WAYNE STATE UNIVERSITY COLLEGE OF ENGINEERING 5:00-9:00 P.M., Thursday, Ford Learning & Development Ctr. - Rotunda Court 1 FIN 6240, Section 17861-901 Engineering Financial and Accounting Concepts Fall Semester 2013 Prof. Melvin Houston, MBA, JD, CPA Office: (313) 835-6479 Office Hrs.: By appointment Campus: (313) 577-6320 (Messages) Campus Office: Manuf. Eng. Fax: (313) 835-7909 Bldg., Room 2017 ID on Internet: melvin.houston@wayne.edu Blackboard: www.blackboard.wayne.edu C ourse Material: Required Texts: Cost Accounting: A Managerial Emphasis, Fourteenth Edition, by Charles T. Horngren, George Foster, Srikant M. Datar and Madhav Rajan (Prentice Hall, 2012, ISBN 10:0132109174). This textbook has a web site that features an online study guide that can be downloaded into your system. The address on the internet is http://www.myaccountinglab.com/support/tours. C ourse Description: The Goal: A Process of Ongoing Improvement, by Eliyahu Goldratt, The North River Press (ISBN 0-88427-178-1). Fundamentals of Financial Management, by Eugene F. Brigham, Thirteenth Edition (Business Higher Education/South-Western, 2013, ISBN 10:0538482125). This textbook offers a similar web site for students that can be accessed at www.swlearning.com/finance/brigham. One packet containing various articles and other items needed for the course will be provided to you by the College of Engineering. The central concepts of finance and managerial accounting are combined in this course. The purpose of the course -- from a financial perspective -- will be to demonstrate how engineering decisions can impact the financial goals of the company. The primary goal of financial decision-making is to maximize the price of the company's common stock, which also maximizes the wealth of its shareholders. In this sense, the course gives managers a macro-vision of what the company is attempting to
accomplish, how value is created, and where the engineering function fits in. Managerial accounting on the other hand -- which will be the primary accounting focus of this course -- is concerned more with providing financial information to users internal to the firm. This course will survey the fundamental principles of managerial accounting used to support decisions for the engineering management control processes. In addition to reviewing the concepts of process costing, planning and control, and budgeting, trends in cost management, cost management in manufacturing, and other control issues will also be discussed. G rading, Attendance and Class Participation: Participation in class is expected and encouraged, as about 20% of the course grade will be based on class participation and timely submission of homework assignments. Regular attendance at class meetings, along with extensive preparation prior to attending class, is also required. E xaminations: There will be two examinations in this course, each of which will be worth 400 points. The date for each examination is listed on the attached schedule. Both examinations are take-home and the date each is due will be arranged during class. A ssignment of Final Grades: Overall, grading will be based on the following assignment of points: Item Points Class Participation and Homework 200 Midterm Exam 400 Final Exam 400 Total Points 1000 ==== -2-
FIN 6240 SCHEDULE Date Chapter Topic Assignment Aug. 29 Introduction and Overview Financial Statements of Sept. 5 B-CH 2 Financial Markets & Institutions 2: Q2-4, Q2-10 B-CH 8 Risk and Rates of Return 8: P8-1 to P8-5 B-CH 5 Time Value of Money 5: P5-1 to P5-4 12 B-CH 7 Bonds and Their Valuation 7: P7-4, P7-8 & P7-9 B-CH 9 Stocks and Their Valuation 9: P9-7 & P9-8 B-CH 10 The Cost of Capital 10: P10-6 & P10-7 19 B-CH 11 The Basics of Capital Budgeting 11: P11-1 to P11-5 B-CH 12 Cash Flow Estimation and Risk Analysis 12: P12-1 to P12-3 Capital Budgeting Case Studies 26 Capital Budgeting Case Studies (Cont'd) Chpt. 1 Basic Accounting Concepts (P) "Battle at the GAAP? It's time for a Change." by Dennis Peavey * "Summary Annual Report," by Jim Hamilton. * "The Auto Business in the 1990's," by Harold Poling. Chpt. 2 Understanding Corporate Annual Reports 2: E2-28, E2-20
Sept. 26 (Cont'd) *"As Security Worries Intensify, Companies See Efficiencies Erode," by Greg Ip. (P) "Financial Reporting in the 1990's," by Dennis Beresford. * "The Dangerous Mortality of Managing Earnings," by William Bruns. * "The Key to Real Teamwork: Understanding the Numbers," by Olen Greer. Oct. 3 NO CLASS 10 Analysis of Financial Statements (P) "Financial Statement Analysis," by Robert Hagin. * "How Useful is the Statement of Cash Flows," by Marc Epstein. *"Ford Motor's Cash Goes Subcompact," by Norihiko Shirouzu. * "Not Just Bean Counters Anymore," by Steven Harrison. B-CH 12 Cash Flow Analysis (Cont d) 2: P12-6 17 Guest Speaker (Investment Evaluation at FMC) MID-TERM EXAMINATION 24 Chpt. 3 Cost-Volume-Profit Relationships 3: P3-37, E3-31 Chpt. 10 Determining How Costs Behave 10: P10-33 & E10-25 * "Cost-Volume-Profit Relationships," by Sidney J. Baxendale. (P) "A Microeconomic Approach to Quality Cost Control," by Il-Woon Kim. * "Quality Costs: Facilitating the Quality Initiative," by James Simpson. 2
Oct. 31 Chpt. 5 Relevant Information and Decision-Making & Chpt. 11 5: E5-25 11: E11-26 * "When and Why to Measure Costs Less Accurately to Improve Decision Making," by Ken Merchant. * "Auer Case from Cost Accounting," by Edward Deakin. * "Product Costing at Caterpillar," by Lou Jones. N ov. 7 Chpt. 4 & Chpt. 17 Job Costing and Process Costing 4: E4-20 & P17-34 (P) "Elements of Activity-Based Costing," by Robin Cooper. ( P) "Cost Classification in Unit-Based and Activity-Based Manufacturing Cost Systems," by Robin Cooper. (P) "Implementing Activity-Based Costing at a Process Company," by Robert Eiler. * "Using Activity-Based Costing to Achieve Manufacturing Excellence," by Peter Turney. Chpt. 6 The Master Budget: The Overall Plan 6: E6-23 * "Planning and Control of Research and Development Expenses," by James Wilson. * "How Challenging Should Profit Budget Targets Be?," by Ken Merchant. (P) "Mission Statements: Importance, Challenge, and Recommendations for Development," by D. Ireland. 14 Chpt. 7 & Chpt. 8 Standards for Control I & II 7: E7-26 8: E8-22 3
Nov. 14 (Cont'd) (P) "Planning and Control Techniques," by Ned Hill. * "So You Want to Lower Costs?," by Roger Schmener. * "Target Costing and How to Use it," by M. Sakurai. (P) "The Path to Total Cost Management," by R. McIIhattan. * "The Right Way to Control Period Expenses," by Donald Byrum. * "Materials Variance Analysis and JIT: A New Approach," by H. Harrell. Nov. 21 Chpt. 22 Management Control in Decentralized Organizations 22: E22-17 (P) "Decentralization and Performance Evaluation," by Edward Deakin. (P) "Rate of Return - The Poison Apple," by Bill Parks. * "J. I. Case Company: Performance Measurement," by M. Sellenheim. * "The Two Faces of EVA," by Frances Nuelle. * "Eli Lilly is Making Shareholders Rich. How? By Linking Pay to EVA," from Fortune magazine. * "Capital City," Helen Kay. Chpt. 22 Transfer Pricing 22: E22-22 * "Transfer Pricing in the 1990's," by Roger Y. W. Tang. (P) "Divisional Reporting and Transfer Pricing," by Gordon Shillinglaw. 4
28 THANKSGIVING DAY RECESS Dec. 5 Guest Speaker (Global Manufacturing) and/or Guest Speaker (Theory of Constraints) * "Do We Really Need Product Costs? The Theory of Constraints Alternative," by James Low. (P) "Targeting Quality Improvement for Maximum Impact," by James Low. * "How Did Traditional Costing Lose Its Relevance?," by James Low. (P) Un-authored article from the course packet titled, "Theory of Constraints." 12 FINAL EXAMINATION 5