Management Accounting

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COPENHAGEN BUSINESS SCHOOL
Course outline
Management Accounting

Course responsible: Chris Chapman, Professor, PhD
Instructor: Chris Chapman, Professor, PhD

Place: Råvarebygningen, Porcelænshaven
Time: Please see schedule for term 1 or lecture plan

Objectives
The purpose of this course is to provide students with an understanding and
appreciation of the strengths and limitations of an organization’s accounting
systems in regard to management. The course provides a framework for
analysing and understanding these accounting systems (like budgeting,
reporting, analysis and management of cost, responsibility accounting and
transfer pricing as well as the design of comprehensive approaches to
performance management). Furthermore, the course reflects on the internal
accounting system’s role in keeping the firm and its members honest,
responsible, and able to actively engage in activity that is both economically,
environmentally and socially sustainable (ie. Manage the triple bottom line).

Class preparation
The material for this course consists of one textbook, selected other readings
and cases. It is expected that all students prepare all readings and cases for
each class.

Where cases require calculations there will be spreadsheets available
containing the exhibits. It will significantly enhance your learning in the course
if you have been able to identify the kind of management accounting decision
that each case addresses and made an attempt at applying the appropriate
technique to the questions presented using a spread sheet before coming to
class.

Given the centrality of spreadsheets as a working tool for management
accounting we will address some basic matters of good spread sheet design
as we look at the calculations and decisions in the Caribbean internet café
case in MA1.

Class participation
The lectures will be conducted in a dialogue manner. Issues and models will
be presented, and their potential merits will be open for a dialogue.
Cases will also take up a good part of the teaching, and a thorough analysis of
case issues, and suggestions for their solution, will be expected.
2
The participants’ job experience can often be a useful source for adding to our
mutual understanding, and is therefore most welcome.

Literature:

Text book:
 Wouters, M. Selto, F., Hilton, R. & Maher, M. (2012) Cost
Management: Strategies for Business Decisions, International Edition

Please note that the text book is intended mainly as a resource that you might
find most useful after completion of the course since I find it to be particularly
good at offering in-depth analysis of individual topics that goes beyond the
level that it is sensible to try and incorporate into a general introductory course
such as this one.

With this more limited role during the course please note that in terms of
covering the calculative basics necessary to the course it is most likely that
any introductory management accounting text book will be quite adequate
since the technical analysis required will be covered in detail in the slides and
class discussion.

More important as the class proceeds are the following assigned readings that
situate how and why the calculations we cover might be managerially relevant
in practice.

Assigned reading:
 Barwise, P., Marsh, P., & Wensley, R. (1989). Must finance and
strategy clash? Harvard Business Review, 67(5), 85-91.
 Cooper, R., & Kaplan, R. S. (1988). Measure costs right: Make the right
decisions. Harvard Business Review (September/October), 96-103.
 Ittner, C., & Larcker, D. (2003). Coming Up Short on Nonfinancial
Performance Measurement. Harvard Business Review, 81(11), 88-95.
 Kaplan, R. S., & Anderson, S. R. (2004). Time-Driven Activity-Based
Costing. Harvard Business Review (November), 131-138.
 Kovac, E., & Troy, H. (1989). Getting transfer prices right: What
Bellcore did. Harvard Business Review (Sep/Oct), 148-154.
 Libby, T. & Lindsay, M. (2010). Beyond budgeting or budgeting
reconsidered? A survey of North-American budgeting practice,
Management Accounting Research (21), 56-75
 Sharpe, P., & Keelin, T. (1998). How Smithkline Beecham makes better
resource-allocation decisions. Harvard Business Review (March-April),
45-57.

Cases:
 See lecture plan


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Learning Objectives (to achieve grade 12)
At the end of the course the students are expected to be able to:

 Read and interpret management accounting reports concerned with
economic analysis of multi-product or multi-segment organizations and
ask significant questions regarding the costing practices used to
prepare such reports
 Describe and understand different management accounting systems
and discuss their strengths and limitations from a decision making as
well as a control perspective
 Analyse the cost of improving accounting systems’ decision making
ability and effectiveness as a control device and reflect upon the trade-
off between the use of accounting for different purposes
 Critically reflect on and assess the value and relevance of specific
management accounting and control systems in a particular
organizational setting.


Exam
A final 3-hours sit-in exam on PC (individual, closed book), scheduled for
Monday 20
th
October 2014. The time and place will be announced on
CBSLEARN a week before the exam.

The examination will be structured into three parts

Part A – Calculation (Weighting 20%)

This section is designed to test your basic calculative abilities across the
range of techniques addressed in the course. It will comprise 10 compulsory
multiple choice questions.

Various of the sessions (as indicated on the outline below) will be followed by
MCQ homework quizzes following class in order to act as a tool for
consolidating your learning and to demonstrate the nature of the section A
questions that you will see in the examination. The quizzes will not be
formally assessed.

Part B – Theory (Weighting 30%)

This section is designed to test your understanding of the theoretical
implications and potentials of the techniques and systems discussed in the
course. The questions are designed and will be evaluated on the basis that a
strong answer would be containable to one clear and well-structured page of
text rather than several pages of less structured and focussed writing.

You will be presented with five questions and must choose to answer three.

Indicative questions:

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Question 1 Explain briefly the central concepts underlying activity based
costing. In what ways are these superior to full costing?

Question 2 Explain briefly how cost volume profit analysis might sensibly
inform management decision making. What are some of its limitations?

Part C – Bringing the calculation and theory together (Weighting 50%)

Real organizations contain packages of most (if not all) of the management
controls discussed in the course. In considering how these interact and
cohere to help the organization define and pursue its strategic objectives, we
leave the realm in which there is an optimal answer. This section will
comprise single case analysis that will require you to draw on the knowledge
tested in the first two sections and to creatively work to construct a coherent
explanation of a management control solution.


Grading
All grading elements will be graded on the Danish 7-point scale.



Outstanding
A 12
B 10
Satisfactory
C 7
D 4
Acceptable E 02
Unacceptable
F 00
F - 03

5
Lecture plan


Lecture

Time Topics Reading Cases Text Book
MA 1

Wednesday
24-09-2014
13.00-16.15
Introduction to management
accounting and the nature of costs

Barwise et al. (1989) Caribbean Internet
Cafe

Wouters et al.
Chapters 1 and 2
MA 2 Friday
26-09-2014
09.00-12.15
Short and Long Term Decision Making
(CVP+NPV) (MCQ Homework quiz
to follow class)

Sharpe & Keelin
(1989)
Wouters et al.
Chapters 7 and 8
MA 3 Thursday
02-10-2014
13.00-16.15
Activity Based Costing (MCQ
Homework quiz to follow class)
Cooper & Kaplan
(1988)
Wilkerson Wouters et al.
Chapters 4 and 5
MA 4 Friday
03-10-2014
13.00-16.15
Time Driven Activity Based Costing
(MCQ Homework quiz to follow
class)
Kaplan & Anderson
(1994)
Mid West Paper
Products

Wouters et al.
Chapter 6
MA 5 Tuesday
07-10-2014
09.00-12.15
Budgeting and Financial Planning Libby & Lindsay
(2010)
Codman & Shurtleff

Wouters et al.
Chapter 9 and 14
MA 6 Wednesday
08-10-2014
13.00-16.15
Transfer Pricing Kovac & Troy (1989) San Francisco Bay
Consulting

Wouters et al.
Chapters 12 and 15
MA 7 Thursday
09-10-2014
09.00-12.15
Single (Operational Control) and
Double (Strategic Performance
Measurement) Loop Learning (MCQ
Homework quiz to follow class)
Ittner & Larcker
(2003)
Hereford Steak
Houses
Wouters et al.
Chapters 13 and 16
MA 8 Friday
10-10-2013
13.00 -14.30
Review of all topics +preparation for
exam
All



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