Michael G. Foster School of Business
University of Washington
Accounting 460 A
Advanced Cost Accounting
Spring 2010
Room BLM 205; M & W, 1:30—2:50 pm
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Instructor:
Larry L. DuCharme, Ph.D.
Office: M-259
Office hours: M & W (3:00 - 4:00 pm) and by mutual arrangement.
Office phone: 543-8194 / 543-4368; Home phone: (425) 640-3025;
e-mail: lducharm@u.washington.edu
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TEXTs: S. Mark Young, Readings in Management Accounting, Prentice Hall, 5d edition, 2007 (referred to below as
M.Y.Readings).
John K. Shank, Cases in Cost Management: A Strategic Emphasis, Thomson South-Western, 3d edition
(referred to below as J.S.Cases)
Class Schedule:
DATE
03/29 Introduction to the course;
Strategic Cost Analysis
Prepare: Baldwin Bicycle Company (J.S.Cases) for Wednesday
This case should give you an example of the kind of analysis you need to do with cases.
03/31
Prepare: Baldwin Bicycle Company for in-class discussion today.
Read: 1.1 “Be Data Literate…” in M.Y.Readings
1.2 “Cost/Management Accounting.…” in M.Y.Readings
1.3 “Management Accounting in the Era of….” in M.Y.Readings
I will call on you to answer questions about the readings.
04/05
ABC/ABM
Read: 4.1 “Is ABC Suitable for Your Company?” In M.Y. Readings
4.2 “Measuring and Managing Customer Profitability” In M.Y.Readings
4.3 “ABM Lifts Bank’s Bottom Line” In M.Y.Readings
04/07 Prepare: Morrissey Forgings, Inc. [J.S.Cases, pp. 197-200]
Formulate an action plan for the company. You must go further than just ABC!
The assignment questions set up a business perspective for the case situation, looking at the recent past, the
present, and the near future.
Question 7a: Estimate what income and ROA would be if Tim implemented your advice…so what now?
04/12 ABC and Value Chain Analysis: Strategic Decisions
Read: “A Note on Value Chain Analysis” [J.S. Cases, pg. 112-123]
2.1 “Strategic Cost Management and the Value Chain” In M.Y.Readings
6.3 “Distribution Channel Profitability” In M.Y.Readings
04/14 Prepare: Chalice Wines [J.S.Cases]
This is a hard but very fun case. The repeal of prohibition granted states the power to separate
manufacturing., distribution, and retailing of alcoholic beverages (so called 3-tier laws). There has been
recent activity in this state related to mfg. and sale of wines. What is the issue?
04/19 Target Cost
Read: 6.4 “Smart Pricing.” In M.Y.Readings
7.1 “Control Tomorrow’s Costs through Today’s Designs.” In M.Y.Readings
7.2 “The use of Target Costing….” In M.Y.Readings
04/21 Prepare: Montclair--The Deep Color Grades [J.S.Cases]
Michael G. Foster School of Business
University of Washington
04/26 Budgeting, variance analysis
Review variance analysis from your Cost Accounting course.
Read: 10.2 “Budgeting Gamemanship” In M.Y.readings
10.3 “Budgeting Made Easy” In M.Y.readings
10.4 “Corporate Budgeting….” In M.Y.readings
10.5 “Beyond Budgeting” In M.Y.readings
04/28 Prepare and hand in: Boston Creamery [JSCASES, p. 59-68] ***This is your first written assignment.***
05/03 Transfer Pricing
Read: “Control with Fairness in Transfer Pricing” [HBR, Nov/Dec 1983, No.83606]
12.1 “Transfer Pricing with ABC.” In M.Y.Readings
05/05 Prepare: Birch Paper Company [Harvard Case # 9-158-001]
05/10 Measuring and Driving Performance
Read: 9.1 “Using the Balanced Scorecard as….” In M.Y.Readings
9.2 “Transforming the….I” In M.Y.Readings
9.3 “Transforming the….II” In M.Y.Readings
05/12 Prepare: Citibank: Performance Evaluation [Harvard Case #9-198-048]
05/17 Compensation System Design
Read: 8.2 “Why Incentive Plans Cannot Work.” In M.Y.Readings
8.3 “Six Dangerous Myths About Pay” In M.Y.Readings
8.5 “Pay Without Performance:…….” In M.Y. Readings
05/19 Prepare: Jones Ironworks, Inc. [J.S.Cases]
05/24 Strategic Risk-Control Problems
Read: “…The 7-S Model.” [Harvard #497045]
“How Risky is Your Company?” [HBR, May-June 1999; reprint #99311 at web site]
Prepare: Kidder Peabody [Harvard Case #9-197-038]
05/26 Finish Kidder Peabody case
05/31 Study day (Memorial Day)
06/02 Strategic Positioning
Prepare: Levi’s Personal Pair Jeans (A) [J.S.Cases] Research current info. on Levi’s.
Final reading: “Transforming Cost Management into a Strategic Weapon” This article summarizes and
integrates many of the important themes in Management Accounting. It will be handed out before class.
06/07 Final Exam.: Wellington Chemicals [J.S.Cases] (2:30 – 4:20 pm)
***This is your second and final written case analysis***Check my web site for more details.
Read: 3.3 “The Outsourcing Decision,” in M.Y. Readings
You might also find it helpful to read, Venkatesan, R., “Sourcing: To Make or Not to Make,” Harvard
Business Review, Nov.-Dec., 1992, pp. 98-107. No. 92610 at the Harvard website.
Course materials: M.Y.Readings is available in the University Bookstore.
The Harvard cases and readings are available on the web at:
http://cb.hbsp.harvard.edu/cb/access/5819035
Refer to the managerial text that you used in Acctg.225 or Acctg. 311
I will hand out some additional readings in advance of class sessions.
I will also post case questions on my web site several days prior to the class
discussion in which we will discuss the case.
I will frequently leave messages for students on my web page:
http://faculty.washington.edu/lducharm/classes460.htm
Accounting 460
Spring 2010
page 3
Course Overview
This course allows students to reinforce their understanding of and their ability to use some key
tools and thinking patterns of management accounting. The focus is on maximization of the
overall performance of an organization (both for- and not-for-profit).
A manager must not only master techniques (tools), he/she must also be able to evaluate the
relevance of the tools/approaches and know when to use them appropriately for decision making.
The purpose of management accounting (an essential part of the managerial information system) is
to support the value creation process and the growth of the organization. Many of the cases in this
course challenge students to diagnose a whole situation, to lend order to a somewhat unstructured
picture, and then apply useful analytical frameworks to deal with the issues. Answering the
questions that arise in the cases should go beyond the application of techniques and help students
work through the whole connection between raw data, data analysis, and management’s particular
information needs.
Case Method
“Analyzing cases is really a process of asking and answering questions. In studying cases, the art
and skill of asking the right questions is as important as being able to answer them. Some of the
case questions will be obvious, but for most questions there will be more questions to explore than
were at first apparent. You need to make a list of questions for yourself. After you have answered
these questions, you might ask: What things might be done to improve the enterprise? What
seems most promising? And so on. The process is like peeling an onion to get at the heart of the
matter. This will help you think about the management part of management accounting.”—William
Rotch
A case typically contains several issues. Some issues are evident, but most of the time you will
have to identify the key issues. You have to identify the issues before getting into your tool bag of
techniques for analysis. Cases provide specific context in which to answer some interesting
questions. Data available for formulating a solution to a complex situation are never orderly and
systematically presented. In the real world you have billions of pieces of information available
and at times are missing some critical information (information overload with missing critical
pieces). Missing information is especially present in cases. It is your responsibility to identify the
missing information and research for the info or make some reasonable assumptions to make up
for missing information.
No case has a single solution. The important part is that all students have a rigorous, logical, and
well articulated method of analysis. For a manager, the decision (even if prepared with a group of
peers, partners or subordinates) is a personal commitment.
One approach to preparing for a case discussion:
First, read the case quickly completely through—What is this case all about?
Carefully read the case with underlining and note taking; make some notations/computations.
Develop your own view about the case.
Discuss your ideas with your small study group; purpose is NOT for a group solution.
The final discussion of a case takes place in the scheduled class session, where, with the assistance
of the instructor, the collective views and opinions and judgments of everyone in the class are
explored. It is the goal of the class session to identify strong or weak analysis NOT to say what
(or who) is right or wrong. Remember, what actually happened or what one person thought ought
to be done is of no great significance; what is important is the analytical process that you followed
as you developed your own answers to the case!
Accounting 460
Spring 2010
page 4
Course Grade
Your final grade will be based on the following weights:
% of grade
First-case analysis
35
Class participation
30
Final-case analysis
35
100%
Class Procedures
The learning process in this course relies on the active participation and contribution of everyone.
Raising questions or suggesting answers are equally important. Listening to others and building
on prior observations are key to a constructive discussion in the class room. I want you to
challenge ideas and not people--behave professionally at all times.
In order to contribute to the class, you need to be present. Please e-mail me about any planned
absence from class. You are expected to submit any work done in class that you missed (by email or hardcopy, before or after missed class, individual typewritten analysis of the assignment
for that session—problems, case analysis, summary of readings). Failure to submit missed class
material may lead to reduction in your “individual participation” score.
Academic Honesty
As a student in Accounting 460 you acknowledge that you are a member of a learning community
in the Foster School of Business that is committed to the highest academic standards. As a
member of this community, you agree to uphold the fundamental standards of honesty, respect,
and integrity, and you accept the responsibility to encourage others to adhere to these standards.
Office Hours / Meeting Times
If you have questions about anything in the course, career, other concerns, or just want to chat,
please stop by my office during office hours (M & W 3:00-4:00 pm) or contact me to arrange a
meeting. I am around campus many hours each week. If my office door is open, then I am
available to see you. Above, I have included my home phone number if you need to reach me and
are unable to get me at my office.
“Procrastination is like a credit card: it’s a lot of fun until you get the bill.”—Christopher Parker
Good luck--Larry
ver.: March 2010