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Cost Accounting (M30255)

General information

Type:

OB

Curs:

1

Period:

S semester

ECTS Credits:

2 ECTS

Teaching Staff:

Group Teacher Department Language
Sec: A Santiago Simón del Burgo Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: B Santiago Simón del Burgo Economía, Finanzas y Contabilidad ENG

Group Teacher Department Language
Sec: C Santiago Simón del Burgo Economía, Finanzas y Contabilidad ENG

Prerequisites

Financial Accounting

Previous Knowledge

Fundamentals of Financial Accounting

Course Learning Objectives

The purpose of this course is to provide MBA students with the key points to understand how accounting is used in business as an input for decision-making, including an appreciation for the distinct roles of financial and management accounting. The concepts and topics covered in Cost Accounting presume that participants have a thorough understanding of the material covered in the Accounting course. The knowledge acquired in Accounting regarding the features of and the interrelationships among the fundamental financial statements will be used in this course to better understand some of the most relevant topics within the two functional areas of accounting: financial and management accounting.

Cost/management accounting aims:
- To introduce cost- and management-accounting terminology;
- To analyze the relationship between costs, volume, and profit;
- To show how accounting information can be used in decision making;
- To describe the logic of cost accumulation for inventory valuation and profit measurement;
- To provide tools for the preparation and variance analysis of budgets.

CONTENT

1. Unit 1. The scope of management accounting

Differences between financial accounting and management accounting. Functions of
management accounting. The decision-making process. Basic cost terminology.
Readings: Drury, C. (2012). Management Accounting for Business (8th ed.), chapter 1 , chapter 2
Dressler, S. (2002). Management Accounting Master: Closing the gap between managerial accounting and
external reporting. Journal of cost management
HOMEWORK 1

2. Unit 2. Cost accumulation for inventory valuation and profit measurement

Cost assignment: assignment of direct and indirect costs. Accounting for overhead
expenditure. Job and process costing. Activity-based costing systems. Product and
customer profitability analysis.
Readings: Case Study: Destin Brass
Case Study: Kanthal
Drury, C. (2012). Management Accounting for Business (8th ed.), chapter 7, chapter 8.
Cooper R., Kaplan R. S. (1988). How cost accounting distorts product costs. Management Accounting
Hong J. (2000). Improving production decisions: A case for activity-based costing. Journal of cost
management
Kaplan R. S., Anderson S. R. (2004). Time-driven activity-based costing. Harvard Business Review
Kaplan R. S., Narayanan V. G. (2001). Measuring and managing customer profitability. Journal of cost
management
Cooper R., Chew (1996). Control tomorrow's costs through today's designs. Harvard Business Review
HOMEWORK 2

3. Unit 3. Cost behavior and cost-volume-profit analysis

Cost-volume-profit analysis. The break-even point. Margin of safety. Degree of operating
leverage. Cost-volume-profit analysis assumptions. How to deal with multiple products.
Readings: Case Study: Forrest Gump
Drury, C. (2012). Management Accounting for Business (8th ed.), chapter 3
HOMEWORK 3

4. Unit 4. Measuring relevant costs and revenues for decision making

The meaning of relevance. Importance of qualitative factors. Product mix decisions when
capacity constraints exist. Special order decisions. Outsourcing and make or buy
decisions. Discontinuation decisions. Misconceptions about relevant costs.
Readings: Case Study: Baldwin Bycicles
Drury, C. (2012). Management Accounting for Business Decisions, chapter 4
Boyd, L. H. (1997). The use of cost information for making operating decisions. Journal of cost management
HOMEWORK 4

5. Unit 5. Strategic planning, profit plans and budgets

Strategic planning and strategic decision making through the use of profit plans. Plans vs
budgets. The different roles of budgets. The multiple functions of budgets. Stages in the
budgeting process. Conflicting roles of budgets.
Readings: Case Study: Café Monte Bianco
Drury, C. (2012). Management Accounting for Business Decisions, chapter 9
Hope J., Fraser R. (2003). Who needs budgets?. Harvard Business Review

6. Unit 6. Standard costing, variance analysis and strategic profitability reports

The purposes of standard costing. Establishing cost standards. Flexible budgets.
Variance analysis. The causes of variances. Preparing reports to reconcile actual profit
with budgeted profit.
Readings: Case Study: Compagnie du Froid
Drury, C. (2012). Management Accounting for Business Decisions, chapter 11
Conclusion

Methodology

ASSESSMENT

ASSESSMENT BREAKDOWN

Description %
Individual-based 50
Group-based 40
Class participation 10

Assessment criteria

Assignments

You will find three types of assignments in the syllabus:

a) READINGS. You are expected to read these materials before the session they refer
to, so that they can be used as a basis for class discussion.

b) EXERCISES. These are problems which are useful to illustrate specific aspects of the
issues covered in the course. In most of the cases, solutions will be provided.

c) HOMEWORK PACKAGES. These are problem sets to be prepared in groups. They
must be turned in one session after the reference material is covered in class. Look
at the syllabus for details on specific dates. Homework will be graded.

Bibliography

Drury, C. (2012). Management and Cost Accounting (8th ed.). Thomson.

Timetable and sections

Group Teacher Department
Sec: A Santiago Simón del Burgo Economía, Finanzas y Contabilidad

Timetable Sec: A

From 2018/4/4 to 2018/4/30:
Monday and Wednesday from 10:00 to 13:30. (Except: 2018/4/9, 2018/4/16 and 2018/4/25)

Wednesday 2018/5/9 from 10:00 to 13:00.

Group Teacher Department
Sec: B Santiago Simón del Burgo Economía, Finanzas y Contabilidad

Timetable Sec: B

From 2018/4/9 to 2018/5/7:
Monday and Thursday from 10:00 to 13:30. (Except: 2018/4/12, 2018/4/19, 2018/4/23, 2018/4/30 and 2018/5/3)

From 2018/5/2 to 2018/5/9:
Each Wednesday from 10:00 to 13:00. (Except: 2018/5/2)
Each Wednesday from 10:00 to 13:30. (Except: 2018/5/9)

Group Teacher Department
Sec: C Santiago Simón del Burgo Economía, Finanzas y Contabilidad

Timetable Sec: C

From 2018/4/5 to 2018/5/3:
From Wednesday to Thursday from 10:00 to 13:30. (Except: 2018/4/11, 2018/4/18, 2018/4/26 and 2018/5/2)

Wednesday 2018/5/9 from 10:00 to 13:00.