Central Focus and Learning Objectives
This chapter provides a comprehensive overview of the field of management accounting.
After studying this chapter, students should be able to:
1. Understand and exploit the differences between management accounting information and financial accounting information.
2. Understand how the organization’s strategy drives the need for different types of management accounting information.
3. Recognize the type of management accounting information that will be useful in a given organization.
4. Understand how financial accounting information provides an overall measure of an organization’s performance.
5. Realize how management accountants can develop nonfinancial information that can predict and explain financial results.
6. Appreciate the behavioral and ethical issues faced by management accountants.
Central Focus and Learning Objectives
This chapter outlines the fundamentals of cost management concepts, cost classifications, and cost behavior. After studying this chapter, students should be able to:
1. Explain why the appropriate derivation of a cost depends on how the cost will be used
State the difference between flexible costs and capacity-related costs and why the difference is important.
2. Use cost behavior information to compute the organization’s break even sales level.
3. Show why the concept of opportunity cost is used in short-run decision-making and how opportunity cost relates to conventional accounting costs.
4. Explain why management accountants have developed the notions of long-run and short-run costs and how these different costs are used in decision making.
5. Explain the modern approach to cost classifications based on activity levels.
6. Explain the notion of life cycle cost and how that idea is used in new product and product purchasing decisions.
Central Focus and Learning Objectives
This chapter presents fundamental concepts relating to basic product costing systems. After studying this chapter, students should be able to:
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1. Understand job order costing systems.
2. Understand how using job bid sheets is effective for estimating product costs in a job order costing system.
3. Use cost driver rates to apply support activity costs to products.
4. Discuss why using cost systems with multiple cost driver rates gives different estimates of product costs than cost systems with a single rate.
5. Evaluate a cost system to understand whether it is likely to distort product costs, explain the importance of recording actual costs, and compare them with estimated costs.
6. Appreciate the importance of conversion costs and the measurement of costs in multistage continuous-processing industries.
7. Understand the significance of differences between job order costing and multistage-process costing systems.
8. Understand the two-stage allocation process and service department allocation methods.
Central Focus and Learning Objectives
This chapter presents fundamental concepts relating to activity-based cost systems. After studying this chapter, students should be able to:
1. Understand how traditional cost systems, using only unit level drivers, distort product and customer costs.
2. Describe why companies producing a more varied and complex mix of products have higher costs than companies producing only a narrow range of products.
3. Design an activity-based cost system by linking resource costs to the activities performed, and then to cost objects, such as products and customers.
4. Appreciate the role for choosing appropriate activity cost drivers when tracing activity costs to products and customers.
5. Use the information from a well-designed activity-based cost system to improve operations and make better decisions about products and customers.
6. Understand the importance of measuring the practical capacity of resources and the cost of unused capacity
7. Assign marketing, distribution, and selling expenses to customers
8. Analyze and manage customer profitability.
9. Appreciate the role for activity-based cost systems for service companies.
10. Discuss the barriers for implementing activity-based cost systems and how these might be overcome.
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Central Focus and Learning Objectives
This chapter looks at many factors related to process and activity decisions. After studying this chapter, students should be able to:
1.Explain why sunk costs are not relevant costs.
2. Analyze make or buy decisions.
3. Demonstrate the influence of qualitative factors in making decisions.
4. Compare the different types of facilities layouts.
5. Explain the theory of constraints.
6. Demonstrate the value of just-in-time manufacturing systems.
7. Describe the concept of the cost of quality.
8. Calculate the cost savings resulting from reductions in inventories, reduction in production cycle time, production yield improvements, and reductions in rework and defect rates.
Central Focus and Learning Objectives
This chapter introduces a number of issues relating to pricing and product mix decisions.
After studying this chapter, students should be able to:
1. Show how a firm chooses its product mix in the short term.
2. Explain the way a firm adjusts its prices in the short term depending on whether capacity is limited.
3. Discuss how a firm determines a long-term benchmark price to guide its pricing strategy.
4. Evaluate the long-term probability of products and market segments
Central Focus and Learning Objectives
This chapter presents the basic concepts underlying management accounting and control systems. After studying this chapter, students should be able to:
1. Apply the concept of control.
2. Identify the characteristics of well-designed management accounting and control systems
(MACS).
3. Describe the total-life-cycle costing approach to managing product costs over the value chain.
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4. Explain target costing.
5. Explain Kaizen costing.
6. Identify environmental costing issues.
7. Apply the process of benchmarking the best practices of other organizations
Central Focus and Learning Objectives
This chapter emphasizes many of the behavioral issues involved with MACS system design and change management. After studying this chapter students should be able to:
1. Discuss the four key behavioral considerations in MACS design.
2. Explain the human resources model of management.
3. Discuss task and results control methods.
4. Apply the ethical control framework to decisions.
5. Understand the balanced scorecard and its applications.
6. Discuss the links between different incentive systems and performance.
Central Focus and Learning Objectives
After studying this chapter students should be able to:
1. Understand why managers need a Balanced Scorecard to measure and manage intangible assets for value creation.
2. Appreciate the role for strategy maps to visualize the cause-and-effect linkages between outcomes in the financial and customer perspectives and the drivers of those outcomes: the value proposition, critical internal processes, and human, information, and organization capital.
3. Translate mission, vision, and strategy statements into a Balanced Scorecard.
4. Understand how to develop a coherent set of Balanced Scorecard objectives, measures, targets, and initiatives.
5. Explain why key performance indicator scorecards are not necessarily Balanced
Scorecards.
6. Design a Balanced Scorecard for nonprofit and public sector organizations.
7. Describe how to use the Balanced Scorecard to implement strategy and explain the five principles that assist the transition to a strategy-focused organization.
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8. Recognize common pitfalls in implementing the Balanced Scorecard and suggest ways to avoid the pitfalls.
Central Focus and Learning Objectives
This chapter focuses on many types and aspects of budgeting. After studying this chapter students should be able to:
1. Identify the primary role of budgets and budgeting in organizations.
2. Demonstrate the importance of each element of the budgeting process.
3. Explain the different types of operating budgets and financial budgets and the relationships among them.
4. Describe the way organizations use and interpret budgets.
5. Know how to use what-if and sensitivity analysis — budgeting tools used by budget planners.
6. Compute and interpret common variances used by management accountants.
7. Identify the role of budgets in service and not-for-profit organizations.
8. Recognize the behavioral effects of budgeting on an organization’s employees
Central Focus and Learning Objectives
This chapter is devoted to a discussion of the decision making process for investment in capital assets. After studying this chapter students should be able to:
1. Recognize the nature and importance of long-term (capital) assets.
2. Understand why organizations control long-lived assets and short-term assets differently.
3. Use the basic tools and concepts of financial analysis: investment, return on investment, future value, present value, annuities, and required rate of return.
4. Use capital budgeting to evaluate investment proposals and recognize how the concepts of payback, accounting rate of return, net present value, internal rate of return, and economic value added relate to investing in long term assets.
5. Incorporate the effect of taxes and inflation in evaluating investments in long term assets.
6. Use what-if, sensitivity, and basic options analyses to deal with decision making and uncertainty issues that arise in evaluating investments in long term assets.
7. Recognize what, and how to include, strategic considerations in long term investment decisions.
8. Use post-implementation audits to evaluate past long term investment decisions.
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Central Focus and Learning Objectives
Chapter 12 covers the fundamental concepts of responsibility accounting and financial control. After studying this chapter students should be able to:
1.Understand the nature and scope of financial control and its important role both inside and outside organizations.
2. Understand why organizations decentralize decision-making responsibility, the control and motivation issues that arise from this choice, and how organizations approach these control and motivation issues.
3. Understand why organizations use responsibility centers, when each type of responsibility center is appropriate in a given setting, the limitations of the responsibility center approach to evaluating performance, and what performance measures senior management uses to evaluate responsibility center performance.
4. Be able to design and interpret appropriate performance measures to evaluate the performance for each type of responsibility center.
5. Understand why organizations use transfer-prices and the types of transfer prices that organizations use.
6. Be able to determine and compute the appropriate transfer price in a particular setting.
7. Understand the nature and scope of return on investment and economic value added approaches to evaluating economic performance and be able to compute return on investment and economic value added measures.
8. Understand the nature, scope, and limitations of financial ratio analysis and be able to compute the financial ratios to evaluate various elements of organization performance and situation.
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