ACCT 310 Syllabus Page 1 Dr. Michael Constas CBA 403 [email protected] Office Hours M 5-6PM, W 5-7PM & after my night classes. ACCOUNTING 310 COST ACCOUNTING www.csulb.edu/~mconstas Spring 2011 ACCT 310 focuses on understanding: (i) the methods in which costs are allocated to a firm’s product lines, (ii) the behavior of costs and what causes them to change, and (iii) the best way to utilize cost information in managing a firm’s operations. This emphasis on costs results from the fact that costs tend to be a facet of a firm’s operations that may be misrepresented and/or not fully understood. A firm’s decision makers often think of costs and other financial statement figures as being absolute truths. Contrary to what most managers think, however, financial statements are not carved in stone on Mt. Sinai. They are open to interpretation. Although firms know the source of their revenues, some of the costs associated with their product lines are less clear. While material and labor costs are easy to determine, it is often difficult to identify the overhead associated with particular products and services. There is no Overhead Meter that produces an accurate measure of the overhead incurred in producing a good or service. As a result, conventions are used to assign overhead to a firm’s output. These conventions may or may not be appropriate or provide an accurate measure of how overhead is incurred in different situations. Firms, therefore, may not be using accurate information when making decisions. If managers use inaccurate information when making decisions, the decisions made may be wrong or not optimal. In addition, in different contexts, it may be inappropriate for firms to consider certain costs when making decisions, even if the costs are accurately measured. When decisions are based on inappropriate or inaccurate cost information, they may be less than optimal. Moreover, cost structures are not static, they can change, and understanding their behavior can give a manager an advantage in managing operations. For example, because BIC pens understood learning curves and economies of scale (as well as their effect on BIC’s costs), BIC was able to achieve a 50% share of the U.S. ball point pen market in a very short period of time. This class is designed to sensitize managers to these issues. This is not a class on bookkeeping, and there are very few journal entries covered in this class. The class reviews cost procedures in order to aid managers in their decision making. This class involves critical thinking (not memorization).ACCT 310 Syllabus Page 2 CATALOG DESCRIPTION Accounting for and analysis of costs; cost management; use of accounting and cost data for planning and decision making; product costing, activity-based costing (ABC); break-even and cost-volume-profit analysis; budgeting as a tool for profit planning; evaluation of internal control and systems; non-routine decisions, capital budgeting; continuous improvement (CI); balanced scorecard (BSC); target costing; quality costs; just-in-time (JIT). CURRICULUM JUSTIFICATION The curriculum is designed to teach (1) critical thinking skills through such managerial accounting topics as the role of cost accounting information for management and business strategy development. (2) As for business functions, the course covers topics such as cost accumulation systems for inventory valuation and income determination. (3) For quantitative and technical skills, the course addresses such profit planning tools such as cost-volume-profit analysis and budgeting. COURSE OBJECTIVES Learning goals – Critical Thinking: (a) Students will be able to understand the role of accounting information in management decision making and how management accounting contribute to business strategy development. (b) Students will be able to differentiate product vs. period costs, expired vs. unexpired costs, direct vs. indirect costs, and fixed vs. variable costs. Learning goals – Business Functions: (a) Students will be able to use normal costing system to determine overhead application rate, allocate overhead to products and services, and dispose under or over-applied overhead. (b) Students will be able to understand the cost flow in a job order costing system, prepare schedules of cost of goods manufactured, cost of goods sold and present income statement. Learning goals – Quantitative and Technical Skills: (a) Students will be able to conduct break-even and cost-volume-profit analysis for both single and multiple products; and to determine margin of safety and operating leverage. (b) Students will be able to understand the relationship between company strategy and budgets, and prepare master budgets, including cash budget. TEXTBOOK Garrison, Noreen & Brewer Managerial Accounting 14th Edition McGraw-Hill IrwinACCT 310 Syllabus Page 3 COURSE SUBJECT MATTER Date Chapter Topic 1/26 Ch 3 Job/Order Costing. A discussion of the methods used to apply costs to custom-made or low-volume products and services. 2/2 Ch 4 Process Costing. An examination of the manner in which costs are applied to high-volume, standard products and services. 2/9 App 4B Service Departments. A discussion of the practice of grouping overhead into cost centers, and the methods used to allocate that cost center overhead to a firm’s output. 2/16 Ch 2 Cost Behavior. An examination of the manner in which costs are incurred. 2/23 Ch 5 Cost-Volume-Profit Analysis. A review of the procedures used to determine the sales and production volume necessary to avoid a loss or achieve a specified operating profit. 3/2 Midterm No. 1 (Chapters 2,3,4, & 4B) 3/9 Ch 6 Variable Costing. An examination of the ability to use alternative Income Statement formats to aid in decision making. 3/16 Ch 7 ABC Costing. A review of different methods employed to allocate overhead to a firm’s product lines Ch 8 Budgeting. A review of the preparation of budgets and the role that they play in the planning process 3/23 Ch 9 & 10 Variances. A review of the procedures used to determine variances from budgeted production
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