Managerial Accounting Courses for MBA Students
Management accounting is the information used to make business decisions including product costing, quality analysis, employee motivation, performance evaluation and feedback, product pricing, production technology, component sources, customer profitability, investment decisions, capacity utilization, and the like. Managerial accounting is integrally involved in the marketing, finance, operational, and human relations aspects of the business. Managerial accounting courses cut across these functional lines and examine information useful to making decisions in a variety of settings.
The McCombs School offers two graduate course in managerial accounting: BA 380E (introductory managerial accounting) and ACC 387.4 (strategic control systems). These courses are described below.
BA 380E — Introduction to Managerial Accounting
BA 380E is a new required (core) ½ semester course taken in the third semester of the program. Students who entered the program in fall 2003 will take BA 380E in the fall of 2004.
The purpose of this course is to introduce students to the types of managerial information used to effectively and efficiently run the business. The emphasis is on understanding the kind of information to ask for in various decision settings and how to use it (the managerial function) as opposed to the technical details of how to produce the data (the accounting function). Of course, some technical expertise is needed to understand the strengths and limitations of the data. However, the course focuses on the use of that data as information in managerial decision making; that is, interpretation and evaluation of information in common business situations.
The content of this course is organized into four components. First covered are the concepts and fundamentals of management accounting which pervade business decisions. This area includes cost behavior as studied in cost-volume-profit analysis and cost traceability as studied in product costing and overhead allocation. We study two models for accumulating information: the full cost model (all costs incurred) and the direct cost model (incremental costs). These two cost models provide the framework for studying the use of managerial accounting information in various decision settings. The overriding theme of this course is understanding these two frameworks and their applicability in various decision settings. Towards the end of the course we compare these two accounting-based models with cash flows and consider their roles in short- and long-run decision settings.
The second component covered is relevant costing, or the use of information to make alternative choices in non-routine decision situations. The focus is on approaches for structuring special decisions situations. We reconsider the full cost and direct cost models and examine decisions such as special order, make or buy, sell or process further, product line elimination, pricing, equipment replacement, and capital budgeting.
Covered third is the planning function, or identifying goals and the means for their attainment. This aspect of the management information system is used to motivate and coordinate employees. Planning activities involve decisions between alternative courses of actions with a focus on future costs. In this context we consider standard costs and budgeting.
The final component covered is the control function, or implementation of plans and the use of feedback to ensure goals are reached. A third model for accumulating information is introduced: cost controllability (how costs are affected by a manager's decision-making authority). In this topic we consider variance analysis, responsibility accounting, and performance evaluation.
ACC 387.4 — Strategic Control Systems
ACC 387.4 is a follow-up course for students who want to go beyond the material in BA 380E. Accordingly, students may elect to take this course in their fourth semester.
Relying solely on historical accounting information to run a business is like driving down the highway with the windshield covered. Through the "rear view mirror" of accounting information you can see clearly where you have been, but you have no way of navigating the twisting, turning road of the future.
Business strategy guides companies into the future impacting the results that are ultimately reported in historical financial statements. This course shows how strategic control systems can give managers the timely quantitative and qualitative information they need to "drive into the future" with confidence and success.
Managers use performance measurement and control systems to maintain or alter patterns in organizational activities. Desirable patterns may include efficiency and error-free processing, such as yield rates in manufacturing environments. In other instances, they may relate to patterns of ongoing creativity and innovation in products or internal processes, such as percentage of sales from new products or year-over-year improvement in processing speed. Rather than simply identifying good business measurements, this course emphasizes the identification and utilization of measurements that drive results consistent with corporate strategies.
Major Themes
- Linking strategies to operations
- How can management leverage the potential for innovation while ensuring adequate control and protection from unpleasant surprises by employees?
- How do managers organize and allocate various resources to support implementation of strategies?
- How is focus maintained when a plethora of business opportunities exist?
- Aligning people with corporate objectives
- How can managers communicate business strategy and goals effectively to all employees?
- How can senior managers move information from employees, who are in day-to-day contact with customers, back up the hierarchy to those responsible for formulating and supporting strategies?
- What is the role of compensation and recognition systems in motivating employees to achieve corporate objectives?
- Measuring results to control, learn and improve performance
- How can managers drive growth that enhances, rather than dilutes, profitability and cash flow?
- What are the best ways to measure and track performance toward strategically important goals?
- How are performance measures linked with external markets?
- How can managers ensure that their business is not exposed to unacceptable levels of risk?
