead and fixed overhead cost variances.
12. Identify and use relevant costs and benefits in making special decisions such as make/buy, joint product, add/drop product lines, special orders, and utilization of constrained resources.
13. Identify and use relevant costs and benefits in making capital budgeting decisions using time value of money calculations.
14. Apply analytical, interpersonal, and communication skills in problem solving.
Topics and Scope:
I. Introduction to Management Accounting
A. Role of financial versus managerial accounting
B. Careers in managerial accounting including professional certifications
C. Emerging issues such as use of technology and risk management in business and non-business organizations
D. Professional ethics and codes of conduct including professional organizations and government legislation
E. Critical thinking skills, analytical skills, interpersonal and collaborative skills
F. Business reports
II. Basic Cost Terms and Concepts
A. Manufacturing and nonmanufacturing costs
B. Product versus period costs including prime and conversion costs
C. Cost classifications for predicting cost behavior including variable, fixed and mixed costs
D. Analysis of mixed costs using scatter graph, high-low, and least-squares regression methods
E. Traditional and contribution format income statements
F. Cost classifications for assigning costs to cost objects including direct and indirect costs
G. Cost classifications for decision making including differential, opportunity, and sunk costs
III. Job-order Costing
A. Process and overview
B. Flow of costs through the accounting system
C. Cost of goods manufactured schedule and cost of goods sold calculation
D. Under-applied and over-applied overhead
E. Job-order costing in service organizations
F. Changes in information technology
IV. Process Costing
A. Comparison of job-order and process costing
B. Flow of costs through the accounting system
C. Equivalent units of production under weighted average and FIFO cost flows
D. Computing and applying costs under weighted average and FIFO cost flows
E. Operation costing
V. Cost-Volume-Profit Relationships
A. Contribution margin income statement, contribution margin per unit and ratio, and effect of changes in sales price, volume, variable unit cost and total fixed costs
B. Break-even point and target profit analysis
C. Margin of safety
D. Cost structure and operating leverage
E. Sales mix and break-even analysis in multi-product companies
VI. Variable Versus Absorption Costing and Segment Reporting
A. Overview of variable and absorption costing
B. Variable costing and the contribution margin income statement
C. Absorption costing and the traditional income statement
D. Reconciliation of net operating income under variable and absorption costing
E. Segmented income statements using the contribution margin income statement
F. Traceable fixed costs versus common fixed costs
G. Levels of segmented income statements and relationship of traceable and common fixed costs
VII. Activity-based Costing
A. ABC overview and emerging technology
B. Designing and implementing an ABC system
C. Comparison of traditional and ABC product costs
D. Process improvements and limitations of ABC
VIII. Operational Budgets and Profit Planning
A. Purposes and types of budgets
B. The master budget as a planning tool
C. Assumptions and predictions used in the master budget
D. Behavioral impact of budgets
E. Prepare the master budget schedules through the budgeted financial statements
IX. Flexible Budgets and Performance Analysis
A. Characteristics of a flexible budget and common errors
B. Limitations of the static planning budget
C. Flexible budget variances including activity, revenue and spending variances
D. Performance report combining activity, revenue and spending variances
E. Flexible budgets with multiple cost drivers
X. Standard Costs and Variances
A. Setting standard costs: direct materials, direct labor, variable overhead and fixed overhead
B. Using standards in flexible budgets
C. Cost variance analysis: materials, labor, variable and fixed overhead
D. Controllability of variances and management by exception
E. Predetermined overhead rates and overhead analysis
F. Advantages of standard costing systems
G. Standard costing systems in the new manufacturing environment
XI. Segment Performance Measurement in Decentralized Organizations
A. Advantages and disadvantages of decentralization
B. Responsibility accounting
C. Evaluating investment center performance: return on investment and residual income
D. Operating performance measures: delivery cycle and manufacturing cycle efficiency
E. Balanced scorecard
F. Transfer pricing
XII. Differential Analysis: The Key to Decision Making
A. Identifying relevant costs and behaviors
B. Special decisions: special orders, make/buy, add/drop, scarce resource, and joint products
C. Behavioral issues in decision making
D. Use of qualitative facts in decision making
E. Risk aversion
XIII. Capital Budgeting Decisions
A. Discounted cash flow analysis: net present value and internal rate of return methods
B. Undiscounted approaches: payback and simple rate of return methods
C. Choosing the hurdle rate
D. Comparing two investment projects
E. Uncertain cash flows
F. Ranking investment projects
G. Post audit procedures
H. Effect of income taxes on capital budgeting decisions
I. Present value calculations and tables