ACC 4040 - Advanced Managerial Accounting Course Outline Fall 2014

University of Manitoba
I.H. Asper School of Business
Department of Accounting and Finance
ACC 40401 - Advanced Managerial Accounting
Course Outline
Fall 2014
Instructor:
Office:
Office Hours:
E-mail:
Debbie Mortimer, B. Comm. (Hons.), M. Acc., FCGA
Fall 2014
366 Drake
Phone #: 204-474-6389
Tuesdays 4pm-6pm (until Nov. 4) or by appointment
[email protected]
Course Learning Objectives and Approach:
Objectives:
This undergraduate course is designed to broaden and deepen your conceptual and technical
understanding of management control systems (MCS). MCS are considered broadly to include
everything that managers do to ensure good performance or, more specifically, to ensure that
the company’s strategies get implemented effectively. But the emphasis in the course is on
financial controls, which dominate in importance at managerial levels in all organizations.
Using financial controls requires managers to make decisions about: (1) responsibility
structures (e.g., cost centers, profit centers), (2) performance measures (e.g., market, financial,
and/or nonfinancial measures and their combinations), (3) performance evaluations, which
take into consideration performance targets or other benchmarks, and (4) rewards (including
performance-dependent compensation).
Additionally, this advanced course is designed to
integrate prior management accounting course material with other course material
through the use of case studies, research papers, and team projects,
help students develop analytical, decision making, application, oral communication,
time management, interpersonal, creative and written communication skills, and
prepare students to write professional accounting exams.
Required Reading Material:
Management Control Systems. 3rd Edition. Merchant and Van der Stede, Prentice Hall. 2012.
ISBN: 978-0-273-73761-2.
Journal articles:
1. Ghosh, D, Complementary arrangements of organizational factors and outcomes of
negotiated transfer pricing in Accounting, organizations and society, 25, 2000, pages
661-682
1
ACC4040 is a 3 credit hour course; Prerequisite: ACC3040 minimum grade of D
Page 1 of 14
2. Gaffney, K, Glankikh, V and Webb, RA, A case study of a variance analysis
framework for managing distribution costs in Accounting Perspectives, 6, 2007, pages
167-190
Grading:
Course grade is based upon:
Team Work:
15% Team Project, due November 28
 Oral presentation (5%)
 Written report (10%)
10% Team Case – Due November 4
Individual Work – see course contract (page 15)
Components:
1. Participation:
a. online
b. in class
2. Midterm Examination (case analysis), October 23, 6pm-8pm, room 343 Drake
3. Final Examination (case analysis), to be scheduled by registar’s office
Final grades are based on the student’s weighted mark and performance relative to other
students. The following are the tentative grade cut-offs:
Cumulative Marks
90-100
80-89
75-79
70-74
65-69
60-64
50-59
Below 50
Grade
A+
A
B+
B
C+
C
D
F
GPA
4.5
4.0
3.5
3.0
2.5
2.0
1.0
0.0
These tentative cut-offs are subject to adjustment up or down depending on the relative
performance of the current class compared to prior classes that have taken the course with the
same instructor.
Team Work:
Team Project:
In assigned teams, you will have to decide on a company to report on/investigate. The
company chosen must employ at least 50 full-time staff (a franchised type business with less
than 50 employees may be approved); it may be of profit or non-profit orientation. Instructor
approval of the chosen company is required before starting the project.
When contacting the approved company please inform them of the scope of their involvement
which includes an onsite interview with company executives (or equivalent) and a tour of the
company’s facilities. Also, your company will be invited to attend the team presentations at
the end of the term.
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You will be required to submit a report evaluating the company’s control systems. The report
should be between 6-8 pages, typed and double-spaced. The team will also be required to
present their findings to the class in an oral presentation of about 15-20 minutes. All team
members must participate in the presentation portion of the project. The following is a
tentative timetable for the project:
Submit team company for approval – include company name,
contact name, contact information (e-mail or phone) and company
industry
Contact company to set up a time for the interview and tour – via
phone or e-mail or in writing
Research company (website, other available information), design
interview questions
Interview and tour
Conduct other relevant research regarding company and ask followup questions from the interview
Oral Presentations and Written report due
September 26
By October 10
By October 24
By November 14
By November 21
November 28
The following are examples of interview questions:
What is the strategy or mission of your company?
What are the company’s key success factors/competitive advantage?
How do you ensure the strategy is being followed?
How is your company organized – formal or informal?
Do you have a strategic planning process? Who is involved? How does it work?
Do you have a budgeting system in place? How does it work?
How do you evaluate each of your key success factors?
How do you evaluate your people, on financial measures, or on non-financial measures?
How do you compensate your people?
How would you describe the culture of your workplace?
How would you describe the management style of your company?
What are your management control procedures (e.g. Standard costing, variance analysis,
observation (gut feel), other measures)?
How do you measure success or failure in your organization?
Team Case
As a team, you will be required to prepare a response to the case – “Formosa Plastics Group”
(page 536 of textbook). Your case response should be between 5-7 pages, typed, double
spaced with a minimum 11 point font. Appendices are not included in the page count. More
information will be posted in D2L.
Team Evaluation
Each team member will evaluate each of the other team member’s performance. If all
members contributed equally to the team work (case analysis, and project) each member
should receive a contribution score of 100%. If one or more members did not contribute fully
he or she should be given a contribution score of less than 100% (minimum = 0%). The grade
for each member will be equal to the grade assigned for the team work, multiplied by that
individual’s average contribution score as determined by the other team members. Please
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submit your evaluation of your team members via e-mail
([email protected]) no later than December 5, 2014. Non-submission of a
team evaluation will result in each team member receiving 100% contribution score.
Individual Work:
Online Participation:
For 10 of the assigned cases of your choice you will be required to post a pre-class comment
to a discussion board in D2L. There will be assigned questions posted on the discussion board
for you to comment on. Your comment should not be more than 2-3 sentences. For the same
10 cases you will be required to post a post-class comment to D2L detailing “what you learned
from the case”. Your comment should not be more than 2-3 sentences.
Pre-class comments to be posted by:
Post-class comments to be posted by:
1pm on the day of the case discussion
12pm (noon) the day following class discussion
In-Class Participation:
Assigned cases/research papers are to be prepared for class. We will discuss each
case/research paper as a class and will learn what makes a management control system work
and/or not work. Oral participation marks will be allocated based on the QUALITY of the
student's participation. You can earn ½ of the oral participation grade by attending every case
class, meaning to increase your grade you must speak. The final oral participation grade will
be based on the consistent quality of class participation. The onus for speaking in class rests
entirely upon the student, who must indicate desire to speak in context of the ongoing
discussion by raising a hand.
In addition to the instructor's evaluation of oral participation, a student will be chosen for each
class case discussion to evaluate his or her peer’s participation. Participation will be graded
on a scale of 0-5. The following will aid as a guide to participation grading:
0 = no participation.
1 = stating a case fact.
2 = stating a case fact and giving a reason for its importance to the discussion.
3 = analysis of case facts/data and/or comments that add to the case learning experience. Ideas
offered provide useful insights.
4 = analysis of case facts/data and/or comments that move the case discussion forward and add
to the case learning experience. Ideas offered provide good insight and direction for the class.
5 = exceptional comment, pinpointed the case's essence and purpose. Ideas are well
substantiated and persuasively presented.
Examinations:
For students who miss the midterm for legitimate reasons, the weight of the midterm exam
will be allocated to the final examination. Absence from exams due to illness requires a
medical certificate. If you miss the midterm for non legitimate reasons you will be given a
score of 0 (zero).
Students who miss the final exam must apply to the Undergraduate Program Office in their
faculty for possible deferred examination privileges.
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Any request for re-reads of term examinations must be made, in writing, within 10 working
days of the class when it was returned.
Note: November 13 is the last day for voluntary withdrawal without academic penalty.
Class Preparation
The most important requirement for this course is a thorough preparation and analysis of the
assigned case, reading material and active participation in the classroom. The course is built
around the case method. The learning in the class focuses more on the thought process in
analyzing business situations, not just on the solution per se.
Most of the cases included in this course represent broad organizational situations and
encompass many facets of a company's control system. In some instances, the case may
represent a good system and you are expected to learn what makes the system work well.
Other cases may present a system which has failed and the purpose here is to learn from the
failures. Any recommendation for changes when analyzing cases should carefully weigh the
organizational costs involved.
Assigned questions for in-class discussion purposes are available at the end of the course
outline and will be posted in D2L for each case/research paper.
In the Classroom
My expectation is that you will come to the class having already thought and analyzed the
cases both individually and in small team discussions.
I encourage active student participation in class. I should point out that most students
typically tend to underestimate the worth of what they have to say. Thus, if ever in doubt,
speak up.
My role in the class is to help facilitate discussion. In part, I serve as a recording secretary,
clarifier, and questioner in order to help you present and develop your ideas. Remember, there
is no single correct solution to any of the case problems. There are however, wrong solutions,
or solutions which are inadequately supported with analysis.
Evaluation Cases
Certain assigned cases are denoted as “evaluation cases”. These cases have rubrics available
for you to assess your response to the case. It is encouraged you prepare a written response to
each of these cases, which you can then self-assess against the rubric to identify areas of
strength and weakness. The rubric will be made available during the class discussion of the
case.
The intent of “evaluation cases” is to give you practice on writing case responses and develop
an understanding of how cases are graded. This will help you develop skills for writing case
exams, including this course’s midterm and final exam, as well as, professional accounting
case exams.
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Tentative Course Schedule
Date
Sept. 4
Sept. 9
Sept. 11
Sept. 16
Sept. 18
Sept. 23
Sept. 25
Sept. 30
Oct. 2
Oct. 7
Oct. 9
Oct. 14
Oct. 16
Oct. 21
Oct. 23
Oct. 28
Oct. 30
Nov. 4
Nov. 6
Nov. 11
Nov. 13
Nov. 18
Nov. 20
Nov. 25
Nov. 27
Friday,
Nov 28
Dec. 2
Case
Introduction to course
Management Control Systems – Overview
(Lecture format)
Management Control Systems – Overview
and How to Analyze a Case (Lecture
format)
Atlanta Home Loan
Course Contract Due
Houston Fearless 76, Inc.
Teams Assigned
Axeon N. V.
PCL: A Breakdown in the Enforcement of
Management Control
Air-Tex Aviation
Ghosh – Research paper – posted in D2L
Zumwald, AG – evaluation case
Kranworth Chair Corporation – evaluation
case
Raven Capital, LLC – evaluation Case
Catalytic Solutions Inc.
Berkshire Industries PLC – evaluation Case
No Class - Midterm Exam 6pm-8pm
Room 343
Gaffney – research paper – posted in D2L
Olympic Car Wash
Formosa Plastics Group
Team Case Due
Corporate Governance and Ethics (Lecture
format)
Remembrance Day – no class
Vector Aeromotive Corporation –
evaluation case
Conservative Accounting in General
Products Division
The “Sales Acceleration” Program
The Expiring Software License
Entropic Communications Inc. – evaluation
case
University of Southern California:
Responsibility Center Management System
No class in lieu of Nov. 29 presentations
Team Presentations – 10am – 2pm
Reading
N/A
N/A
N/A
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 6
Chapter 7
Chapter 7
Chapter 9
Chapter 11
Chapter 10
Chapter 12
Chapter 12
Chapters 13-15
Chapter 13
Chapter 15
Chapter 13
Chapter 17
No class in lieu of Nov. 28 presentations
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Case Questions:
Atlanta Home Loan
Assignment Questions:
1. Identify the devices (controls) that Al Fiorini used to control his business both before and
after he went back to school. Classify each control as a result, action, or personnel or cultural
type of control.
2. What went wrong? Did Al use the wrong types of controls? Did he use the right types of
controls but fail to design or implement them properly? Or was he just unlucky?
3. What should Al Fiorini do now? Why?
Houston Fearless 76, Inc.
Assignment Questions:
1. Why are Houston Fearless 76, Inc. (HF76) managers unhappy with the company’s existing
sales incentive plan? Are weaknesses in this plan a major cause of the company’s performance
problems?
2. Evaluate the new incentive plan being contemplated. What modifications would you make
to the proposed new plan, if any? How would you address the unresolved issues?
3. Are there any significant impediments to the successful implementation of the new
incentive plan? If so, which?
4. Would you make any changes to the system providing bonuses to sales assistants? If so,
what?
Axeon N.V.
Assignment Questions:
1. Is construction of the new factory in the UK in the best interest of Axeon N.V.?
2. Ignoring your answer to question 1, if the plant were not built and AR-42 was shipped from
the Netherlands to the UK, what transfer price would be appropriate?
3. What should Mr. van Leuven do?
PCL
Assignment Questions:
1.
What were the issues that cause the first taskforce to be unsuccessful?
2.
Why was the second taskforce more successful?
3.
What should PLC do to ensure that internal control measures will continue to be
enforced?
AirTex
Assignment Questions:
1. Did AirTex need a new control system at the time of the takeover?
2. Evaluate the control system that Frank and Ted implemented. Should anything have been
done differently?
Ghosh Research Paper
You may find it useful to review the appendix to the paper before you read the hypothesis part
of the paper.
1.
Identify the hypothesis of the research.
2.
Evaluate the research methods.
3.
Critique the application of the findings to the “real world”.
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Zumwald AG
ERRATUM
Instructors using the Zumwald AG case from the first print of the 3rd Edition of the book
(2012), should note the following error on page 294, where FOOTNOTE 1 should NOT be the
text currently printed as:
“1. Jim Harder noted that no statistics existed on the computer time used by the billing
system […] needed to support capacity planning requirements.”
BUT INSTEAD SHOULD BE REPLACED IN ITS ENTIRETY BY:
“1. The cost of the other components that go into X73 is €72,000. ISD’s conversion cost for
the X73 system is €144,000, of which €117,700 is fixed.”
Assignment Questions:
1. What sourcing decision for the X73 materials is in the best interest of:
a. The Imaging Systems Division?
b. The Heidelberg Division?
c. The Electronic Components Division?
d. Zumwald AG?
2. Calculate the contribution margins for each units listed in question 1a-d, based on your
answer to question 1.
3. What should Mr. Fettinger do?
Kranworth
Assignment Questions:
1. Identify the most important key recurring decisions that must be made effectively for KCC
to be successful. In KCC’s functional organization, who had the authority to make these
decisions? Who has the authority to make these decisions in KCC’s new divisionalized
organization?
2. Did KCC top management go too far in decentralizing the corporation? Did they not go far
enough? Or did they get it just right? Why?
3. Evaluate KCC’s new performance measurement and incentive system. Assuming that KCC
will retain its new divisionalized organization structure, what changes would you recommend,
if any? Why?
4. Assume that the R&D function is to be decentralized (given to the divisions). Would this
necessitate changes to KCC’s performance measurement and incentive system? If so, which
and why? If not, why not?
Raven Capital
Assignment Questions:
1. Evaluate the Raven performance evaluation and incentive compensation system.
2. What could Raven management do to make it possible to evaluate the analysts’
performances more objectively? Should Raven management make these changes?
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Catalytic Solutions Inc.
Assignment Questions:
1. Evaluate the composition of the compensation package at CSI.
a. What are the advantages and disadvantages of awarding stock options?
b. What are the advantages and disadvantages of awarding bonuses?
c. Was the relative importance placed on salaries, stock options, and bonus awards
reasonable? Why should CSI offer a mix of rewards rather than providing its
employees 100% of their compensation based on 100% salary? On 100% annual
bonuses?
2. Evaluate the specific features of the annual bonus plan in 2001 and 2002. Comment on:
a. The choice of the number of measures used, the specific measures used, and the
changes in the plan between years;
b. The relative proportions of financial vs. non-financial measures;
c. The decision to base rewards on company-wide, rather than individual, performance;
d. The amount of subjectivity allowed in determining the bonus awards;
e. The calibration (target difficulty) of the bonus plans.
3. As CSI grows and, perhaps, becomes a public company, how will the firm’s performance
measurement and compensation package choices evolve?
Berkshire Industries:
Assignment Questions:
1. Were Berkshire’s motivations for a new incentive system reasonable? If so, what were their
main options for a new system? Was an economic profit-focused system a reasonable choice?
2. Evaluate the Berkshire Industries’ new incentive plan. What changes would you
recommend, if any?
3. What, if anything, should Mr. Embleton do about the problems caused by performance
shortfalls in the Spirits Division? Explain.
Gaffney Research Paper
Assignment Questions:
1. How useful is the information Catalyst obtains from its various distribution mix
variances? (first-leg, last-leg, transportation mode, and carrier) (ie what is each
variance trying to measure)
2. By studying the variance analysis approach Catalyst took, identify and discuss how the
company determined the design of the variance analysis.
3. How can Catalyst’s approach be applied more generally to other organizations? What
information does an organization need to be able to conduct a variance analysis such as
the one at Catalyst?
Olympic Car Wash
Assignment Questions:
1. What are the controllable vs uncontrollable variables in Olympic’s budget?
2. Design a variance analysis structure for Olympic.
3. How large should the bonus pool be for the Aalst location?
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Vector Aeromotive Corporation
Assignment Questions:
1. Why did Vector Aeromotive have a board of directors because it went public? How (if at all)
do the legal and moral obligations of private-company directors differ from those of directors
of publicly held companies?
2. Evaluate the board composition and actions. All things considered, did the board act properly?
Did the board members choose the optimal time to terminate Gerry Wiegert?
3. What should the board members do now (March 22, 1993)?
4. What could have prevented or minimized the problems that Vector faced?
Conservative Accounting in GDP
Assignment Questions:
1. Do you approve of Robert’s actions? Are they good or bad from the perspective of the
division? From the perspective of the corporation?
2. Are Robert’s actions ethical?
3. Should Joanne tell anyone of Robert’s request?
The “Sales Acceleration” Program
Assignment Question:
Did the SPD managers act in an ethical manner in deciding to implement the “Sales
Acceleration Program”?
The Expiring Software License
Assignment Question:
Did Jimmy Wu act in an ethical manner in using his purchasing card to renew the Citrix
software license?
Entropic Communications
Assignment Questions:
1. Why did Entropic implement a formal ERM process?
2. Do you think the company realized the benefits of ERM as envisioned by Committee of
Sponsoring Organizations (COSO)? Why or why not?
3. What changes would you suggest for making the ERM process at Entropic more effective?
4. ERM is currently one of the hottest topics being written about in management, accounting, and
corporate governance practitioner journals. Virtually every company is looking at the
technique and deciding whether and how to use it. Do you think the ERM technique is a fad
that will soon disappear or an improvement that will provide enduring benefits to a broad range
of companies?
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University of Southern California
Assignment Questions:
1. Using the financial responsibility center terminology that we use in this course, what would
you call USC’s responsibility centers? Are they revenue centers? Profit centers? Something
else?
2. The RCMS seems to be working reasonably well. USC has used it for over 25 years, and
seemingly nobody wants to abandon it. What makes it effective?
3. Consider each of the criticisms of RCMS:
a. Does it sound plausible that the RCMS could have been causing, or at least
contributing to, the problem if, indeed, there was a problem?
b. Which of the problems have been solved by the RCMS refinements that were
implemented over the years? Which remain?
4. What should be done now? Does the RCMS create “perverse incentives”? If so, how? If not,
why not?
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Academic Integrity
It is critical to the reputation of the Asper School of Business and of our degrees,that everyone
associated with our faculty behave with the highest academic integrity. As the faculty that helps create
business and government leaders, we have a special obligation to ensure that our ethical standards are
beyond reproach. Any dishonesty in our academic transactions violates this trust. The University of
Manitoba General Calendar addresses the issue of academic dishonesty under the heading "Plagiarism
and Cheating". Specifically, acts of academic dishonesty include, but are not limited to:
-
using the exact words of a published or unpublished author without quotation marks and without
referencing the source of these words
-
duplicating a table, graph or diagram, in whole or in part, without referencing the source
-
paraphrasing the conceptual framework, research design, interpretation, or any other ideas of
another person, whether written or verbal (e.g., personal communications, ideas from a verbal
presentation) without referencing the source
-
copying the answers of another student in any test, examination, or take-home assignment
-
providing answers to another student in any test, examination, or take-home assignment
-
taking any unauthorized materials into an examination or term test (crib notes)
-
impersonating another student or allowing another person to impersonate oneself for the purpose of
submitting academic work or writing any test or examination
-
stealing or mutilating library materials
-
accessing tests prior to the time and date of the sitting
-
changing name or answer(s) on a test after that test has been graded and returned
-
submitting the same paper or portions thereof for more than one assignment, without discussions
with the instructors involved.
Group Projects and Group Work
Many courses in the Asper School of Business require group projects. Students should be aware that
group projects are subject to the same rules regarding academic dishonesty. Because of the unique
nature of group projects, all group members should exercise special care to insure that the group project
does not violate the policy on Academic Integrity. Should a violation occur, group members are jointly
accountable unless the violation can be attributed to a specific individual(s).
Some courses, while not requiring group projects, encourage students to work together in groups (or at
least do not prohibit it) before submitting individual assignments. Students are encouraged to discuss
this issue as it relates to academic integrity with their instructor to avoid violating this policy.
In the Asper School of Business all suspected cases of academic dishonesty are passed to the Dean's
office in order to ensure consistency of treatment.
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UNIVERSITY OF MANITOBA
I. H. Asper School of Business
Medical Absenteeism Form
Student Identification: (please print clearly)
______________________________
Last Name
___________________ ___________ _______________________________
First Name
Middle Initial U of M Student Identification Number
I hereby authorize ________________________________ to verify with the attending physician or his/her
(Name of Instructor/Administrator)
staff or colleagues that the contents of this form are true.
________________________________________
_______________________________________
Student’s Signature
Date
To be completed by the attending physician: (after the above section is completed)
________________________________________
______________________________ ________________
Physician’s Last Name (please print clearly)
Physician’s First Name
Middle Initial
___________________________________________
Street Address
________________________________ __________________
City, Province
Postal Code
___________________________________________
Telephone Number
_________________________________
Fax Number
To the attention of the physician: Your evaluation of the student’s condition is being used for the purpose of
determining whether or not the student has a valid reason to miss an important exam or assignment. Your
professional evaluation is necessary to ensure that only valid cases are excused.
I certify that the nature of the student’s condition is severe enough to prevent the student from taking an exam
or completing an assignment. If requested, my associates or I will verify for the above-named
instructor/administrator that this information is accurate.
The student’s condition will likely span the following dates:
____________________________
(indicate start date)
until ____________________________
(indicate end date)
___________________________________
_________________________________
Physician’s Signature
Date
Notes to physician:
 Please make a note in the student/patient’s file indicating that the student has given the above-named
instructor/administrator permission to verify with you, your staff, or your colleagues, that the information
contained on this form is correct. Thank you for your professional evaluation of this student’s condition.
 PLEASE ATTACH THIS FORM TO YOUR REGULAR OFFICE STATIONERY THAT
INDICATES THE STUDENT VISITED YOUR OFFICE.
Note to student:
 The use of this form is at the option of the student. However, in order to obtain an excused absence
for an assignment or exam, the student must obtain a doctor’s certification that the student’s
condition is severe enough to prevent the student from taking the exam or completing the assignment.
 It is NOT SUFFICIENT to provide a note that only indicates the student visited the doctor’s office.
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ACC 4040 Fall 2014
Course Grade Calculation Contract Name:_
Evaluation Category
Online participation (min 5%, max 10%)
In Class participation (min 10%, max 20%)
Midterm Exam (min 15%, max 30%)
Final Exam (min 25%, max 45%)
Team Case
Team Project
TOTAL
Weighting
%
%
%
%
10 %
15 %
100 %
I agree to have my final grade for ACC 4040 calculated on the above noted weighting.
Signature:
Date:
Approved:
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