Accounting (ACCT) 454
Decision Analysis (Revision 2)

**Note: Students registering in the e-Class® delivery should note that there may be some differences in the Evaluation and Course Materials information indicated below. To obtain the most up to date e-Class® information, contact the School of Business Call Centre at 1-800-468-6531.

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Overview

This course provides advanced coverage of accounting concepts and the use of accounting information for managerial decision-making. Lesson 1 provides an overview of the purpose of management accounting as compared with financial accounting, and traces the history of management accounting. It also outlines some of the uses of cost information. Part II of Lesson 1 discusses cost behaviour. Lessons 2 and 3 cover data analysis techniques—linear programming and regression analysis—as well as activity-based cost systems.

Lesson 4 provides a wide-ranging examination of activity-based management, including pricing and profitability analysis and the strategic cost management technique of target costing. Lesson 5 covers decentralization, discussing levels of decentralization and some of the benefits and conflicts it causes. Lesson 6 introduces the balanced scorecard as a total business unit performance measurement platform.

Lesson 7 covers financial measures of performance, including sales, profitability, and productivity variances, and it deals with transfer pricing techniques and issues. Part II of Lesson 7 continues coverage of financial performance measurement, dealing with return on investment and economic value added. Lesson 8 completes the study of the balanced scorecard with a discussion of the customer, internal business processes, and employee perspectives. Lesson 9 considers the role of management accounting in performance evaluation and incentive and compensation, including a discussion of the principal-agent paradigm. Lesson 10 concludes the course with a look at the ethical considerations related to agency theory and control.

Outline

• Lesson 1 Management Accounting and Decision Analysis
  • Part 1 Understanding Management Accounting
                -Origins of cost management systems
                -Contemporary management accounting developments
                -Introduction to major themes of the course
  • Part 2 Understanding Cost Behaviour
                -Origins of cost function
                -Indirect costs
                -Cost of unused capacity
                -Design and analyze a cost-volume-profit model
  
  
• Lesson 2 Resource Allocation, Capacity Cost and Assigning Resource Costs
  • Part 1 Short-Term Budgeting, Resource Allocation and Capacity Cost
                -Activities, resource use, and costs
                -Optimizing the use of short-term resources
                -Linear programming analysis for production planning
                -Opportunity costs, capacity costs, and the theory of constraint
                -Production and resource use
  • Part 2 Assigning Resource Costs to Production Centers
                -Measuring costs of using service departments
                -Assigning service department costs
                -The nature and problems of reciprocal services
  
  
• Lesson 3 Activity-Based Cost Systems, Cost Estimation and Regression Analysis
  • Part 1 Activity-Based Costing
                -Assigning service department costs to activities
                -Cost hierarchy of activities
                -Activity cost drivers
                -Designing the optimal system
  • Part 2 Cost Estimation and Regression Analysis
                -Regression analysis for cost estimation
                -Measuring the goodness of fit of a regression equation
                -Assessing the confidence of a regression equation
                -Multiple regression analysis


• Lesson 4 Activity-Based Management and Cost-Based Decision Making
  • Part 1 Activity-Based Management
                -Purpose of activity-based management
                -Pricing
                -Using activity-based costing for analyzing customer profitability
                -Evaluation of ABM
  • Part 2 Cost-Based Decision Making
                -Life cycle product costing
                -Target Costing
                -Kaizen Costing
                -Cost of quality
                -Other costing tools
  
  
• Lesson 5 Decentralization
              -Why decentralize
              -Organization of decentralized units
              -Performance measures for decentralized operating units
  


• Lesson 6 Balanced Scorecard: Measuring Total Business Unit Performance
              -The balanced scorecard
              -Linking multiple scorecard measures to a single strategy
              -Diagnostic versus strategic measures
  


• Lesson 7 Financial Measures of Performance, Return On Investment (ROI) and Economic Value Added (EVA)
  • Part 1 Financial measure of performance
                -Nature of Financial Control
                -Sales, Profitability, and Productivity Variances
                -Responsibility accounting
                -Transfer Prices
  
  
  • Part 2 Return on investment and economic value added
                -Relating profits to assets employed
                -Shortcomings of the ROI Measure
                -Economic value added
                -Adjustments to ROI and EVA calculations
  
  
• Lesson 8 Measuring Customer, Internal Business Process, and Employee Performance
              -Customer perspective
              -Internal business perspective
              -Employee capabilities
  


• Lesson 9 The agency theory perspective on managerial accounting
  • Part 1 Incentive and Compensation Systems
                -The expectancy view of behaviour
                -Tying rewards to performance
                -Important attributes of compensation systems
                -Executive compensation contracts and participative budgeting
  • Part 2 Formal Models in Budgeting and Incentive Contracts
                -Issues and terms in formal incentive models
                -The agency model


• Lesson 10 Ethical considerations related to agency theory and control
              -Trust, ethical behaviour, and the accountant
              -Eliciting honest revelation of privately held beliefs
              -Standards for ethical conduct for management accountants
  

Evaluation

To receive credit for Accounting 454, you must successfully complete three written assignments and a final exam. The weighting of each assignment and the exam is indicated in the chart below. The passing grade for the final exam is 50 per cent. To receive credit for the course, you must pass the final exam and achieve an overall course grade of at least 50 per cent.

Course Materials

Textbook

Kaplan, Robert S. and Atkinson, Anthony A. 1998. Advanced Management Accounting. 3rd edition. Prentice Hall, New Jersey.

Other material

The course materials include a study guide.

Special Course Feature

Students must have access to an IBM-compatible microcomputer with Office 97 or 2000 Professional software, primarily for Excel use.

Athabasca University reserves the right to amend course outlines occasionally and without notice.
Courses offered by other delivery methods may vary from their individualized-study counterparts.


Athabasca University
1 University Drive
Athabasca, AB T9S 3A3
(780) 675-6111, (800) 788-9041
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Anticipated opening date: May 01.01.
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This page was updated by G. Zahara