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Accounting 5351.001, Strategic Cost Management
Spring 2011, M 7:00-9:30 p.m., CI-108
Instructor:
Office:
Phone:
Email:
Office Hours:
Dr. Awni Zebda
365 OCNR
361-825-6029
awni.zebda@tamucc.edu
M/W 12:30 – 3:30 pm; or by appointment
Text: No text is required.
Course Description: A conceptual approach to the use of cost accounting information to
support decision-makers as they develop, communicate, implement, evaluate and modify
organizational strategy. The linkage between cost management and strategy is facilitated by
examining such tools as: cost driver, value chain, and organizational design analyses.
Quantitative models used in decision making will be examined and evaluated. The behavioral
aspects of using cost information in decision making are discussed. In the course, articles from
the accounting (and related) literature will be used.
Learning Objectives:
By the end of this course, the student will be able to:
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discuss and use mathematical decision models and theories in solving accounting
decision problems
examine the behavioral implications of accounting information and the behavioral effect
of uncertainty and ambiguity on accounting decision making
compare methods of evaluating and validating accounting decision models and
information systems
discuss activity-based costing as an alternative to traditional costing
discuss the concepts, procedures, and behavioral implications of cost allocation
examine and use different transfer pricing systems in performance evaluation
discuss the limitations of different performance measures
discuss the use of balanced scorecard in performance evaluation
examine the cost accounting literature and research
Prerequisites: Accounting foundation courses or their equivalent. Students must be familiar
with basic cost accounting concepts. Those with a somewhat vague recollection of these
concepts are advised to see Horngren, Datar, Foster, Rajan, and Ittner Cost Accounting, 13th ed.
(or any introductory cost accounting text) as we cover them in class.
Class Format: The instructor will introduce major concepts of each topic. Related readings
(cases) will be assigned to students for presentation. Each presenter is to submit to the class a
detailed outline or summary of the topic (case) to be presented. The presentation should first
encompass a general introduction and explanation of the underlying concept or technique. This
should be followed by an in-depth analysis of the article (case) required in the area.
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Attendance Policy: Students are held responsible for class attendance and are advised that
excessive absences may adversely affect their grades.
Evaluation Policy: Final grades are determined based on total points accumulated as follows:
Exam I
100
Participation/Presentation of papers and cases
100
Exam II (comprehensive)
100
300
The instructor reserves the right to amend or change this syllabus during the semester. Last day
to drop a class with an automatic grade of W is April 1.
Student Code of Ethics:
This course, and all other courses offered by the College of Business (COB), requires all of its
students to abide by the COB Student Code of Ethics (available online at www.cob.tamucc.edu).
Provisions and stipulations in the code are applicable to all students taking College of Business
courses regardless of whether or not they are pursuing a degree awarded by the COB.
Americans With Disabilities Act Compliance:
The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that provides
comprehensive civil rights protection for persons with disabilities. Among other things, this
legislation requires that all students with disabilities be guaranteed a learning environment that
provides for reasonable accommodation of their disabilities. If you believe you have a disability
requiring an accommodation, please contact the Disability Services Office at (361) 825-5816 or
visit the office in Driftwood 101. If you are a returning veteran and are experiencing cognitive
and/or physical access issues in the classroom or on campus, please contact the Disability
Services office for assistance.
Dropping Class:
I hope that you never find it necessary to drop this or any other class. However, events can
sometimes occur that make dropping a course necessary or wise. Please consult with me before
you decide to drop to be sure it is the best thing to do. Should dropping the course be the best
course of action, you must initiate the process to drop the course by going to the Student Services
Center and filling out a course drop form. Just stopping attendance and participation WILL NOT
automatically result in your being dropped from the class. April 1, 2011 is the last day to drop a
class with an automatic grade of “W” this term.
Grade Appeals:
As stated in University Rule 13.02.99.C2, Student Grade Appeals, a student who believes that he
or she has not been held to appropriate academic standards as outlined in the class syllabus,
equitable evaluation procedures, or appropriate grading, may appeal the final grade given in the
course. The burden of proof is upon the student to demonstrate the appropriateness of the
appeal. A student with a complaint about a grade is encouraged to first discuss the matter with
the instructor. For complete details, including the responsibilities of the parties involved in the
process and the number of days allowed for completing the steps in the process, see University
Rule 13.02.99.C2, Student Grade Appeals, and University Procedure 13.02.99.C2.01, Student
Grade Appeal Procedures. These documents are accessible through the University Rules Web
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site at http://www.tamucc.edu/provost/university_rules/index.html. For assistance and/or
guidance in the grade appeal process, students may contact the Office of Student Affairs.
Tentative Course Outline
Week
Topic
Assigned Papers
1.
Cost-Volume-Profit Models
1,2,3
2.
Decision Making Under Uncertainty/Value of Information
4,5
3.
Cost Estimation Models
6,7,8
4.
Performance Evaluation Models: Cost Allocation
9,10
5.
Performance Evaluation Models: Transfer Pricing
11,12,13
6.
Performance Evaluation Models: Investment Centers
14,15
Exam I: March 21
7.
Cost Variance Investigation Models
16,17,18
8.
Agency Theory and Incentives Contracts
9.
Recent Developments I
19,20
10.
Recent Developments II
21,22
11.
Behavioral Aspects of Management Accounting I
23,24
12.
Behavioral Aspects of Management Accounting II
25,26
13.
Cases and Presentations
27
14.
Cases and Presentations
28
Exam II: May 11
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Tentative Reading Assignments
1.
Cao, Toyable, Abe, and Akazawa, "Profit and Loss Analysis for an Intensive Care Unit (ICU) in Japan: A
Tool for Stategic Management," BMC Health Services Research, Vol. 6, 1 (2006), pp. 1-7.
2.
Atiase, Bamber, Bamber, and McCartney, "Linear Versus Nonlinear Cost-Volume-Profit Analysis: A
Pedagogical Note," Issues in Accounting Education, Vol. 4 (Fall 1989), pp. 438-453.
3.
Maloo, "A Practical Approach for Incorporating Uncertainty in the Conventional Cost-Volume-Profit
Analysis," Akron Business and Economic Review, Vol. 22, 4 (1991), pp. 29-40.
4.
Newman, "Prospect Theory: Implications for Information Evaluation," Accounting, Organizations and
Society, Vol. 5 (1980), pp. 217-230.
5.
Ghosh and Ray, "Risk Attitude, Ambiguity Intolerance and Decision Making: An Exploratory
Investigation," Decision Sciences, Vol. 23 (1992), pp. 431-444.
6.
Layer, Brinke, Houten, Kals, and Hassis, "Recent and Future Trends in Cost Estimation," International
Journal of Computer Integrated Manufacturing, Vol. 15, 6 (2002), pp. 499-510.
7.
Bode, "Neural Networks for Cost Estimation: Simulation and Pilot Application," International Journal of
Production Research, Vol. 38, 6 (2000), pp. 1231-1254.
8.
Pisano, Bohmer, and Edmondson, "Organizational Differences in Rates of Learning: Evidence from the
Adoption of Minimally Invasive Cardiac Surgery," Management Science, Vol. 47, 6 (2001), pp. 752-768.
9.
Krumweide, "The Implementation Stages of Activity-Based Costing and the Impact of Contextual and
Organizational Factors," Journal of Management Accounting Research, Vol. 10, (1998), pp. 239-277.
10. Cohn, Venieris, and Kaimenaki, "ABC: Adopters, Supporters, Deniers and Unawares," Managerial
Auditing Journal, Vol. 20, 8/9 (2005), pp. 981-1000.
11. Shuster, Standl, Reissmann, Kuntz, and Esch, "Reduction of Anesthesia Process Times After the
Introduction of an Internal Transfer Pricing System for Anesthesia Services," Economics, Education, and
Health Systems Research, Vol. 101 (2005), pp. 187-194.
12. Ghosh, “Organization Design and Manipulative Behavior: Evidence from a Negotiated Transfer Pricing
Experiment,” Behavioral Research In Accounting, Vol. 12 (2000), pp. 1-30.
13. Mahafdi, “The Ethics of International Transfer Pricing,” Journal of Business Ethics, Vol. 28 (2000), pp.
365-381.
14. Waal, "The Role of Behavioral Factors and National Cultures in Creating Effective Performance
Management Systems," Systemic Practice and Action Research, Vol. 19, 1 (2006), pp. 61-79.
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15. Lau and Sholihin, "Financial and Nonfinancial Performance Measures: How Do They Affect Job
Satisfaction?," The British Accounting Review, Vol. 37, (2005), pp. 389-413.
16. Lipe, "Analyzing the Variance Investigation Decision: The Effects of Outcomes, Mental Accounting, and
Framing," Accounting Review, Vol. 68, (1993), pp. 748-764.
17. Ho, J., Keller, L., and Keltyka, P., "Managers’ Variance Investigation Decision: An Experimental
Examination of Probabilistic and Outcome Ambiguity," Journal of Behavioral Decision Making, Vol. 14,
(2001), pp. 257-278.
18. Gerdin, "Activity-Based Variance Analysis: New Tools for Cost Management," Cost Management, 18, 5
(2004), pp. 38-48.
19. Arnold and de Lange, "Enron: An Examination of Agency Problems," Critical Perspectives on Accounting,
Vol. 15 (2004), pp. 751-765.
20. Kao, Chiou, and Chen, "The Agency Problems, Firm Performance and Monitoring Mechanisms: The
evidence from Collateralized Shares in Twain," Corporate Governance, Vol. 12, 3 (2004), pp. 389-402.
21. Assiri, Zairi, and Eid, “How to Profit from the Balanced Scorecard: An Implementation Roadmap,”
Industrial Management & Data Systems, Vol. 106, 7 (2006), pp. 937-952.
22. Davis and Albright, “An Investigation of the Effect of Balanced Scorecard Implementation on Financial
Performance,” Management Accounting Research, Vol. 15 (2004), pp. 135-153.
23. Boyd and Gupta, “Constraints Management: What is the Theory?,” International Journal of Operations &
Production Management, Vol. 24, 4 (2004), pp. 350-371.
24. Shank and Govindarajan, "Strategic Cost Management: The Value Chain Perspective," Journal of
Management Accounting Research (Fall 1992), pp. 179-197.
25. Murray, "The Performance Effect of Participative Budgeting: An Integration of Intervening and
Moderating Variables," Behavioral Research In Accounting, Vol. 2 (1990), pp. 104-123.
26. Nouri and Parker, "The Effect of Organizational Commitment on the Relation between Budgetary
Participation and Budgetary Slack," Behavioral Research In Accounting, Vol. 8 (1996), pp. 74-90.
27. Ruchala, "The Influence of Budget Goal Attainment on Risk Attitudes and Escalation," Behavioral
Research In Accounting, Vol. 11 (1999), pp. 161-191.
28. Harrison, Chow, Wu, and Harrell, "A Cross-Cultural Investigation of Managers’ Project Evaluation
Decisions," Behavioral Research In Accounting, Vol. 11 (1999), pp. 143-160.