BA 321BA 321Agenda for Lecture 1Agenda for Lecture 1

• Course administration

• Introduction to cost accounting

• Break

• Entrance exam

BA 321BA 321AdministrationAdministration

• Syllabus

• Course Requirements

• Course Materials and Resources

• How to Succeed

BA 321BA 321Course RequirementsCourse Requirements

Four Exams57%

I n-Class Activities

13%

Final Exam30%

Grades will be posted to Blackboard

BA 321BA 321Course MaterialsCourse Materials

• Management Accounting: Concepts and Techniques, by Dennis Caplan

• Cost/Managerial Accounting: Exam Questions and Explanations, by Irvin N. Gleim (7th edition)

• Optional materials: Cost Accounting: A Managerial Emphasis, 11th edition (copyright 2003) by Horngren, Datar and Foster

• Additional required readings and assignments will be distributed in class

BA 321BA 321How to SucceedHow to Succeed

• Do not expect a course in financial accounting

• Come into the course with the prerequisite knowledge and skills.

• Take personal responsibility for understanding all assigned readings and problems.

• Make efficient use of the time you spend in class and studying.

• Understand the difference between following a solution and generating a solution.

• Be a “smart” test-taker.

Assignment for ThursdayAssignment for Thursday provide the following information provide the following information

on an 8.5 x 11 sheet of paperon an 8.5 x 11 sheet of paper

• Name

• A photograph of yourself (preferably passport style)

• Nickname, if any (what you want to be called in class)

• Hometown (where you grew up)

• Most recent or favorite job

• Career goal

Worth 5 points if turned in complete and on time, 4 points if turned in next Tuesday, 3 points if turned in next week but after Tuesday.

Assignment for ThursdayAssignment for Thursday provide the following information on provide the following information on

an 8.5 x 11 sheet of paperan 8.5 x 11 sheet of paper

• Charles Schulz

• “Sparky”

• St. Paul, MN

• Cartoonist (creator of “Peanuts”)

• Career goal: To complete 50 uninterrupted years of Peanuts cartoons

Links Between Management Links Between Management Accounting and Other DisciplinesAccounting and Other Disciplines

Management Accounting

Financial Accounting

Operations Management

Strategy Finance

Marketing

M.I.S.

BA 321BA 321Agenda for Lecture 1Agenda for Lecture 1

• Course administration

• Introduction to cost accounting

• Break

• Entrance exam

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Question: What is the fundamental economic problem that we all face?

Answer:

The allocation of scarce resources

Accounting and Allocation of

Scarce Resources

FinancialAccounting

Accounting and Allocation of

Scarce Resources

FinancialAccounting

ManagementAccounting

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events of

organizations for use by management

in planning, evaluation, and control.

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events of

organizations for use by management

in planning, evaluation, and control.

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events oforganizations for use by management

in planning, evaluation, and control.

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events of

organizations for use by management

in planning, evaluation, and control.

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events of

organizations for use by management

in planning, evaluation, and control.

Definition of Management Accounting

Management accounting is the process of

identifying, measuring, and reporting

information about the economic events of

organizations for use by management

in planning, evaluation, and control.

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Financial and Management Accounting, Compared

EXTERNAL USERS

INTERNAL USERS

MANAGEMENTACCOUNTING

FINANCIAL ACCOUNTING

Financial and Management Accounting, Compared

• Required

• Follows GAAP

• Usually Historical

• Highly condensed

• General use

• Optional

• No rules

• Forward-looking

• Can be detailed

• Tailored to specific needs

Financial Managerial

Financial and Management Accounting, Compared

EXTERNAL USERS

INTERNAL USERS

MANAGEMENTACCOUNTING

COST ACCOUNTING

FINANCIAL ACCOUNTING

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Lecture 1Lecture 1A Historical PerspectiveA Historical Perspective

• The Industrial Revolution

• The Early 20th Century

• The Information Revolution

• Proliferation of Product Lines

• Globalization of the Economy

Lecture 1Lecture 1A Historical PerspectiveA Historical Perspective

• Increasing importance of the Service Sector

• Total Quality Management (TQM)

• Just-in-Time (JIT)

• The Theory of Constraints

Lecture 1Lecture 1IntroductionIntroduction

• The allocation of scarce resources

• Management accounting defined

• Management accounting and financial accounting compared

• A historical perspective

• What happens when management accounting systems fail

Headlines You ProbablyWon’t See

• “General Motor’s stock rose 3/8s of a point today on news that GM is installing a new cost accounting system”

NEW YORK TIMESOCTOBER 28, 1997

Oxford Health Plans said yesterday that it had been losing money because it fell behind in sending bills to customers and underestimated how much it owed doctors and hospitals. Shares fell 62%.

Stephen Wiggins, chairman of Oxford, said the company had belatedly discovered that many customers were not paying premiums, often because the company was late in sending bills.

Oxford acknowledged that it had fallen behind in payments to hospitals and doctors as it struggled with a new computer system.

With incomplete information in its computers, it had to advance money to doctors and hospitals without verifying that they were obeying Oxford's rules.

Mr. Wiggins said Oxford would add about 0.5% to spending on administration next year in an effort to insure there are no similar problems. “The important thing," he added, "is we're the same company we were on Friday, except our market value has dropped by half.”

BA 321BA 321Agenda for Lecture 1Agenda for Lecture 1

• Course administration

• Introduction to cost accounting

• Break

• Entrance exam