Module Handbook

2013-14

ACC4210Financial and Management Accounting

PART TWOSpring Term

(Duration of the part two: 12 weeks)

Module Leader: Dr. Pingli Li

Accounting & Finance Department

Business School

This handbook can also be accessed via UniHub in My Learning.

This handbook is available in large print format. If you would like a large print copy please contact the module leader, Dr Pingli Li, W233 on 0208 411 5738. If you have other requirements for the handbook please also contact her, other formats may be possible. We will do our best to respond promptly. To help us, please be as specific as you can about the information you require and include details of your disability.

The material in this handbook is as accurate as possible at the date of production however you will be informed of any major changes in a timely manner.

Your module handbook should be read and used alongside your programme handbook and the information available to all students on UniHub including the Academic Regulations and Student Charter.

Contact Details

Module leader:

Dr Pingli Li W233Email Address p.li@mdx.ac.uk Telephone 0208 411 5738

Office Hours…………………………………………………

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ACC4210

Financial and Management Accounting (Part Two)

Contents Page

Aims 4

Learning outcomes 4

Syllabus 4

Teaching and learning strategies 4-5

Assessment scheme 5

Textbooks 5

Outline of lecture programme 6

Coursework assignment 7 -11

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Aims

This module aims to provide a critical understanding of the financial accounting and management accounting techniques and practices and their relevance to contemporary business. The relevant concepts and theories, together with a range emerging issues will be presented and critically evaluated.

Learning Outcomes (Part Two)

Knowledge

On completion of this module, the successful student will be able to:

1. Demonstrate a critical understanding of the recent changes in Management Accounting, particularly with regard to budgeting, costing, and performance management;

2. Critically explain, apply and evaluate pricing techniques and cost accounting techniques;

3. Critically explain, apply and evaluate decision making techniques to evaluate business choices;

4. Critically understand the role of budgeting and standard costing to plan and control business performance.    

Skills

This module will call for the successful student to:  

5. Apply the relevant concepts to analyze company’s financial statement, capital budgeting practice and controlling functions;  

6. Work in groups and demonstrate problem solving abilities.    

 

Syllabus (Part Two)

The following areas of study are covered in part two of this module:

Traditional cost allocation and activity-based costing (ABC) Cost-volume-profit analysis (CVP) Investment appraisal methods Budgeting process Standard costing and variance analysis Transfer pricing Management control system and performance measurement Benchmarking and balanced scorecard

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Learning, Teaching and Assessment Strategies

Core knowledge is acquired through lecture, seminar and independent learning. The lectures will impart information and define the scope of coverage for private study.  The lecture will outline the extent of the syllabus and address difficult aspects in more detail.  Weekly seminars will cover material from the previous weeks lecture.  Students are expected to attempt the seminar questions before attending each seminar. 

Assessment Scheme

Formative Assessment

Students will be expected to complete questions each week and the answers will be discussed in class when students will have the opportunity to clarify their understanding.

Summative Assessment (Part Two, 50% in total)

Essay (10%): Students are required to complete one essay independently.

Coursework (30%): E-submission of one group coursework. Continuous assessment (10%): Students will be required to complete 6 in-class tests during the lecture time, which are intended to reinforce the preparation undertaken for the lecture. The tests will be marked and contribute towards the overall assessment.

Assessment WeightingCoursework: 100%

Learning Materials:

Essential:

Weetman, P. (2013). Financial and Management Accounting, 6th edition,Pearson

Additional Readings

Drury, C, (2012). Management & Cost Accounting, 8th edition, South-Western

Ashton, D, Hopper, T, and Scapens, R (2007). Issues in Management Accounting, Prentice-Hall

Atkinson, A., Banker, R, Kaplan, R, and Young, S (2007). Management Accounting, 5th ed., Prentice-Hall International

Atrill, P, and McLaney, E, (2012). Management Accounting for Decision Makers, 7th ed., Prentice Hall/Pearson Education

Kenneth Merchat and Wim Van der Stede, (2007), Management Control Systems: Performance Measurement, Evaluation and Incentives, 2nd ed., Pearson Education

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Recommended Journals: Accounting and Business ResearchAccounting, Organizations and SocietyThe British Accounting ReviewFinancial ManagementJournal of Business Finance & AccountingJournal of Management Accounting ResearchManagement Accounting Research

Further reading is provided for each topic in the lecture notes.

Module Calendar

WEEK 13-24Topic

Week 13 Introduction to Management Accounting, Cost Terms and Concepts

Week 14 Cost-Volume-Profit (CVP) Analysis (Mini-test 1)Week 15 Relevant Costs and Revenues for Decision-Making (Mini-test 2)Week 16

Week 17 Reading week (no teaching)

Week 18 Traditional and Activity-Based Costing (ABC) (Mini-test 3)Week 19 Management Control Systems (Mini-test 4)Week 20 Budgeting processWeek 21 Standard costing and variance analysis (Mini-test 5)Week 22 Performance measurement (Mini-test 6)Week 23 Transfer pricingWeek 24 Revision

Note: There may be minor changes to the above schedule. In the case of any changes, announcements will be made during the lecture and on My Learning.

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ACC4210 Financial and Management Accounting- Management Accounting Coursework Assignment

There are two pieces of coursework for management accounting. The first individual coursework is a critical essay on a given topic and the second group coursework is a case study. 

The coursework needs to be submitted online through the link provided on “my learning”. The deadline for the coursework is on (TBC).

The deadline is fixed and will not be extended. If you do have extenuating circumstances, please inform me and the Unihelp desk.

You are required to complete and submit your own work. If evidence of plagiarism is observed, this will be dealt with according to the University guidelines. As the module leader, I reserve the right to arrange an oral examination of your submitted work.

You are expected to submit the work in a typed format with font 12, single line spacing. The use of page numbering is essential.

Individual coursework (10 marks)

Write an essay on ONE of the following two topics in no more than 2000 words (excluding references, footnotes, and diagrams):

Topic 1 Activity-based-costing (ABC) in practice - the factors affecting the successful implementation of an ABC system

Topic 2 The Balance Scorecard (BSC) in practice- the factors affecting the successful implementation of a BSC

You are expected to critically review the relevant literature. A good essay should discuss and contrast the findings, the research methods, and the limitations of relevant previous studies, and should be able to identify the research gaps in the relevant areas.

Assessment criteriao The coverage of the relevant literature (30%)o The depth and originality of the discussion (60%)o The structure and presentation (10%)

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Group coursework (30 marks)

You are required to complete the coursework in groups of 3-4 students.

Each group is required to submit one copy of coursework. If any student has any problems in finding a partner or teaming up with a group, please come and see me as soon as possible.

For groups to function well, commitment from all members of the group is vital. You are required to keep a record of your group’s activities and to indicate the contribution of each member of the group on the forms provided. These forms should be handed in with your coursework.

The mark awarded to each member in the group will be the same if the group members contribute equally to the work. Different marks could be given when I receive information on different contributions in the form of a written report and signed by all group members.

All group members should be fully aware of all different aspects of you submitted coursework. As the module leader, I reserve the right to arrange an oral examination for each individual group member when and if necessary.

Assessment of Contribution – ACC4210The Diary of Group Work - Coursework

Dates Activities & Outcome Attendance(Signature)

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Name Student No. Contribution(in %)

Signature

Swiss Village

This case was originally set in the 1960's in Switzerland. The Swiss Village is an old, but well maintained property that has changed ownership several times over the years. It has no restaurant or bar. It is positioned as a mid-price, good quality "destination" resort village.

The Swiss Village is open during the skiing season. It opens on December 2 and closes the last day of March. The ski mountain it serves operates on a permit from the state which allows only 120 days of operation per year. Each of the 50 rooms in the east wing rents for $45 per night for single occupancy or $60 per night for double occupancy. The west wing of the village has 30 rooms, all of which have spectacular views of the skiing slopes, the mountains, and the village. Rooms in this wing rent for $50 per night and $75 per night for single or double occupancy, respectively. The average occupancy rate during the season is about 80% (typically, the Village is full on weekends and averages 50 to 60 rooms occupied on week nights.) The ratio of single versus double occupancy is 2:8, on average.

Operating results for the last fiscal year are shown in Exhibit 1. Mr. Jones, the manager of the village, is concerned about the off-season months, which show losses each month and reduce the high profits reported during the season. He has suggested to the owners, who acquired the village only at the end of the 2011 season, that to reduce the off-season losses, they should agree to keep the west wing of the village operating year-round. He estimates the average occupancy rate for the off-season to be between 20% and 40% for the next few years. Jones estimates that with careful attention to the off-season clientele a 40% occupancy rate for the 30 rooms during the off-season would be much more likely if the owners would commit $10,000 for advertising each year. There is no evidence to indicate that the 2:8 ratio of single vs. doubles would be different during the remainder of the year or in the future. Rates, however, would have to be drastically reduced. Present plans are to reduce them to $30 and $45 for singles and doubles.

Mr. Jones’s salary is paid over 12 months. He acts as a caretaker of the facilities during the off- season and also contracts most of the repair and maintenance work during that time. Using the west wing would not interfere with this work, but would cause an estimated additional $10,000 per year for repair and maintenance.

Mrs. Jones is paid $50 a day for supervising the maids and helping with check-in. During the season, she works 7 days a week. The regular desk clerk and each maid are paid on a daily basis at the rate of $80 and $60 respectively. Although depreciation and property

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taxes would not be affected by the decision to keep the west wing open, insurance would increase by $500 for the year. During the off-season, it is estimated that Mr. and Mrs. Jones could handle the front desk without an additional person. Mrs. Jones would, however, be paid for 5 days a week.

The cleaning supplies and half of the miscellaneous expenses (room supplies) are considered a direct function of the number of rooms occupied. The other half of the miscellaneous expenses are fixed and would not change with 12 month operation. Linen is rented from a supply house and the cost also depends on the number of rooms occupied, but is twice as much, on average, for double occupancy as for single occupancy. The utilities include two items: telephone and electricity. There is no electricity expense with the village closed. With the village operating, electricity expense is a function of the number of rooms available to the public. Rooms must either be heated or air-conditioned. The telephone bills for each of the four seasonal months were as follows:

80 telephones @ $3.00 per month $240

Basic Service Charge 50

Total $290

During the off-season, only the basic service charge is paid. The monthly charge of $3 is applicable only to active telephones.

An additional aspect of Mr. Jones's proposal is that a covered and heated swimming pool be added to the village. Mr. Jones believes that this would increase the probability that the off-season occupancy rate would be above 30%. Precise estimates are impossible. It is felt that although the winter occupancy rate will not be greatly affected by adding an indoor pool, eventually such a pool will have to be built to stay even with the competition. The cost of such a pool is estimated to be $80,000. This amount could be depreciated over 5 years with no salvage value. The only other costs associated with the swimming pool are $800 per month for a lifeguard, required by law, additional insurance and taxes, estimated to be $1,200; heating cost of $5,000; and a yearly maintenance cost of $6,000.

EXHIBIT 1Swiss Village

Operating Statement, For the fiscal Year ended 31st March 2012

Revenues $475,200

Expenses

Salaries

Manager

Manager’s Wife

Desk Clerk

Maids (four)

$80,000

6,000

7,200

28,800

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$122,000

Depreciation (15 year life) 130,000

Property Taxes 14,000

Insurance 13,000

Repairs and Maintenance 17,204

Cleaning Supplies 19,200

Utilities 6,360

Line service 13,920

Interest on Mortgage (5% interest rate) 21,716

Miscellaneous Expense 7,314

Total expenses 364,714

Profit before taxes $110,486

Income taxes (48%) 53,033

Net profit $57,453

Assignment questions1. List all the relevant decision alternatives in Mr. Jones’ proposal.

(2 marks)2. For each alternative from question 1, list the annual expenses that are incremental to

that decision alternative but are not related to the room/days occupied. (8 marks)

3. Calculate the incremental contribution margin per occupied room/day during the off-season.

(8 marks)4. For each decision alternative, calculate the occupancy rate necessary to break even on

the incremental annual expenses. (8 marks)

5. Which alternative do you recommend? Why? (4 marks)Total 30 marks

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