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ACCT 350 Cost Accounting Course Guide

Course Description 

The primary objective(s) of cost accounting are to: (1) calculate the information necessary for GAAP inventory costing and (2) provide the information necessary for managerial decision-making. In the internal management accounting function, as opposed to the public accounting function, the managerial accountant is a very important and active player in the management team. The information necessary for decision-making must be gathered, analyzed, presented, and communicated in order to serve the varying decision-making needs of various managers.

This course will concentrate on the following: examination of the concepts, theories, principles, and practices of cost accounting; development of quantitative and qualitative methods for analyzing raw data to provide useful decision-making information; and exploration of the use of various cost accounting techniques that support the business decision-making process and GAAP inventory costing.

Specific, Assessable Learning Objectives 

Upon completion of this course, students will be able to do the following:
1. Examine a business situation, apply the IMA Code of Ethics, and formulate an acceptable course of action (Professional Ethics Topic);
2. Analyze historical data in order to estimate costs for future management decision making (Cost Estimation Topic);
3. Calculate appropriate product costs within a designated business environment (Product Costing Topic); and
4. Prepare and interpret budgets and operating results through variance analysis (Budgeting and Variance Analysis Topic);

Course Outline and Topics 

1. Professional Ethics & Standards (Cognitive Level: Analysis)
    a. Review the Institute of Management Accountants’ Standards of Ethical Conduct for Management Accountants
    b. Overview of Sarbanes-Oxley Legislation
    c. Cressey’s Fraud Triangle
        i. Components of the Fraud Triangle
       ii. Identifying an Ethical Dilemma
      iii. Identifying Stakeholders in the Ethical Dilemma
      iv. Reaching Resolution of the Dilemma
2. Cost Estimation (Cognitive Level: Analysis)
    a. Review Cost-Volume-Profit Analysis
        i. Review the Behavior of Variable, Fixed, and Mixed Costs
       ii. Contribution Margin vs. Gross Margin Income Statements
      iii. Review Basic CVP
      iv. Review the Use of the Profit Equation
    b. Effect of Taxes on CVP Analysis
        i. Sales and Product Mix Issues in CVP Analysis (both in terms of Sales Dollars and Units)
    c. Estimation of Cost Functions
        i. Graphical Visualization and Formulization
       ii. Regression Analysis
          1. Goodness of Fit
          2. Economic Plausibility
          3. Interpretation of Coefficients
3. Product Costing (Cognitive Level: Analysis)
    a. Detailed Inventory Cost Flows for Manufacturers and Service Companies (with t-accounts and journal entries)
    b. Job Order Costing
       i. Overhead Application
      ii. Journal Entries
    c. Process Costing
       i. Weighted Average Method with Journal Entries
      ii. Transferred-In Costs
      iii. Overhead Application
    d. Activity Based Costing
       i. Graphical Presentation of Direct and Indirect Cost Pools and Flows
      ii. Cost Pools & Rate Calculations
      iii. Cost Driver Choice
   e. Direct (Variable) and Absorption (Full) Costing
       i. Fixed Overhead Cost Flows
      ii. Contribution Margin vs. Gross Margin Income Statements
     iii. Numerical Reconciliation of Net Incomes Due to Changes in Inventory Levels (For the First Year of Operations Only)
   f. Introduction to Transfer Pricing (Cognitive Level: Comprehension)
      i. Need for Transfer Pricing
     ii. Goal Congruence Issues
    iii. Various Types of Transfer Prices
       1. Market Based
       2. Cost Based (range: floor, and ceiling prices)
       3. Negotiated
       4. Administered
    iv. Very Basic Overview of the Elimination Process for Intercompany Transfers
     v. Basic Journal Entries in Transfer Pricing
4. Budgeting and Variance Analysis (Cognitive Level: Analysis)
   a. Master/Static Budget
       i. Structure and Components
      ii. Preparation
     iii. Behavioral Aspects of Budgeting
   b. Static and Flexible Budgets
      i. Preparation of Budgets
     ii. Difference Between these Two Types of Budgets
   c. Variance Analysis
     i. Direct Material, Direct Labor, Variable Overhead, and Fixed Overhead Variance Calculations
       1. Static Budget Variance
       2. Sales Volume Variance & Flexible Budget Variance
       3. Price and Efficiency Variances for Direct Labor and Direct Materials
       4. Spending and Efficiency Variances for Variable Overhead and Fixed Overhead
     ii. Interpretation of Variances
    iii. Related Journal Entries for Price and Efficiency Variances for Direct Labor and Direct Materials

 Recommended Teaching Methodology

This course will be taught using an interactive lecture approach in order to introduce the basic concepts, theories, and practices. Small group problem solving, discussion, case analysis, written homework assignments, and student presentations may be used to enhance student understanding.

The readings will come from the required text, plus supplemental readings (as needed). Lectures and discussions will enable the Professor and the students to expand upon and clarify the material presented in the readings.

 Required AACSB Assessment of Learning Objectives

Technical competence in the course (Learning Objectives 2 through 4) will be assessed via the comprehensive Final Exam. Ethics (Learning Objective 1) will be assessed via an individual student assignment in this course.

 Recommended Student Grading Measures

The primary student grading measures will be examinations, including a comprehensive Final Exam. The final exam will include (but not necessarily be limited to) common questions across all sections, in order to facilitate AACSB assessment. Secondary student grading measures may include quizzes, graded homework, practice sets, class participation, and individual/group projects and presentations.

 Use of Calculators

The accounting department has adopted a policy of restricting the use of certain programmable calculators in class and final exams. Students may either bring a simple four-function calculator for an exam. All personal electronic devices (including cell phones) must be stored during class.

Statement of Expectations

This course is a required core course for all Accounting Majors in the School of Business. Students are expected to take an active role in their learning experience. Therefore, they are expected to have read the assigned material prior to class and to have prepared all written assignments. Students should attend and actively participate in all classes.

Most of the learning will not take place in the classroom. Students should be informed that most learning occurs as they do the required work outside of class. This includes their reading, critically thinking, and applying the concepts to the real world, problems, and exercises. The amount that they learn and the level of skill that they develop will be directly proportional to the amount of effort they put forth into preparing for class.

The concept of academic integrity lies at the very heart of any college. This is particularly true of Siena with its strong Franciscan tradition and its dedication to fostering sound moral growth. In such an environment, academic dishonesty cannot be tolerated. Work that students submit for this course must be entirely their own. Although students are encouraged to study together, they are required to produce their own solutions to all work they submit (including, obviously, exams). In any situation in which a student is unsure what constitutes academic dishonesty, it is the student’s responsibility to raise the question with his or her instructor. It is also the student’s responsibility to be familiar with the student guidelines on academic dishonesty, “Academic Integrity and the Siena Student.”

 Course Prerequisites

The course prerequisites are ACCT 200 – Financial Accounting, ACCT 205 – Managerial Accounting, and QBUS 100 – Mathematics for Decision Making 1 (or its equivalent).

This course assumes a working knowledge of micro computers, including WORD and EXCEL. Additionally, students must be comfortable with the mathematical tools necessary for business. The student must be able to communicate effectively and be able to work in groups.

Institutional Mechanism for Providing Feedback for Continuous Quality Improvement

The Accounting Department will annually review assessment results from the common questions on the final examination for this course and other assessment projects that might be undertaken. Specifically, assessment results of the learning objectives will be analyzed to determine the level of success in achieving these learning objectives. Any deficiencies in achieving learning objectives will be addressed, and the appropriate changes (designed to improve the success in achieving these learning objectives) will be implemented.

There also will be a periodic review of the course curriculum to accommodate changes in accounting practice and/or classroom experience.