BA 321
Agenda for Lecture 1
• Course administration
• Introduction to cost accounting
• Break
• Entrance exam
BA 321
Administration
• Syllabus
• Course Requirements
• Course Materials and Resources
• How to Succeed
BA 321
Course Requirements
Final
Exam
30%
Four
Exams
57%
In-Class
Activities
13%
Grades will be posted to Blackboard
BA 321
Course Materials
• Management Accounting: Concepts and
Techniques, by Dennis Caplan
• Cost/Managerial Accounting: Exam
Questions and Explanations, by Irvin N.
Gleim (7th edition)
• Optional materials: Cost Accounting: A
Managerial Emphasis, 11th edition (copyright
2003) by Horngren, Datar and Foster
• Additional required readings and assignments
will be distributed in class
BA 321
How to Succeed
• Do not expect a course in financial accounting
• Come into the course with the prerequisite
knowledge and skills.
• Take personal responsibility for understanding
all assigned readings and problems.
• Make efficient use of the time you spend in
class and studying.
• Understand the difference between following a
solution and generating a solution.
• Be a “smart” test-taker.
Assignment for Thursday
provide the following information
on an 8.5 x 11 sheet of paper
Worth 5 points if turned in complete and on time, 4
points if turned in next Tuesday, 3 points if turned in
next week but after Tuesday.
• Name
• A photograph of yourself (preferably passport
style)
• Nickname, if any (what you want to be called in
class)
• Hometown (where you grew up)
• Most recent or favorite job
• Career goal
Assignment for Thursday
provide the following information on
an 8.5 x 11 sheet of paper
• Charles Schulz
• “Sparky”
• St. Paul, MN
• Cartoonist (creator of “Peanuts”)
• Career goal: To complete 50
uninterrupted years of Peanuts
cartoons
Links Between Management
Accounting and Other Disciplines
M.I.S.
Operations
Management
Financial
Accounting
Management
Accounting
Finance
Strategy
Marketing
BA 321
Agenda for Lecture 1
• Course administration
• Introduction to cost accounting
• Break
• Entrance exam
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Question:
What is the fundamental
economic problem that we
all face?
Answer:
The allocation of scarce
resources
Accounting and
Allocation of
Scarce Resources
Financial
Accounting
Accounting and
Allocation of
Scarce Resources
Financial
Accounting
Management
Accounting
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Definition of
Management Accounting
Management accounting is the process of
identifying, measuring, and reporting
information about the economic events of
organizations for use by management
in planning, evaluation, and control.
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Financial and Management
Accounting, Compared
FINANCIAL
ACCOUNTING
EXTERNAL
USERS
MANAGEMENT
ACCOUNTING
INTERNAL
USERS
Financial and Management
Accounting, Compared
Financial
Managerial
• Required
• Optional
• Follows GAAP
• No rules
• Usually Historical
• Forward-looking
• Highly condensed • Can be detailed
• General use
• Tailored to
specific needs
Financial and Management
Accounting, Compared
FINANCIAL
ACCOUNTING
MANAGEMENT
ACCOUNTING
COST ACCOUNTING
EXTERNAL
USERS
INTERNAL
USERS
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Lecture 1
A Historical Perspective
• The Industrial Revolution
• The Early 20th Century
• The Information Revolution
• Proliferation of Product Lines
• Globalization of the Economy
Lecture 1
A Historical Perspective
• Increasing importance of the Service
Sector
• Total Quality Management (TQM)
• Just-in-Time (JIT)
• The Theory of Constraints
Lecture 1
Introduction
• The allocation of scarce resources
• Management accounting defined
• Management accounting and
financial accounting compared
• A historical perspective
• What happens when management
accounting systems fail
Headlines You Probably
Won’t See
• “General Motor’s stock rose
3/8s of a point today on news
that GM is installing a new
cost accounting system”
NEW YORK TIMES
OCTOBER 28, 1997
Oxford Health Plans said yesterday that it
had been losing money because it fell
behind in sending bills to customers and
underestimated how much it owed doctors
and hospitals. Shares fell 62%.
Stephen Wiggins, chairman of Oxford, said
the company had belatedly discovered that
many customers were not paying
premiums, often because the company was
late in sending bills.
Oxford acknowledged that it had
fallen behind in payments to
hospitals and doctors as it
struggled with a new computer
system.
With incomplete information in its
computers, it had to advance money to
doctors and hospitals without verifying that
they were obeying Oxford's rules.
Mr. Wiggins said Oxford would add about
0.5% to spending on administration next
year in an effort to insure there are no
similar problems. “The important thing,"
he added, "is we're the same
company we were on Friday,
except our market value has
dropped by half.”
BA 321
Agenda for Lecture 1
• Course administration
• Introduction to cost accounting
• Break
• Entrance exam