Core International Management Program

______GROUPE HEC______

HEC MBA PROGRAM

CORE INTERNATIONAL MANAGEMENT PROGRAM

September 2006 Intake

Winter quarter January-March 2007

Management accounting

and

Decision-making

Syllabus

Last update: December 19, 2006

Course instructor: Professor Claire Dambrin, HEC, Department of Accounting and Control

This document may not be used, reproduced or distributed without the authorization of Group HEC

Management accounting & decision-making

Syllabus

Winter quarter January-March 2007

Instructor: Dr. Claire DAMBRIN

Office Hours: by appointment

Office Location: W2 building, room 43

Office Phone: 01 39 67 72 94

Email:

1- Course description

Management accounting is a field in transition, moving from a procedural focus to a strategic focus on the use of managerial accounting information to facilitate the managerial decision for the success of the enterprise - for manufacturing, service, and not-for-profit organizations. A principal motivation for the changes in management accounting is the increased global and domestic competition, the rapid change of manufacturing and information technology, a renewed focus on the customer satisfaction, a constant need for cost reductions and quality control.

Management accountants can no longer be a reporter of financial information. They should turn themselves into a business partner - developing and presenting information that is critical for the decision-makers.

The objective of the course is not to turn you into professional accountants, because most MBA students will become users of management accounting information for decision-making, rather than preparers of this information. The primary objective is to enable you to make effective use of management accounting data within your own organization or effective practice. A second objective is to develop the analytical skills necessary to reduce complex business problems into simple models that assist in the decision-making process.

We shall see how accounting information can be useful in making managerial decisions in a global business environment. This course takes a holistic approach to accounting rather than focusing exclusively on accounting methodology per se. We shall combine the study of traditional concepts and techniques with that of the most recent advances in management accounting.

Prerequisites

This is not essentially a mathematically sophisticated course. The course requires some ability to diagnose and model complex business issues, and is based on analytical, rather than mathematical approaches.

The course's point of view also largely differs from the financial accounting perspective, as it is based on managerial thinking rather than on a purely accounting viewpoint. Some background in operations, marketing, strategy, organizational behavior, management information systems and statistics would help. We shall insist on the integrative nature of the course, as decisions cannot be examined independently from their business context.

2- Course objectives

The objective of the course is to reinforce the students' practical and theoretical understanding of some key "tools" and thinking patterns of management accounting for decision making. At the end of the course, managers-in-the-making should be able to:

• know how to use key instruments such as cost behavior, costing techniques, critical cost concepts in decision making;
• understand how costs and value are created;
• make informed decisions based on an economic point of view, but also as to fulfill the strategic objectives of the firm;
• be able to identify the changes needed in a managerial information system to meet the specific decision-making goals of their organizational unit.

3- Course themes

The course has been structured to allow for gradual progressions from the simpler to the more complex. It consists of an introduction (1 classroom session) and the following techniques and topics:

Breakeven analysis

Pricing decisions

Costing systems

• Job-costing and process-costing
• Cost allocation systems
• Joint-product and by-product costing
• Activity-based costing

Customer profitability analysis

Process improvements, Activity-based management

Kaizen and Target costing

Capital investment decisions

4- Course material

The required text for the regular class meetings is:

Horngren, Bhimani, Datar & Foster, Management and cost accounting (3rd edition), Pearson Prentice Hall, 2005.

This textbook is referred to as HB. Lectures in class are the core of what you need to know, and you may find it useful to do further reading in HB. The class schedule refers to the relevant chapters of HB and most exercises are taken from this book as well.

A course pack will also be available containing cases and additional facultative readings.

For your own information, you may also find it useful to refer to the following textbooks:

-Atkinson, Kaplan, Young, Management Accounting (4th edition), Pearson Prentice Hall, 2004.

-Shank, Cases in cost management: a strategic emphasis, Southwestern, 2001;

-Groot & Lukka, Cases in management accounting: current practices in European companies, Prentice Hall, 2000.

Additional resources will be made available online at: (the login and password will also be provided in due time).

5- Teaching methods

The course uses lectures with concept-application exercises and/or problem-solving exercises (tool-based, simplified situations) and case studies (decision-based, more complex situations). Key elements for problem-solving exercises and cases will be provided to the students.

MBA students are also expected to read the course material beforehand and prepare some analysis of the cases for each lesson.

An electronic version of powerpoint slides used in class will also be available on the website the night before class. Technological inconveniences may lead to send the documents by e-mail to all students instead.

6- Students grading

You have to reach a minimum of 55 points in total (all marks included) to pass the course.

The final grading will contain the items and weight as follows:

2 graded team assignments (written assignment or in-class PPT oral presentation) / 40 points
Class participation / 10 points
Final 2hrs individual exam / 50 points
Total available / 100 points

Final grades are based partly on two team assignments (in class Powerpoint oral presentation or written assignment); class participation; and on a final exam. Note that a 40% mark (minimum 20 points) in the final exam is a requirement to pass the course.

If you encounter and are aware of methodological difficulties, you should not hesitate to contact your instructor by email and take an appointment.

Group assignments (40 points)

There will be two graded group assignments during the course.

The group assignment can either be an oral presentation of the group on a case (20 minutes presentation, followed by class discussion) or a written report on a case. Each group assignment will account for 20 points. During the first session, Students will decide their team members. Teams should not exceed 4 students per group.

You may choose to present and hand out these assignments at the most convenient time for your group, and according to the topics that you would like to add value to. You may perfectly hand out two reports, or do one class presentation and hand out one report. However, as in-class presentations must be limited to one per case study in the syllabus, you must let me know asap if you wish to give an oral presentation. A schedule will be organized at the beginning of the course on a first come, first served basis, and no later than January 22, 2007.

• When presenting a case analysis, any member of the group must be able to present and discuss the case orally in class (presence and participation of all members are essential). Please provide me with your power point presentation at the beginning of the presentation.
• Please be ready for case reports latest at the beginning of the class when the case will be discussed. Note that the written case analysis report shall not exceed 5 pages (10 pages including appendices). Please provide me with one paper version of your group report.

Note that group assignments involve both technical and judgmental aspects. Consequently, the grading of these cases and project has both objective and subjective components.

Group work supposes active discussion within the group of all the concepts, questions and suggested solutions, by all the members of the group together . Any member of the group must be able to relate at any time in class of the group’s discussions and conclusions.

Class preparation & participation (10 points)

Please keep in mind that although I will not check attendance in a systematic way, attending the MBA courses is a requirement. Managing your time and calendar is your responsibility.

Assessment on class participation will take place based on a variety of criterias including analytical and problem-solving skills, communication skills, and behavioral and ethical issues. As preparation is an essential ingredient to create a stimulating class environment, the evaluation will also take into account students’ contribution in class and their ability to express their views about the problems or cases to be prepared. The instructor expects students to behave in an appropriate and ethical manner and to show respect to her and classmates.

I expect you to prepare all homework assignments – problems and cases – and always be prepared for class. Attending a class that you have not prepared not only damages your own learning, but also cuts on the stimulating class environment. I expect that at the beginning of any class you canprovide a picture of the main case issues in a way that enhances the discussion and collective learning.

Active individual participation all along the class sessions also stimulates active learning and help the lessons to sink in deeper. Please use a name card in my class to help me know you individually in the best delays.

Class participation is expected, nevertheless, you are also expected to listen to the others and build on previous observations in a constructive manner. Poor grades are assigned to students who rarely contribute or monopolize the time with irrelevant comments. Furthermore, given the number of students and time constraints, there will be moments when I will need to allocate speaking time accordingly and keep to the context of the core themes of the session.

You may send me by e-mail as many home assignments that you have prepared as you wish. Please try and restrain your comments and suggestions to two A4 pages. I will do my best to return some written comments within two week days. This may help you with evaluating your own progress. However, I will not grade these short papers and I will not take them into account in your participation grade. This is only for your support.

Exam policy (50 points)

Please note that a 40% mark (minimum of 20 points) is a requirement at the final individual exam to pass the course.

It is an open-book exam. All paper sources are authorized, but no electronic devices (computer, phone, etc.).

The date for the Management Accounting & Decision-making exam has been set:

Tuesday, March 20, 2006, 1:00-3:00PM

Only in the case of an emergency with written proof (such as a medical certificate) may an exam be missed. Job interviews are not accepted as a reason for missing an exam.

Exams will be graded within three weeks. Should you have any questions regarding your grades, please request an appointment with your instructor.

7- Course Content

S / Date and schedule / Program / Recommended readings / Facultative readings / Cases and exercises to prepare
1 / Thursday, January 18, 2007 / Introduction to cost management and management accounting / HB chapters 1,2 / “The Case for Management Accounting”, Strategic Finance, Oct.2003 *
“Roles and Practices in Management Accounting Today”, Strategic Finance, July 2003 *
“The Cost Accountant is dead, long live the Business Process Analyst”, Strategic Finance, Dec.2005 *
“IMAC committee proposes guidance for achieving ethical behaviour”, Strategic Finance, Strategic Finance, Dec.2006 *
2 / Thursday, January 25, 2007 / Refreshment Cost-Volume-Profit,
Cost behaviour / HB 8 (pp.232-249),
HB 9 / Case study: Bill French Accountant*
3 / Friday, January 26, 2007 / Job costing systems and process costing systems / HB 3 (pp.61-72)
HB 4 (pp.92-108) / HB Problems
4-19 and 4-20
4 / Monday, January 29, 2007 / Cost allocation and allocating joint costs / HB 5,
HB 6 / HB Problem
6-22
(process further or sell by-products)
Case study :
Unitron *
5 / Thursday, February 1, 2007 / Relevant costs in business decisions:
- fixed/variable costs;
- product-mix decisions under capacity constraints / HB 10 (except pp.316-318) / Shank, Govindarajan, College (1992), “Strategic Cost Management: the Value Chain Perspective”, Journal of Management Accounting Research, vol.4 * / HB Problem 10-13
Case study:
Bridgeton*
6 / Thursday, February 8, 2007 / Activity-Based Costing / HB 11 / “What ERP can offer ABC”, Strategic Finance, Aug.2003 * / HB Problem
11-13 (product cost cross-subsidiation)
Case study:Destin Brass Products*
7 / Thursday, February 15, 2007 / ABC/ABM (costs of ABC, customer profitability analysis) / HB 10, (pp.316-318), HB 12 (pp.373-380, pp.393-400) / “How to create an Activity Management Program that lasts”, Strategic Finance, Feb.2004 *
“Using CRM to increase profits”, Strategic Finance, March 2004 * / Case study:
Sloan Styles Inc. *
8 / Thursday, March 8, 2007 / Target Costing (market based view, resource-based view) / HB 12
pp.380-387 &
pp.390-393 / Monden, Hamada (1991), “Target Costing and Kaizen Costing in Japanese Automobile Companies”, Journal of Management Accounting Research, vol.3, Fall * / HB problem
12-12
Case study:
Mercedes Benz: All Activity Vehicles*
9 / Tuesday, March 13, 2007 / Capital investment decisions / HB 13 / “A Holistic Approach to Venture Capital Investment Decisions”, Strategic Finance, Feb.2005 *
“Strategic Decisions and Cash Flow”, Strategic Finance, July 2003 * / HB problem
13-21
10 / Thursday, March 15, 2007 / Synthesis / Cooper (1996), “Costing techniques to support corporate strategy”, Management Accounting Research, vol.7 * / Case study:
Dublin Shirt Company *

• * Indicates this is a case, exercise or reading that is in the course pack.
• Bold indicates one of the possible group assignments.

Management accounting and Decision-making Syllabus - p. 1