|1. Description - |
|Study of accounting information system for internal uses for decision-making, planning, directing operations and controlling. Process costing, job-order costing, activity-based costing, standard costing, cost behavior and cost-volume profit analysis, budgeting, performance evaluation, capital investment analysis, and ethics.|
|Prerequisite: ACTG 1B.|
|Advisory: MATH 10 or high school algebra.|
|2. Course Objectives - |
|The student will be able to: |
- recognize management accounting information as a creator of value.
- analyze cost concepts and the cost assignment process.
- prepare and evaluate a Schedule of Cost of Goods Manufactured, Schedule of Cost of Goods Sold, and Income Statement.
- analyze cost behavior and the role of resource usage in understanding cost behavior.
- compare and contrast the cost accounting system of service, merchandising and manufacturing firms.
- describe job-order and process costing systems, illustrate the flow of costs in each, and prepare related accounting records and reports.
- assess departmental cost allocation process.
- examine activity-based cost system.
- discuss the impact of technology on the business environment.
- calculate break-even and evaluate cost volume profit analysis.
- prepare traditional and contribution-margin income statements and define related terms.
- apply relevant costing and tactical decision making.
- recognize and describe the use of budgets for planning and control.
- Explain the difference between absorption and variable costing.
- explain the development and use of standard costs and flexible budgets.
- evaluate responsibility accounting, performance evaluation and interpret variance analysis reports and relate them to responsibility accounting and control.
- examine ethical issues related to managerial accounting
|3. Special Facilities and/or Equipment - |
|Access to a PC lab and Excel software. When taught as an online distance learning section, students and faculty need ongoing and continuous Internet and Email access. |
|4. Course Content (Body of knowledge) - |
- Managerial Accounting and the Business Environment
- The role of management accountants in an organization;
- The basic concepts underlying Lean Production and Just-in-Time systems, the Theory of Constraints (TOC), Total Quality Management (TQM);
- Managerial Accounting and Cost Concepts
- the major differences and similarities between financial and managerial accounting;
- Three basic manufacturing cost elements;
- product costs versus period costs;
- statement of cost of goods manufactured, income statement including calculation of the cost of goods sold;
- differences between variable costs and fixed costs;
- differences between direct and indirect costs;
- cost classifications used in making decisions: avoidable costs, differential costs, opportunity costs, and sunk costs;
- Job-Order Costing
- process costing and job-order costing;
- documents used in a job-order costing system;
- predetermined overhead rates, actual overhead cost and estimated overhead costs;
- flow of costs in a job-order costing system and journal entries to record costs;
- application of overhead cost to Work in Process using a predetermined overhead rate;
- use of T-accounts to show the flow of costs in a job-order costing system;
- underapplied or overapplied overhead cost and related journal entry for clearing the balance in Manufacturing Overhead account;
- Process Costing
- flow of materials, labor, and overhead through a process costing system;
- the equivalent units of production and cost per equivalent unit using the weighted-average method;
- the equivalent units of production and cost per equivalent unit using the FIFO method.
- Use of Cost Behavior in decision-making process
- scattergraph plot to diagnose cost behavior;
- mixed cost using the high-low method;
- income statement using the contribution format;
- Cost-Volume-Profit Relationships
- changes in activity and its effect on contribution margin and net operating income;
- the contribution margin ratio (CM ratio) and its relationship to net operating income and sales volume;
- the effect of changes in contribution margin on variable costs, fixed costs, selling price, and sales volume;
- the break-even point in units and dollars;
- margin of safety, its significance, and the desired target profit;
- using cost-volume-profit for sensitivity analysis;
- segment reporting and the relationship with cost, revenue, profit, and investment centers;
- the degree of operating leverage at a particular level of sales and explain how it can be used to predict changes in net operating income;
- the break-even point for a multi-product company;
- Profit Planning
- organizations budget and the processes used to create budgets;
- the various parts of a master budget including
- sales budget
- production budget.
- direct materials budget
- direct labor budget.
- manufacturing overhead budget
- selling and administrative expense budget
- cash budget
- budgeted income statement
- budgeted balance sheet
- Flexible Budgets and Performance Analysis
- flexible budget versus static budget;
- reports on activity variances;
- reports on revenue and spending variances;
- Standard Costs and Operating Performance Measures
- the direct materials price and quantity variances and their significance;
- the direct labor rate and efficiency variances and their significance;
- the variable manufacturing overhead rate and efficiency variances;
- Relevant Costs for Decision Making
- relevant and irrelevant costs as they relate to decision-making process;
- analysis of product line, keep or drop a business segment;
- make or buy analysis;
- analysis of special order to accepted or reject;
- the most profitable use of a constrained resource and the value of obtaining more of the constrained resource;
- analysis of showing joint products at the split-off point versus processing further for increase in profit;
- Absorption and variable costing
- target selling price;
- cost-based price;
- Capital Budgeting Decisions
- the acceptability of an investment project using the net present value method;
- the acceptability of an investment project using the internal rate of return method;
- the payback period for an investment;
- the simple rate of return for an investment;
- capital rationing and the profitability index;
- Ethical issues
- Code of conducts for managerial accountants;
- Company code of conducts;
- Code of conducts on the international level
|5. Repeatability - Moved to header area.|
|6. Methods of Evaluation - |
- Written and Oral Communications: written homework assignments, oral presentation, class participation.
- Group Work: problem solving, current readings discussion, case studies analysis.
- Computer assignments: accounting software, electronic spreadsheet, accounting practice set.
- Research Paper / Project
- Midterms, quizzes and final exam
|7. Representative Text(s) - |
|Horngren,Harrison Jr. & Oliver Accounting. 10th Ed. Saddle River, New Jersey: Pearson Publishing, 2014. |
Garrison, Ray and Eric Noreen. Managerial Accounting. 14th ed. New York, New York: McGraw Hill/Irwin, 2011.
Pasewark, William R. Understanding Corporate Annual Reports. 7th ed. Burr Ridge, Illinois: Irwin McGraw-Hill, 2010.
|8. Disciplines - |
|9. Method of Instruction - |
|Lecture, Discussion, Oral presentations, Electronic discussions/chat, Demonstration, Internship/preceptorship, and group work. |
|10. Lab Content - |
|Not applicable. |
|11. Honors Description - No longer used. Integrated into main description section.|
|12. Types and/or Examples of Required Reading, Writing and Outside of Class Assignments - |
- Written Research Paper and/or Project
- Written Presentation
- Reading of internet articles and writing on accounting topics or accounting-related current events and/or careers
- Reading textbook
- Reading of Wall Street Journal, Business Week, and Fortune
|13. Need/Justification - |
|This course is a required core course for the AA degree and Certificate of Achievement in Accounting. |