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| 1. Description - |
| Study of accounting information system for internal uses. Process costing, job-order costing, activity-based costing, cost behavior and cost-volume profit analysis, budgeting, performance evaluation, and capital investment analysis.
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| Prerequisite: ACTG 1A.
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| Co-requisite: None
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| Advisory: MATH 10 or high school algebra.
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| 2. Course Objectives - |
| The student will be able to:
- recognize management accounting information as a creator of value.
- analyze cost concepts and the cost assignment process.
- analyze cost behavior and the role of resource usage in understanding cost behavior.
- compare and contrast the cost accounting system of service and manufacturing firms.
- assess departmental cost allocation process.
- examine activity-based cost systems.
- recognize strategic cost management, life cycle cost management, and Just In Time.
- calculate break-even and evaluate cost volume profit analysis.
- apply relevant costing and tactical decision making.
- recognize and describe the use of budgets for planning and control.
- analyze standard cost.
- evaluate responsibility accounting, performance evaluation.
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| 3. Special Facilities and/or Equipment - |
| Access to a PC lab and Excel software. When taught as an online distance learning section, students and faculty need ongoing and continuous Internet and Email access.
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| 4. Course Content (Body of knowledge) - |
| - Managerial Accounting and the Business Environment
- Discuss the role of management accountants in an organization.
- Identify the basic concepts underlying Lean Production, the Theory of Constraints (TOC), and Six Sigma.
- Discuss importance of upholding ethical standards.
- Managerial Accounting and Cost Concepts
- Identify the major differences and similarities between financial and managerial accounting.
- Identify each of the three basic manufacturing cost categories.
- Distinguish between product costs and period costs and give examples of each.
- Prepare an income statement including calculation of the cost of goods sold.
- Understand the differences between variable costs and fixed costs.
- Understand the differences between direct and indirect costs.
- Explain cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs.
- Job-Order Costing
- Distinguish between process costing and job-order costing and identify companies that would use each costing method.
- Identify the documents used in a job-order costing system.
- Compute predetermined overhead rates and explain why estimated overhead costs (rather than actual overhead costs) are used in the costing process.
- Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record costs.
- Apply overhead cost to Work in Process using a predetermined overhead rate.
- Apply the use T-accounts to show the flow of costs in a job-order costing system.
- Compute underapplied or overapplied overhead cost and prepare the journal entry to close the balance in Manufacturing Overhead to the appropriate accounts.
- Process Costing
- Record the flow of materials, labor, and overhead through a process costing system.
- Compute the equivalent units of production and cost per equivalent unit using the weighted-average method.
- Compute the equivalent units of production and cost per equivalent unit using the FIFO method.
- Analysis and Use of Cost Behavior
- Apply a scattergraph plot to diagnose cost behavior.
- Analyze a mixed cost using the high-low method.
- Prepare an income statement using the contribution format.
- Cost-Volume-Profit Relationships
- Discuss how changes in activity affect contribution margin and net operating income.
- Use the contribution margin ratio (CM ratio) to compute changes in contribution margin and net operating income resulting from changes in sales volume.
- Discuss the effects on contribution margin of changes in variable costs, fixed costs, selling price, and volume.
- Determine the level of sales needed to achieve a desired target profit.
- Determine the break-even point.
- Compute the margin of safety and explain its significance.
- Compute the degree of operating leverage at a particular level of sales and explain how it can be used to predict changes in net operating income.
- Compute the break-even point for a multi-product company.
- Profit Planning
- Discuss why organizations budget and the processes they use to create budgets.
- Understand the various parts of a master budget including
- Sales budget
- Production budget.
- Direct materials budget
- Direct labor budget.
- Manufacturing overhead budget.
- Selling and administrative expense budget.
- Cash budget.
- Budgeted income statement.
- Budgeted balance sheet.
- Flexible Budgets and Performance Analysis
- Prepare a flexible budget.
- Prepare a report showing activity variances.
- Prepare a report showing revenue and spending variances.
- Standard Costs and Operating Performance Measures
- Compute the direct materials price and quantity variances and explain their significance.
- Compute the direct labor rate and efficiency variances and explain their significance.
- Compute the variable manufacturing overhead rate and efficiency variances.
- Relevant Costs for Decision Making
- Identify relevant and irrelevant costs and benefits in a decision.
- Prepare an analysis whether a product line or other business segment should be dropped or retained.
- Prepare a make or buy analysis.
- Prepare an analysis showing whether a special order should be accepted.
- Determine the most profitable use of a constrained resource and the value of obtaining more of the constrained resource.
- Prepare an analysis showing whether joint products should be sold at the split-off point or processed further.
- Capital Budgeting Decisions
- Evaluate the acceptability of an investment project using the net present value method.
- Evaluate the acceptability of an investment project using the internal rate of return method.
- Determine the payback period for an investment.
- Compute the simple rate of return for an investment.
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| 5. Repeatability - Moved to header area. |
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| 6. Methods of Evaluation - |
| - Written and Oral Communications: written homework assignments, oral presentation, class participation.
- Group Work: problem solving, current readings discussion, case studies analysis.
- Computer assignments: accounting software, electronic spreadsheet, accounting practice set.
- Research Paper / Project
- Midterms, quizzes and final exam
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| 7. Representative Text(s) - |
| Garrison, Ray and Eric Noreen. Managerial Accounting. 13th ed. New York, New York: McGraw Hill/Irwin, 2010.
Pasewark, William R. Understanding Corporate Annual Reports. 7th ed. Burr Ridge, Illinois: Irwin McGraw-Hill, 2010.
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| 8. Disciplines - |
| Accounting
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| 9. Method of Instruction - |
| Lecture, Discussion, Oral presentations, Electronic discussions/chat, Demonstration, Internship/preceptorship, and group work.
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| 10. Lab Content - |
| Not applicable.
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| 11. Honors Description - No longer used. Integrated into main description section. |
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| 12. Types and/or Examples of Required Reading, Writing and Outside of Class Assignments - |
| - Written Research Paper and/or Project
- Written Presentation
- Reading of internet articles and writing on accounting topics or accounting-related current events and/or careers
- Reading textbook
- Reading of Wall Street Journal, Business Week, and Fortune
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| 13. Need/Justification - |
| This course is a required core course for the AA degree and Certificate of Achievement in Accounting.
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