AMIS 3300H — Honors Cost Accounting
Fall 2013 – Tuesday/Thursday 2:20-3:40 – SB 319
Professor Rick Young – 292-0889 – Office hours TBA
TA J. J. Erickson – Mason 125 – Mondays 12:20-2:30
Introduction
In this class we continue our study of accounting from a managerial perspective. Relative to AMIS 2300H, there
will be less emphasis on product costs and value and on individual decision making, and greater emphasis on
management planning and control. Once again, so that you can apply what you know to a dynamic economy, the
course will be taught from a conceptual standpoint. “Rules, recipes and handy guidelines on how to use accounting
are crutches for the less than well-prepared and responsible manager.” (Demski, ch. 1)
Honors Accounting
This is an Accounting Honors course. By now, you know what is expected of you.
Performance Evaluation
You will be evaluated based on class preparation, an in-class midterm examination, and a common final
examination. Please note the date and time of the final exam, as it departs from the University schedule. Plan your
break and work schedule around this date.
Class Preparation (40%)
Class preparation is important to discussion, and is encouraged by three activities that will be graded: class
participation, oral presentations, and written assignments.
Class participation
We will spend most of our class time working through numerical problems and, more important, discussing the
larger issues they are intended to illustrate. The problems are there more to provoke your thinking than to teach
you an accounting technique. No recipes for their solution will be provided. Your approach to class preparation
should not only include trying to come up with correct answers, but also thinking about the lessons that are being
illustrated. Both are important. I expect there to be vigorous class discussion fed by students’ oral “presentations”
(discussed below). I will do only a little formal lecturing. You earn 50% of the participation points for 100%
attendance. You earn up to 25% of the participation points by volunteering questions or comments that contribute
to the learning environment. Lack of attendance or negative “contributions” to the learning environment will
detract from your participation grade. Finally, a professional attitude towards the course is worth 25% of your
participation points. This includes being prepared, attentive, engaged, and on time.
Oral “presentations”
You will be placed in groups of 2 during the first week of class. Each day one or two groups will be called on at
random to talk for 10-15 minutes about a problem assigned for that day in class. The word “presentation” is in
quotes because a formal, polished presentation is neither expected nor even desired. What I want you to do is
talk about what you experienced while working out the problem, the main issues from the chapter being
illustrated, what you were able to do and what pitfalls you encountered, questions that occurred to you, etc. It is
NOT important, nor is it normally possible, that you complete the problem during the allotted 10-15 minutes, nor
even present the entire solution. The purpose is not to put you under pressure to work the entire problem out
correctly, but to stimulate classroom discussion.
Written assignments
Each group should turn in one hard copy of their solution (however incomplete) to that day’s problems at the start
of class. Use of spreadsheets is encouraged—on a few occasions they may actually be required. The collected
solutions will be graded primarily for effort and completeness. In addition to impeding your learning, “splitting
up the work” is considered a breach of ethics in accordance with the Honors Code.
Examinations (60%)
The midterm and in-class examis are individual, closed-book, and closed-note examinations. There is also an
individual take-home portion of the final exam that is due on the date of the in-class portion. No makeup midterms
will be given. The final exam will be given according to the University calendar. Makeup final exams will be given
only if excused by University guidelines. Be sure to plan your break around the final examination date.
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Class participation / professional attitude
Written assignments and oral “presentations”
Midterm
Final examination (as scheduled by the University)
20
20
30
30
100 %
Required Materials:
Demski, J., Managerial Uses of Accounting Information, 2nd edition.
Other readings will be distributed or posted online.
Students with Disabilities
Students with documented disabilities should feel free to inform me in private of your needs and to make
arrangements with the Office for Disability Services (292-3307 — 150 Pomerene Hall).
AMIS 3300H — Tentative Course Outline — Fall 2013
(1) Thu 08-22 The abc’s of product costing (impressionism)
Reading: preface, ch. 1; skim ch. 5; ch. 6; is accounting an academic discipline? (skim)
Written: P6-3; P6-7; Demski describes four key ingredients as being necessary for a serious study of accounting. Which topic
or topics addressed in 2300H incorporated these ingredients? Which of these ingredients is included in chapter 5? What is the
main theme of chapter 5?
(2) Tue 08-27 Activity costing (modernism)
Reading: ch. 6
Written: P6-17; E7.1, E7.2; E7.3 (email solver ss to TA’s – try q1=8, q2 = 9, and q1 = 0, q2 = 9 as well); Rework Problem A
from your 2300H final exam.
(3) Thu 08-29 Is activity based costing an improvement?
Reading: ch. 7, sec. 7.1-7.3 & 7.6 (skim sec. 7.4-7.6); Staubus
Written: P7-15; Write a paragraph about the main theme of chapter 7, especially example 7.3. Write a one-page summary of
the Staubus article, including a comparison of what Staubus and Demski say about activity costing.
(4) Tue 09-03 What is the cost (value)?
Reading: Noreen; Noreen-Soderstrom; Cooper-Kaplan
Written: Write a summary of Noreen, including a paragraph or two that relate the articles to P7-15 and E7-3; skim the NoreenSoderstrom article and explain how it relates to Noreen and to the Cooper-Kaplan article; P11-9; Problem B from final exam.
(5) Thu 09-05 Information and risk
Reading: ch. 9
Written: P9-12, P9-18; What are the “take-aways” from P9-12 and P9-18? Problem C from your final exam; Write a
paragraph that compares the two decision frames in chapter 9 and 10 in the Demski text.
(6) Tue 09-10 What is the cost (value) redux?
Reading: ch. 10
Written: 10-12; Work the example in the Haggling section (10.5) on p. 240-242. Also, calculate the maximum amount the
bidder would be willing to pay for an audit that would reveal V before she makes her take-it-or-leave-it offer. Graph this
maximum as a function of V. Also, write a paragraph to summarize the Internal Control section (10.6), and think about the
following. The employer would like to reimburse its employees who are out of town on business for their meals. One option
for the employer is to collect itemized receipts and reimburse for those items that are deemed necessary (perhaps excluding
alcohol?). Another option is to give the employees the option to request a “per diem” (fixed amount per day), where the
amount of the per diem is based on the city where the business was being undertaken. Think about at what level to set the per
diem. What principles are being invoked for each of these internal control procedures? What are the possible effects of each
procedure on employee behavior?
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(7) Thu 09-12 Strategic “costing”
Reading: ch. 13
Written: 10-14; examples 13.1-5
(8) Tue 09-17 Performance evaluation basics
Reading: ch. 13
Written: P13-6; P13-7, Rework Problem D from your 2300H final exam.
(9) Thu 09-19 The value of information in an agency setting
Reading: ch. 14
Written: P13-8, P13-9, P13-10; P14-9, P14-10
(10) Tue 09-24 Optimal use of information in an agency setting
Reading: ch. 14
Written: P13-14; 14-14
(11) Thu 09-26 Performance evaluation and valuation
Reading: G-M-V-V
Written: P14-11, P14-12; Write a 1-3 page typed summary of and commentary on G-M-V-V.
(12) Tue 10-01 Multi-task performance evaluation I
Reading: ch. 15
Written: E15.1-E15.4
(13) Thu 10-03 Multi-task performance evaluation II
Reading: ch. 15
Written: E15.5; P15-7; P15-8, P15-9
(14) Tue 10-08 Multi-task performance evaluation III
Reading: ch. 15; Bruggen-Moers
Written: E15.6, E15.7; P15-2, P15-3; Write a 1-3 page typed summary of and commentary on Bruggen-Moers.
(15) Thu 10-10 Task assignment
Reading: ch. 15 (especially sections 15.4 and 15.5)
Written: P15-11, P15-12
(16) Tue 10-15 MIDTERM
(17) Thu 10-17 The controllability “folklore”
Reading: ch. 16; Antle-Demski
Written: Work the examples in the Antle-Demski article. Explain why Demski uses the term “controllability folklore” rather
than the original term, “controllability principle”.
(18) Tue 10-22 Controllability in practice
Reading: Merchant
Written: P16-1; P16-2; P16-3; P16-18; Write a 1-3 page typed summary of and commentary on Merchant.
(19) Thu 10-24 Endogenous reporting
Reading: ch. 17
Written: P17-4 (check figures = -2,911.57, -2,443.00, 12,273.97, 10,376.07), 17-5 (check figures = -2,976.41, -698.83,
5,855.26, 1,849.94 ); Ralph’s Limited Liability
(20) Tue 10-29 Accounting systems and performance evaluation
Reading: Nikias-Schwartz-Young
Written: Work the examples in Nikias-Schwartz-Young
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(21) Thu 10-31 Accounting discretion and incentives
Reading: Sunder article; Schwartz-Young
Written: Work the examples in the Schwartz-Young. Write a 1-3 page typed summary of and commentary on Sunder.
(22) Tue 11-05
Reading: J-S-S-Y (Adverse selection paper – see 2200H on my courses webpage)
Written: Work the examples in J-S-S-Y.
(23) Thu 11-07 Participative budgeting basics
Reading: Rankin-Schwartz-Young 2003
Written: Write a 1-3 page typed summary of and commentary on R-S-Y 2003.
(24) Tue 11-12 Other considerations in participative budgeting
Reading: Evans-Hannan-Krishnan-Moser
Written: Write a 1-3 page summary of and commentary on E-H-K-M.
(25) Thu 11-14 A further look at “honesty”
Reading: Rankin-Schwartz-Young 2008
Written: Write a 1-3 page typed summary of and commentary on R-S-Y 2008.
(26) Tue 11-19 Accounting for financial institutions
Reading: M-S-W-Y: “Bank runs and the accounting for liquid assets in financial institutions”
Written: Write a 1-3 page typed summary of and commentary on M-S-W-Y
(27) Thu 11-21 Project evaluation
Reading: Schwartz-Sudbury-Young
Written: Work the examples in S-S-Y
(28) Tue 11-26 Coordination in organizations
Reading: ch. 18, Dechow-Skinner 2000
Written: Ralph’s Bundled Budgets; P18-16; Write a 1-3 page typed summary of and commentary on Dechow-Skinner.
(29) Thu 11-28 Thanksgiving Break – No Class
(30) Tue 12-03 Governance in organizations (End game)
Reading: ch. 19; Jensen: “Agency costs of overvalued equity”; Fama: “Agency problems and the theory of the firm”; Bebchuk
et al.: “Executive compensation as an agency problem”
Written: Compare and contrast the Fama and Bebchuk et al. views of corporate control (two pages max, typed and doublespaced, 12 point font)
Mon 12-09 Final Examination – In-class and *Take-home portion due
2:00-3:45 SB 319
Possible replacement papers:
Douthit-Kearney-Stevens. 2012. Can agent cheap talk mitigate agency problems in the presence of a noisy
performance measure” JMAR.
Stevens-Thevaranjan. 2010. A moral solution to the moral hazard problem AOS 35.
Davidson-Stevens. 2013. Can a code of ethics improve manager behavior and investor confidence? The Accounting
Review 88 (1).
E = problem within the chapter
P = problem at the end of the chapter
Readings not from Demski text will be put online at http://fisher.osu.edu/~young_53/Young.html - AMIS525
* In your article summary/commentary on the articles I suggest you address the following questions.
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(1)
(2)
(3)
(4)
(5)
(6)
What did they do?
Why did they do it?
What did they find?
What does it mean?
What would you have done differently?
What would you do next?
*Take–home portion of final examination: Summarize Demski’s “Corporate conflicts of interest” in a page or two.
Choose one of the “issues” that he mentions, read about it, and write a thee-page (max) description, with sources
carefully documented. (So, 4-5 pages total typed and double-spaced, 12 point font; I will not read beyond the fifth
page.) You many do this “solo” or jointly with another person. Credit will be given for both content and exposition.
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