UNIVERSITY OF ROCHESTER
WILLIAM E. SIMON GRADUATE SCHOOL OF
BUSINESS ADMINISTRATION
ACC 410
Accounting for Decision & Control
Winter 2006
Professor Jerold L. Zimmerman
COURSE OVERVIEW
Note: Please no laptops in class!
ACC 410 focuses on how managers use their organization’s accounting systems to assist
them in making decisions and how these systems are used to control the actions of employees of the
firm.
Managerial and organizational economics provide the underlying framework for
understanding internal accounting systems. STR 401 and 403 supply most of the theoretical
foundations of ACC 410. The course is oriented towards training managers how to utilize their
internal accounting system, not towards training accountants in the design and operations of the
internal accounting system.
This course teaches you how to apply economics, coupled with the firm’s accounting system,
to make decisions and motivate people in organizations. A key objective of ACC 410 is to integrate
the material in the core courses and to apply what you have already learned in solving real business
problems. ACC 410 is not a course about cost accounting (journal entries, detailed calculations of
process costing, and alternative computational methods of variances). While many of these cost
accounting topics are described at a conceptual level, time limitations prevent a thorough treatment
of many of the more technical issues.
Most employers expect leading MBAs to have a high aptitude for understanding and
performing financial analyses, including cost analyses. Pricing decisions require cost analyses.
Marketing and sales requires providing detailed cost proposals to customers and thorough analyses
of own-company versus competitor cost structures. Investment bankers and consulting firms sell
their services to clients, in part on the ability of their personnel to do careful, comprehensive
financial and cost analyses. Takeovers and mergers require in-depth understanding of the target’s
and acquirer’s cost structures and any synergies.
ACC 410 provides you ample opportunities to develop your analytic, problem-solving skills.
But like most acquired skills, you can only read so much about how to do it. You must also do it.
Take any sport. Studying books about how to execute the sport is helpful, but the only way to learn
a sport is to practice it. Financial and cost analysis is the same. Besides reading the text, you must
practice doing financial analysis. This means working problems. Reading problems and then
reading the solution is like watching a sporting event. You might find the event entertaining, but
merely watching a soccer match unlikely improves your skills to play soccer. Spend time each day
working problems.
The purpose of ACC 410 is to make you a better manager, not to merely have you read
problems and solutions. Most of the problems will look easy once you have seen the solution.
Don’t read the solution until after you have thought about how you would solve the problem.
Reading problems and solutions cannot help you analyze the problems you will encounter in the
exams and in the business world.
Much of the information in ACC 410 builds upon key concepts covered in the first half of the
course. Accounting is not a difficult subject to learn if you keep up with the material. You will not
be able to apply the advanced concepts without investing time in learning the fundamentals. Perhaps
more so than other subjects, accounting is difficult to learn by cramming. If you do little work at the
beginning of the course, it is very likely that you will be hopelessly lost for the remainder of the
course.
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Winter 2006
COURSE REQUIREMENTS
The most important requirements for this course are a thorough preparation and analysis of
the assigned problems, reading material, and active participation in the classroom. Laptops are not
permitted for use in class. First, they are distracting to others. Second, they disrupt the free
interchange of ideas and class discussion. Class notes will be distributed in class and can be used for
note taking.
Grading
Your grade will consist of three components: six problem assignments, a midterm exam, and
a final exam. The relative weighting of these components are as follows:
6 Problem Assignments
Midterm
Final
Total
20%
30%
50%
100%
PROBLEM ASSIGNMENTS (20%)
The course syllabus lists two types of problems: “Assigned Problems” and “Additional
Problems.” Each student must submit six (6) of the nine (9) “Assigned Problems” sets during the
course. The six assignments are to be conducted individually, not by study team. These six problem
sets will be graded. No extra credit will be awarded for submitting additional problem sets.
You are free to choose which six of the ten assigned problem sets to hand in. I do not expect each
problem to be “correct,” only that you have made an intelligent and determined effort to address the
issues raised in the problem. The assigned problem sets will be graded as either an “S” or “S-”. An
S- will be awarded if the problem set is missing a problem or if a “Best Effort” was not made on
each problem. I expect that all students will come to class prepared to discuss the “Assigned
Problems” listed on the course syllabus. Problem assignments are due at the beginning of class on
the day the problems are listed on the syllabus. (Note: the first assignment for Monday, January 16
is due at the beginning of class on Monday, January 16.) Assignments received after class starts will
automatically be graded an S-. All problem assignments must be submitted in hard copy form.
Electronic and fax submissions will NOT be accepted. Problems on the Syllabus denoted
“Additional Problems” will not be discussed in class. These are problems you can work to enhance
your analytic skills and to prepare for the exams. Solutions to both “Assigned Problems” and
“Additional Problems” will be provided on the course website. A problem denoted "5-11" is in
chapter 5 of the text, problem 11. A problem denoted C4-2 is Case 4-2 in chapter 4.
Some of the assignments we will use have been used in the past. By registering for this
course you are agreeing not to use any materials, including solutions and lecture notes obtained,
directly or indirectly, from other individuals. Moreover, you are agreeing not to provide such
materials to other students in the future. Using and providing such material violates the Simon
School Honor Code and will be destructive to you and your colleagues’ learning process. (It is easy
to detect.) It is unlikely that you will be able to successfully complete the exams without preparing
the assigned material for the course. All assignments should be done individually. Sharing problem
solutions is a violation of the Honor Code.
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Winter 2006
EXAMS (MIDTERM – 30%, FINAL – 50%)
Both exams are cumulative and based on all material in the text, class and problem
assignments up to the date of the exam. The best way to prepare for the exam is to prepare carefully
for each of the classes that precede it.
Both midterm and final exams are closed book and closed notes. You will need a small
calculator for each exam. For the final exam (ONLY), you are allowed to bring one (double sided)
page (8.5 ×11) of notes.
Regrading Policy
If you have questions regarding the grading of your midterm or final, submit a memo (along
with the original of the exam) expressing your concerns. You should also indicate the number of
points you want to place “at risk” in the regrading process. I will review your memo and exam and
decide if the exam grade should be changed. If I agree with you, I will increase your grade by some
or all the number of points you put “at risk.” If I disagree with you, you lose the points “at risk.” Be
aware your ultimate exam grade could be lower, rather than unchanged or higher.
IN THE CLASSROOM
I will start each class by asking if there are any questions. This is an excellent opportunity
for us to spend five minutes resolving any confusion that arose in reading the chapter. Remember,
this course is designed to make you a better manager. If you don’t understand something, it is likely
that others in the class are also confused on the same topic. My expectation is that you will come to
class having 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.
I encourage active student participation in class. Most students typically tend to underestimate — rather than over-estimate — the worth of what they have to say. The vast majority of
managers’ interactions with others are oral. The classroom should be considered a laboratory in
which you can refine your communication skills. 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.
Class participation and attendance will be used in determining borderline grades.
COURSE MATERIALS
1.
2.
J. Zimmerman, Accounting for Decision Making and Control, 5th edition (McGrawHill/Irwin, 2006).
Lecture notes will be distributed in class, and will also be downloadable from the course web
site. Problem solutions, however, will only be available electronically from the web site.
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ADDITIONAL GUIDELINES
1.
2.
3.
4.
Attendance is important, and other activities, including job interviews, ought to be scheduled
so as not to conflict with class meetings.
Please be considerate of your colleagues and turn off your cell phone and do not use your
laptop.
Classes will begin and end on time. You should be in the classroom before the class starts.
Entering after class has begun is disruptive and disrespectful of your colleagues.
Do not leave before class is over. It likewise is disruptive.
CONTACT INFORMATION:
Jerold Zimmerman:
Assistant:
e-mail: jerry.zimmerman@simon.rochester.edu
Telephone: 585-275-3397
Office: Carol Simon 3-160D
Kathy Jones
e-mail: kathy.jones@simon.rochester.edu
Telephone: 585-275-8195
Office: Carol Simon 3-160P
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Syllabus
Date of
Additional
Lecture
Chapter
Assigned Problems/Cases
Problems
______________________________________________________________________________________
1/9 (½)
1. Introduction
1/16
2. Nature of Costs
2-11, 2-26, 2-28
2-30, 2-46
2-4, 2-16, 2-17, 2-23
2-24, 2-31
5-6, 5-8, 5-25
C5-3, C5-4
5-13, 5-15, 5-18
5-19, 5-20, 5-22, 5-27
4. Organizational Architecture
1/23
5. Divisional Performance
Evaluation
1/30
6. Budgeting
6-11, 6-15, 6-20
6-22, 6-29
6-13, 6-18
6-16, 6-26, 6-28
2/6
7. Cost Allocation: Theory
7-5, 7-11, 7-17
7-28, 7-30
7-3, 7-7
7-8, 7-18
2/13
Midterm Exam (Chapters 1, 2, 5-7)
8. Cost Allocation: Practices
8-7, 8-15, 8-30
8-27, 8-29
2/20
8. Cost Allocation Practices
9. Absorption Cost
Systems
8-3, 8-14
9-3, 9-20, 9-25, 9-29
8-23, 9-4, 9-5, 9-7
9-23, 9-30
2/27
10. Criticisms: Incentives to
Overproduce
11. Criticisms: Inaccurate
Product Costs
10-14, 10-16, 10-23
10-7, 10-15, 10-25
11-10, 11-14, 11-24
11-13, 11-17, 11-21
12. Standard Costs: Direct
Labor and Materials
13. Overhead & Marketing
Variances
12-5, 12-16, 12-25
12-10, 12-13, 12-18
13-3, 13-9, 13-14
13-6, 13-15
14. Management Accounting
in a Changing Environment
Course Review
14-6, 14-10, 14-11
14-1
3/6
3/13