[Course Prerequisites] ~ [Texts & materials]
[Course Objectives Specific to BUSA 203] ~ [Assignment Schedule]
[Summary of Graded Assignments]

Catalog description: Introduction to the use of accounting data for decision making, managerial planning, and operational control. Topics include cost-volume-profit relationships, cost accounting methods, budgeting, and performance evaluation. Familiarity with Microsoft Excel or other spreadsheet software is required. Prerequisites: BUSA 202, CSCI 120. 3 credits.

What this course is about:

Managerial accounting focuses on the use of accounting information to facilitate the business success of the enterprise -- for both manufacturing and service firms. Also, the concepts of management accounting are increasingly applied to government and not-for-profit organizations, to help them succeed in their service missions, to be responsible to the citizens they serve and to the funding agencies that support them. Management accountants play a strategic role in an organization, developing and presenting the information that is critical for the organization's success, and are an integral part of the value creation process.

In a nutshell, this course is about the economic and financial relationships which are the foundation of any business. We will raise questions like the following: Can we make money? If not, why not? If we can, how? How much? In what other ways can we measure performance? Will we have enough cash? How do we create value for customers? How do we maintain market position and competitiveness? What does the available information tell us about the stability or erosion of our market position?

An understanding of an organization’s competitive position in the market is as important as understanding the costs of designing, producing, and marketing a product or service. The complex relationships between costs, revenues, markets, internal processes, competition, pricing, and strategy make management accounting an especially rich and dynamic area for study. As we will see, these considerations apply equally well to not-for profit institutions.

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Course prerequisites

The prerequisites for a course are intended to assure that you gain as much as possible from our efforts over the semester. There are two prerequisites for this course. The first is BUSA 202. That means you should have taken financial accounting BEFORE this semester, NOT concurrently with BUSA 203. It also means that I expect you to remember basic concepts from financial accounting and be able to use them. These concepts include, but are not restricted to, the definitions of basic accounting categories [e.g., assets, liabilities, revenues, expenses], the organization and content of balance sheets and income statements, and the difference between cash and accrual accounting. You already sold your financial accounting book? Consider buying it back. Also, the last three chapters in the text [starting on page 453] are a review of financial accounting concepts.

The second prerequisite is the ability to use Excel. The spreadsheet work we do will not be terribly sophisticated, but I do insist on good spreadsheet practices. Failure to use good spreadsheet practices will result in a failing grade on individual assignments will probably result in a failing grade in the course. Students who lack good spreadsheet skills invariably achieve lower grades in the class than their better-prepared colleagues; students with exceptionally weak spreadsheet skills invariably wind up dropping the course to avoid a failing grade.  I have provided an extensive list of good spreadsheet practices at Rules for Good Spreadsheet Practice. Read through these and refer to them as you work on the assignments.  If you lack the requisite spreadsheet skills, PLEASE drop the course and enroll again after you have acquired the necessary working knowledge of Excel.

Course objectives specific to BUSA 203

Management accounting issues are addressed in an integrated framework which stresses organizational strategy and the role of management accounting information in production and marketing decisions. My single overriding objective in teaching this course is to have each of you develop a clear understanding of the role of management accounting in contemporary organizations, and the ability to apply that knowledge in a practical, professional setting. This means that students who complete this course will develop an understanding of the concepts underlying the development and use of management accounting information to achieve organizational objectives. Students will gain an understanding of the economics of business and service organizations; and the skill to analyze, evaluate, and discuss real-world business situations. Specifically, by the conclusion of this course, you should be able to do all of the following:

1. Discuss the fundamentals of management accounting, including relevant strategic issues, and be comfortable with the use of the terms and concepts of the discipline

2. Determine cost behavior patterns using both simple algebra and OLS regression

3. Assess the "economics of the business," using cost-volume-profit relationships to determine breakeven points, assess financial leverage, and evaluate profitability and cash flow. You will learn to integrate this information with your knowledge of strategy, markets, and operations in order assess the viability of a business situation.

4. Use revenue, cost, and operational data in management planning and decision making, including operational budgeting.

5. Determine product or service costs in a simple setting

6. Use costs and other critical success factors in evaluation of management control systems

Note that the emphasis here is on active learning and active involvement, and on using management accounting information in decision making, planning, and controlling operations. I have worked in a variety of manufacturing and service organizations, and I have been an academic for over 30 years. In all that time, I have never met anyone whose official title or job description was "management accountant." However, every successful manger or business executive I have ever met understood the terminology of management accounting and used management accounting concepts to make the day-to-day decisions that their jobs required. Thus, many, if not most of the folks who do management accounting are not accountants; they are managers – managers in sales, marketing, finance, human resources, engineering, or manufacturing. Even though the word "accountant" isn’t in their job descriptions (and they certainly don’t think of themselves as accountants), they do management accounting. They use management accounting concepts, tools, and terminology daily to fulfill their varied responsibilities. Whatever your concentration is within the School of Business, whatever industry or service you eventually wind up working in, you will routinely use management accounting information in decision making, evaluation and control.

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Texts and materials

Introduction to Management Accounting by Horngren, Sundem, Stratton, Burgstahler and Schatzberg, 14th edition. Pearson Prentice Hall, 2008. [required] ISBN-978-0-13-612921-9.

The following cases are available in the bookstore. All are from Ivey Business School Publishing:

1. Sombrero: Proposed Fruit Juice Outlet [9B09B001]

2. Catfish Creek Canoe Company [9A99A026]

3. Foxy Originals--Expansion into the US Market [9B07B004]

4. Endoscopes at Victoria Hospital [9A96K003]

5. Accuride Canada Incorporated [9B04D002]

6. College Couriers [9B06B010].

Be sure to get the cases promptly [=TODAY]. If you wait until the night before the case is due and the bookstore has closed for the day, you will not be a happy camper. No extensions will be granted "because I couldn't get to the bookstore...," or the equivalent. A number of additional items will be available via hyperlinks in the assignments section below.

You will need consistent access to Excel. Your ability to USE Excel is absolutely critical to success in this class. For your own benefit, please do NOT enroll in this class if you do not have the requisite Excel skills.