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 Management Accounting and Control  posted by  duggu   on 12/10/2007  Add Courseware to favorites Add To Favorites  
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Weber, Joseph, 15.521 Management Accounting and Control, Spring 2003. (Massachusetts Institute of Technology: MIT OpenCourseWare),  (Accessed 11 Jul, 2010). License: Creative Commons BY-NC-SA

A computer showing accounting information.

A computer showing accounting information. (Image by Matthew Palmer.)

Course Highlights

Because this course focuses on how managers use accounting information to make decisions, it is taught with a mix of theory -- as shown in the full set of lecture notes -- and real world applications, including a thorough final exam. Students work by themselves and in groups to write recommendations to the case studies.

Course Description

This course examines management accounting and related analytical methodologies for decision making and control in profit-directed organizations. It also defines product costing, budgetary control systems, and performance evaluation systems for planning, coordinating, and monitoring the performance of a business. This course defines principles of measurement and develops framework for assessing behavioral dimensions of control systems; impact of different managerial styles on motivation and performance in an organization.


In this class, we focus on how managers can use accounting information to assist them in making decisions and how accounting information can be used to control the actions of other members of the firm. We will use managerial and organizational economics to build a framework for understanding internal accounting systems. Then we will apply these theoretical constructs to actual real world managerial decision problems. As such, you should plan to gain familiarity with the topics by working through the suggested problems. Much of the information in this course builds upon key concepts covered in the first half of the class. Falling behind early is not a good idea.

I believe that the best way to learn material is to gain experience through problem solving. During the course we will spend a substantial amount of time applying the material covered in this class on real world managerial decisions. As such, we will rely considerably on cases to motivate discussion during class sessions. 

The conceptual materials for the course are provided in the textbook, Accounting for Decision Making and Control (4th edition) by Jerry Zimmerman. Reading and problems from this book are assigned for many class sessions. The primary goal of the readings is to help you to develop a framework with which you can analyze accounting and control problems in a variety of management contexts.

Course Requirements
The most important requirements for this course are a thorough preparation and analysis of the assigned cases, problems, and reading material, and active participation in the classroom. The cases included in this course represent broad organizational situations. In some instances, the case may represent a good system and you are expected to learn what makes the system work well. Other problems may present a system that has failed and the objective should be to learn from the failures. Most cases seldom present examples of absolutely perfect or totally flawed systems. There are always some weaknesses in the best of management practices. However, the evaluation of these weaknesses is always relative to the resources required to correct the weaknesses. Thus, it may be costly to remove flaws. When analyzing cases, any recommendation for changes should carefully weigh the organizational costs involved.
There are several unique aspects to the grading system that will be employed for this course. Your grade will consist of four components a group case write up, a group project, and a final exam. The relative weighting of these components are as follows:

1 Case write-up to be done on a group basis       20%
2 Case write-up done individually                         40%
1 Exam - Case write-up                                         40%

Problem Sets
On the day before any scheduled lecture (non-case days) I will provide a problem set that has been selected to help you apply the theoretical material covered under the relevant topic. To make our time in class more productive, I encourage you to read the assigned materials and sketch out solutions to the problems prior to the start of each class.
Case Write-up
Case write-ups (whether they be individual or by group) are to be maximum of four pages of text (typed, double spaced, 12 point "Times" font, 1 inch/2.5 cm margins) plus exhibits.

Your write-ups should be a comprehensive analysis of the case. It is not sufficient to simply answer the questions assigned for the class discussion for that day. Indeed, you should treat those questions merely as a guide to get you started on analyzing the case. You have not completed a case analysis until you are prepared to make a well-reasoned managerial recommendation supported with balanced arguments identifying the advantages and disadvantages of that recommendation.

Please bear in mind that the write-up should illustrate your reasoning, defend it with proof and backup material, and present and support your conclusions and recommendations. You should assume that the reader is familiar with the facts in the case. It may be helpful to think of an executive who is very busy and is not likely to spend a lot of time trying to decipher your report. Use of visual cues and format to emphasize your main points will increase their impact. 

If you attach exhibits to your write-up, refer to those exhibits in the text, explaining what you want the reader to take away from any given exhibit.

Your case write-up should be submitted at the start of class on the date that case will be discussed. Because the case will be discussed in detail in class, no assignments will be accepted after the start of the class.

There will be a final exam in the course. The final exam is cumulative and is designed to be a test of your comprehension of the technical and conceptual material discussed in the classes. The exam will be an open book open notes exam, that will be similar to many of the cases covered in class. The best way to prepare for the exam is to prepare carefully for each of the classes which precedes it. If you do that, then you will need to do little studying immediately prior to the exam. Additional details regarding the timing of the exam will be provided during the first week of classes.
In the Classroom
My expectation is that you will come to the class having already thought through and analyzed the assigned problems and cases. This way, we can devote the bulk of the class time to thinking about and responding to each other's analyses of the problems and cases and only the necessary minimum to getting the facts out.

I encourage active student participation in class. I should point out that most students typically tend to under-estimate - rather than over-estimate - the worth of what they have to say. Thus, if you are ever in doubt, I would encourage you to speak up instead of staying quiet.

The vast majority of managers' interactions with others are oral. Managers generally spend very little time reading, and even less time writing reports. The classroom should be considered a laboratory in which you can test your ability to convince your peers of the validity of your approach. Some people learn more by listening to others than they do by engaging in discussions themselves. Thus, while it is essential for the success of this course that we have excellent class discussions, it is not necessary that everybody actively participate all the time.

I hope that you will be highly energized the night before class when you are preparing for the cases and lectures, and relaxed during class. In class discussions we will be hard on ideas, but soft on people. My past experience suggests that if you spend several hours preparing and the class environment is intellectually vibrant, but not intimidating, you will want to participate. Please note that there is no need to contribute in every class. Some of the best contributors have been those who participated in only a handful of sessions. Their contributions, however, were truly insightful and persuasive. The issue is one of quality not quantity or frequency.

Most class sessions with an assigned case will begin with one student being asked to take 5 minutes to provide an analysis of the case. An effective lead-off can do a great deal to enhance class discussion. It sets the tone and quality level and encourages the class to probe more deeply into the issues of the case. After the individual lead-off presentation, the discussion will be opened to the remainder of the group. Others may choose to build on the lead-off discussion, to present a significantly different alternative, or focus sharply on one or more issues which seem to have been developed inadequately or perhaps overlooked.

My role in the class is to help facilitate discussion. In part, I serve as a recording secretary, clarifier, and intensive questioner in order to help you present and develop your ideas. I manage the class process to ensure that the class achieves an understanding of the case situation. Clearly, there is no single correct solution to any of these problems. There are, however, a number of wrong solutions. There are also solutions which are inadequately supported with analysis, and there are solutions and analyses which are ineffective because they are not presented in an orderly and persuasive fashion. We should work together to see to it that each class session is a lively, stimulating, and intellectually rewarding venture in group learning. We are individually and collectively responsible for achieving that end.

Each case has its own integrity and, thus, it stands on its own. You may draw on personal experiences if you believe they are substantive, insightful, and generalizable. Generally, we are not concerned with what was the actual outcome of the case. Such an approach would imply that there was a "right answer." The outcome of a situation may or may not reflect a good solution. In those instances where there was a particularly interesting outcome, it will be shared with the class.

Lecture Slides, Problem Solutions and Other Handouts

I will distribute lecture slides at the beginning of each class and homework solutions at the end of each class.


Abbreviated Schedule

  LEC #       TOPICS       READINGS*       CASES  
  1       Introduction and Case Discussion       Chapter 1          
  2       The Nature of Costs       Chapter 2       Practice Case: Barton, Thomas L., William G. Shenkir and Brian C. Marinas. Instructional Case - Main Line vs. Basinger: A Case in Relevant Costs and Incremental Analysis. Issues in Accounting Education. Sarasota: Spring 1996. Vol. 11, Iss. 1, pp 163, 2 pgs.  
  3       Economics of Organizations       Chapter 4          
  4       Performance Measurement       Chapter 5          
  5       Performance Measurement               Practice Case: Bruns, Jr., William J. and Roger Atherton. Western Chemical Corp.: Divisional Performance Measurement (A). Harvard Business School Case No. 9-196-079. Boston: Harvard Business School, 1999.  
  6       Balanced Scorecard and EVA Articles       Packet          
  7       Budgets and Budgeting       Chapter 6          
  8       Cost Allocation      

Chapter 7
Chapter 8

  9       Cost Allocation      

Chapter 7
Chapter 8

  10       Absorption Cost Systems      

Chapter 9
Chapter 10
Chapter 11

  11       Absorption Cost Systems      

Chapter 9
Chapter 10
Chapter 11

      Case 1: Cooper, Robin and Patricia J. Bost. Bridgeton Industries: Automotive Component & Fabrication Plant. Harvard Business School Case No. 9-190-085. Boston: Harvard Business School, 1993.  
  12       Standard Costs      

Chapter 12
Chapter 13

  13       Variance Analysis      

Chapter 12
Chapter 13

      Case 2: Merchant, Kenneth A. and Lourdes Ferreira. Scovill, Inc.: NuTone Housing Group. Harvard Business School Case No. 9-186-136. Boston: Harvard Business School, 1993.  
  14       ABC and Target Costing               Case 3: Wruck, Karen H. and Robin Cooper. Siemens Electric Motor Works. Harvard Business School Case No. 9-190-052. Boston: Harvard Business School, 1989.  
  15       Costing Problems               Case 4: Cooper, Robin and Dagmar Bottenbruch. Mueller-Lehmkuhl GmbH. Harvard Business School Case No. 9-187-048. Boston: Harvard Business School, 1990.  
  16       Costing Problems               Case 5: Bruns, Jr., William J. Destin Brass Products Co. Harvard Business School Case No. 9-190-089. Boston: Harvard Business School, 1997.  
  17       Management Accounting and the Changing Environment       Chapter 14       Case 6: Kaplan, Robert A. Kanthal (A). Harvard Business School Case No. 9-190-002. Boston: Harvard Business School, 2001.  
  18       Summary and Review                  
          Final Exam as scheduled                  

*  Skip all chapter appendices.
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