MANAGEMENT ACCOUNTING (Prof. Antonio CHIRICO) TEACHING STAFF RESPONSIBLE FOR THE COURSE: Prof. Antonio CHIRICO Email: chirico@economia.uniroma2.it Availability: Thursday 10:00 12 :00 OTHER MEMBERS CONTRIBUTING TO THE COURSE: Assistant Researcher : dr. Bassam BAROMA Email: baroma@economia.uniroma2.it Availability: Wednesday 10:00 12:00 Assistant Researcher : dr. Andrea BELLISARIO Email: bellisario@economia.uniroma2.it Availability: Thursday 14:00 16:00 PRE-REQUISITES FOR THE COURSE: General concepts of Financial Accounting LEARNING OBJECTIVES The course emphasizes the use of accounting information for internal planning and control purposes. This orientation is quite different from financial accounting perspective where the focus is on accounting disclosures for stakeholders. The course is intended as an introduction for people who will make business decisions and evaluate the performance of business units using data obtained from the accounting system. The course will cover topics and mechanics of cost accounting, basic issues involved in the design of a cost accounting system, and the role of management accounting in decisions concerning resource allocation and performance evaluation. Examine the use of cost data Distinguish between various costing system Understand budgeting process for planning and control and variances analysis Understanding capital budgeting decisions 1
The course is divided into six different sections: Section I: Concepts and Fundamentals of Management Accounting Section II: Cost Accounting Systems and Cost Analysis Section III: Relevant Costs for Decision Making and Control Section IV: Budgeting Process for Planning and Controlling Section V: Segment Reporting, Decentralization and the Balanced Scorecard Section VI: Capital Budgeting Decisions At the end of the course, the students: 1. will be able to distinguish between financial accounting and managerial accounting information; 2. will be able to distinguish between job costing and process costing for computing cost of goods produced and sold; 3. will prepare budget and will explain differences between actual cost and standard cost; 4. will use cost data for making decisions; 5. will prepare a balanced scorecard; 6. will be able to understand capital budgeting decisions and planning investments TEACHING METHODS The course will be a combination of lectures, problem-solving, case studies, and interactive class discussions. MAIN REFERENCES Garrison, Norreen, Brewer, Managerial Accounting (13th Edition, McGraw-Hill International Edition) In particular, students are requested to study chapters: 1-14 During the course, cases will be discussed from the book above-mentioned or other text book. 2
CASE DISCUSSIONS Students are expected to be fully engaged in the entire learning process. This means that students need to prepare the assigned readings of the cases prior to each class and come to class prepared to participate in group work and/or discussions to enhance the learning of the individual and the class. Students will find the relative assignment for each case on the website. Please read the questions carefully before the lesson. The objective is to involve all the class members in the discussion. The cases are designed to integrate the concepts from the case into the context of the course. With case discussions, each student will develop: 1. The ability to set the parameters for the problem (key concepts from the case). 2. Ample knowledge regarding the subject of the case (understanding of material, good response to the observations of others). 3. The ability to connect the case to other course concepts. 4. The ability to involve others in the discussion. In order to effectively discuss the cases, students need to be: prepared with facts and specific quotes from the case. prepared to comment, ask questions, or make observations about the case. During the discussion, students need to: take a position on a question or a point. ask questions to clarify a point. help keep the discussion moving and on track. help draw others into the discussion. integrate theories and content from other cases. During the discussion, students should not: come unprepared and show their lack of knowledge. monopolise the discussion. make irrelevant comments. be insensitive to other s desire to speak or share opinions. OTHER LEARNING SOURCES Slides and other material will be available on the course website. 3
ATTENDANCE Because of the concentrated nature of the MScBA programme, attendance in class is very important. Students who miss more than 6 hours (including arriving late or leaving early) will be required to prepare ALL the chapters of another book for the exam. NOTE: Attendance for the first class session is mandatory as important information regarding the course and the instructor s expectations are given. If you know in advance that you will be absent for one session, please contact your instructor to ensure that absence from a particular session is acceptable. EXAM The exam is made up of two parts: a written and an oral exam which will be usually held on the same day. I - Written exam) You may be given questions to answer regarding a case study. As you respond to the questions, please use specific content and theories (use names to identify theories and models) as the basis of your analysis. You will not receive credit for your personal opinions unless backed by theory, lecture, and/or text material. Moreover, describe how the content/theory can be applied to the situation. Your answers will be evaluated on both quantity and quality. Answers that are more detailed and demonstrate a higher level of understanding and analysis will receive more points. II - Oral exam) You may be asked to discuss your written answers to the case questions and to focus on some specific theoretical issues. 4
ANALYTICAL SYLLABUS Date Time Agenda /Case discussion r Section I : Concepts and Fundamentals of Management Accounting Introduction to Management Accounting Concepts Financial Accounting vs Managerial Accounting Managerial Accounting and Cost Concepts Section II: Cost Accounting System and Cost Analysis System Design: Job-Order Costing System Design: Process Costing Cost Behaviour: Analysis and Use Cost-Volume-Profit Relationships Variable Costing: A Tool for Management Activity-Based Costing: A Tool to Aid Decision Making Section III: Relevant Costs for Decision Making Cost Concepts for Decision Making The Make or Buy Decisions 5
Opportunity costs and Special Orders Utilization of Constrained Resource Section IV: Budgeting Process for Planning Function Profit Planning Profit Planning Flexible Budgets and Performance Analysis Standard Costs and Operating Performance Measures Evaluation of Controls based on standard costs. Management by Exception Section V: Segment Reporting, Decentralization and the Balanced Scorecard Responsibility Accounting and Decentralization Transfer Pricing and Service Department Charges Evaluating Investment Center Performance Evaluating Investment Center Performance Balanced Scorecard Balanced Scorecard Section VI: Capital Budgeting Decisions Capital Budgeting and Planning Investment: basic concepts A. Chirico 6
The net present value and the emphasis on Cash Flows The internal rate of return and other cash flow Other approaches to capital budgeting decisions Capital Budgeting and Planning Investment Capital Budgeting and Planning Investment 7