BAYAMÓN CAMPUS
BUSINESS ADMINISTRATION
Bachelor’s degree in accounting
SYLLABUS
COURSE
TITLE : COST ACCOUNTING II
COURSE CODIFICATION :
CONT. 4005
PREREQUISITES : Cont. 3025
CREDIT HOURS : Four (4) credit hours
MEETING HOURS : Four hours a week
COURSE
DESCRIPTION : Study of different ways of applying cost
accounting to achieve planning and control of
costs. These include control of fixed
and variable budgets, standard and manufacturing costs, analysis of marginal
income, distribution, and administrative costs.
Inventory control and procedures, labor, and indirect costs are also
emphasized. Different costs, usefulness
of graphs for representing cost information and alternatives, and a series of
analytical techniques needed by the accountant to provide information to
administration are studied.
TEXT :Cost Accounting: A Managerial Emphasis,
Eleventh edition, Horngren, Datar & Foster. Prentice-Hall, 2003.
SUPLEMENTARY
EVALUATION
METHODS : Includes:
§
Two or three
tests
§
Group
investigation of a selected manufacturing company. A written and oral
presentation will be required.
§
Internet
problems
§
Final
examination
§
Grade
distribution:
Examinations …………………….. 50%
Written
and oral presentation 40%
Class
participation………………. 10%
Total………………………… 100%
§
Grade scale as follows:
o
100-90 A
o
89-80
B
o
79-70
C
o
69-60
D
o
59-0
F
General
objectives :
§
To motivate
students in the process of learning and
searching information related to cost accounting, interacting with the
business community, and other media,
according with technology development .
§
To develop critical thinking skills, using
information gathered from the accounting system, and participating in the
decision making process
§
To prepare
students to recognize the role of cost accounting in organization: becoming an
integral part of the decision-making process instead of data providers.
§
To motivate
students to maintain the highest standards
of ethical conduct as future professionals.
§
To motivate
students develop good habits of team-work.
§
To develop
high standards of communication’s
skills.
Specific
objectives :
§
Identify what
distinguishes variable costing from absorption costing.
§
Prepare income
statements under absorption costing and variable costing and analyze the
differences between the operating income amounts.
§
Understand how
absorption costing can provide undesirable incentives for managers to build up
finished goods inventory.
§
Describe the
various capacity concepts that can be used in absorption costing.
§
Analyze the
factors that managers considers in choosing a capacity level to compute the
budgeted fixed overhead cost rate.
§
Explain how
the capacity level chosen to calculate the budgeted fixed overhead cost rate affects the production-volume
variance.
§
Explain the
assumptions frequently used in cost-behavior estimation.
§
Outline the
steps in estimating a cost function on the basis of past cost relationships.
§
Explain the
decision process to make decisions.
§
Differentiate
relevant from irrelevant costs and revenues in decision situations.
§
Distinguished between quantitative and qualitative factors
in decision making.
§
Analyze two
potential problems in decision making
§
Explain the
opportunity-cost concept and why it is used in decision making.
§
Analyze
factors in the decision to choose which products to produce when there are
capacity constraints.
§
Discuss
factors managers must consider when adding or discontinuing customers and
segments.
§
Explain why
book value of equipment is irrelevant in equipment-replacement decisions.
§
Explain how
conflicts can arise between the decision model used by a manager and the
performance evaluation model used to evaluate the manager.
§
Discuss the
factors that influences on prices
§
Distinguished
short-run from long-run pricing decisions.
§
Price products
using target-costing approach.
§
Price products
using the cost-plus approach.
§
Use life-cycle
budgeting and costing when making pricing decisions.
§
Describe price
practices in which non-cost factors are important when setting prices.
§
Recognize the
strategy a company is using.
§
Identify what
comprises reengineering.
§
Present the
four perspectives of the balanced scorecard.
§
Analyze
changes in operating income to evaluate strategy.
§
Identify
unused capacity and how to manage it.
§
Identify
purposes for allocating costs to costs
objects.
§
Analyze the
criteria to cost allocation decisions.
§
Discuss
decisions faced when collecting costs in indirect cost pools.
§
Discuss why a
company’s revenues can differ across
customers purchasing the same product.
§
Analyze
additional information about sales
volume and quantity variances.
§
Differentiate
between different methods for allocating costs.
§
Understand how
the uncertainty user managers face is affected by the choice between budgeted
and actual cost allocation rates.
§
Allocate
support department costs using different methods.
§
Allocate
common costs using different methods.
§
Explain
different cost categories in a costs-of-quality program.
§
Analyze
different quality problems.
§
Identify the
relevant costs and benefits of quality
improvements.
§
Present
examples of non-financial quality measures of customer satisfaction and internal
performance.
§
Describe the
benefits of financial and non financial measures of quality
§
Describe
customer-response time and explain why delays happen and their costs.
§
Explain the
theory of constraints.
§
Present management for bottlenecks.
§
Recognize the
multiyear focus on capital budgeting.
§
Understand the
capital budgeting for a project.
§
Present and
evaluate the discounted cash flow methods: present value method and the
internal rate of return.
§
Present and
evaluate the payback period method.
§
Identify and
reduce conflicts from using discounted cash flow methods for capital budgeting
decisions and accrual accounting for performance evaluation.
§
Identify
relevant cash flows and outflows for
capital budgeting decisions.
EDUCATIONAL
STRATEGIES:
Conferences,
discussion of cases and problems,
excel and internet problems, team-group analysis of ethics situations and collaborative
problems. A special team group investigation will be developed of a manufacturing
company. The group will present the company situation according with the class
subject. Instructional modules
for self-study and reinforcement will be assigned. Selected articles on related
topics will be discussed.
Revised and translated by Prof. Sonia Feliciano
April, 2003
COURSE OUTLINE
|
TOPICS |
CHAPTER
|
HOURS
|
|
I.
Inventory
Costing and Capacity Analysis A.
Variable
Costing and Absorption Comparing Income Statements. B.
Performance Measures and Absorption Costing C.
Comparison
of Inventory Costing Methods D.
Alternative
denominator-level capacity concepts and absorption costing E.
Choosing a
capacity level. F.
Capacity
costs and denominator level issues |
9 |
4 |
|
II.
Determining
how costs behave A.
General
issues in estimating costs functions. B.
The cost-and
–effect criterion in choosing costs drivers. C. Cost estimation methods. |
10 |
2 |
|
III.
Decision
making relevant information A.
The decision
process B.
The concept
of relevance C.
Choosing
output levels D.
Insourcing
vs. outsourcing and make vs. buy
decision. E.
F.
Product mix
decisions under capacity constraints. G.
Customer
profitability, activity-based costing and relevant costs H.
Irrelevance
of past costs and equipment replacement decisions. I.
Decisions
and performance evaluation |
11 |
6 |
IV.
Pricing decisions and cost management
A.
Major
influences on pricing decisions B.
Costing and
pricing for the short-run. C.
Costing and
pricing for the long-run. D.
Target
costing for target pricing. E.
Cost-plus
pricing. F.
Life-cycle
product budgeting and costing G.
Other
considerations in pricing decisions |
12 |
6 |
|
EXAMINATION |
9,11,12 |
2 |
|
V.
Strategy,
balanced scorecard and strategic profitability analysis A.
Analysis of
different strategies B.
Implementation
of strategy and the balanced scorecard C.
Evaluating
the success of a strategy D.
Strategic
analysis of operating income E.
Downsizing
and the management of capacity |
13 |
4 |
|
VI.
cost
allocation, customer profitability analysis, and sales-variance analysis A.
Purposes of
cost allocation B.
Criteria to
guide cost-allocation decisions C.
Cost
allocation and costing systems D.
Customer
revenues and customer costs E.
Customer
profitability profiles F.
Sales
variances: sales mix and sales quantity variances G.
Market share
and market size variances |
14 |
4 |
VII.
Allocation of support department costs, common costs and revenues
A. Allocating costs of a support department to operating divisions B. Allocating costs of multiple support departments C. Allocating common costs D. Cost allocations and contracts E. Revenue allocation methods |
15 |
6 |
EXAMINATION
|
13,14,15 |
2 |
|
VIII.
Quality,
time and the theory of constraints A.
Quality as a
competitive tool B.
Costs of
quality C.
Techniques
used to analyze the quality problems D.
Relevant
costs and benefits of quality improvement E.
Costs of
design quality F.
Non-financial
measures of quality and customer satisfaction G.
Evaluating
quality performance H.
Time as a
competitive tool I.
Time drivers
and costs of time J.
The theory
of constraints |
19 |
6 |
|
IX.
Capital
budgeting and cost analysis A.
The
dimensions of cost analysis B.
Stages of
capital budgeting C.
Discounted
cash flow methods D.
Sensitivity
analysis E.
Payback
method F.
Evaluating
managers and goal congruence issues G.
Relevant
cash flows in discounted cash flow analysis H.
Managing the
project I.
Strategic
considerations in capital budgeting |
21 |
8 |
X. Oral team-group presentations of manufacturing
companies
|
|
8 |
|
XI. Review |
|
2 |
Total hours
|
|
60 |
Revised by:
Prof. Sonia Feliciano
April, 2003
BIBLIOGRAPHY
Argyris,
C. and R. Kaplan, “Implementing New Knowledge:
The Case of Activity-Based Costing,”
Accounting Horizons (September 1994), pp. 83-105.
Boër,
G., M. Curtin and L. Hoyt, “ Environmental Cost Management,” Management Accounting (September 1998), pp. 28-38.
Callan,
J., W. Tredup and R. Wissinger, “Journey Toward Cost Management,” Management Accounting (July 1991),
pp. 24-27.
Cheatham,
C. and L. Cheatham, “Redesigning Cost Systems: Is Standard Costing Obsolete?” Accounting
Horizons (December 1996), pp. 23-31.
Cornick,
M., W. Cooper and
Hauser,
R., F. Urbanic and D. Edwards, “Process Costing: Is It Relevant?” Management
Accounting (December 1989), p. 53
.
Hendricks,
J. and K. Rose, “Accountants on the Line,” Management Accounting (June, 1998), pp. 45-48.
Epstein,
M., “Accounting for Product Take-Back,” Management Accounting (August 1996), pp. 29-33
Fordham,
D. and B. Marshall, “Tools for Dealing with Uncertainty,” Management
Accounting (September 1997), pp. 38-43.
Hansen,
Don R., and Maryanne M. Mowen, Cost Management: Accounting and Control,
South-Western Publishing Co., 1997.
Johnson,
H.T. “It’s Time to Stop Overselling Activity-Based Costing,” Management
Accounting (September 1992), pp. 26-35.
Johnson,
S., “The ABCs of the Electric Utility Industry,” Management Accounting (November 1998), pp. 25-32.
Kaplan,
R., “In Defense of Activity-Based Cost Management,” Management Accounting (November 1992), pp. 58-63.
.
Kaplan,
R. and H.T. Johnson, “The Rise and Fall of Management Accounting,”
Management Accounting (January 1987), pp. 22-30.
Maher,
Cost Accounting Creating Value for Management, Irwin, McGraw-Hill, 1997
Merchant,
K and M. Shields, “When and Why to Measure Costs Less Accurately to Improve
Decision Making,” Accounting Horizons (June 1993), pp. 76-81.
Rayburn, Gayle L., Cost Accounting: Using a
Cost Management Approach, Irwin, 1996.
Swenson,
D. and D. Flesher, “Are You Satisfied with Your Cost Management System? Management Accounting (March
1996), pp. 49-53.
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