Course Title: Managerial Accounting and Control

Semester: Spring 2021 Class: MBA 2021

Instructor: Omair Haroon Email: omair.haroon@lums.edu.pk

Room # 415 Telephone: 8394

Office Hours: TBA Secretary/TA Bushra Kanwal

COURSE OVERVIEW

Building on the technical foundations of Financial Accounting I in the first semester, this course
concentrates on the use of accounting information for decision making and control within the firm.
This orientation contrasts with financial accounting where the focus is on accounting disclosures for
parties external to the firm. This course reviews different costing methodologies and how to use them
for decision-making. The course also examines the use of management accounting information for
planning, control and performance evaluation purposes.

Teaching Methodology

Method of teaching will include student group discussion sessions, analysis and class discussion of
cases, quizzes (announced and unannounced), mid-term exam and final exam.

Each session is built on the previous session taught. It is therefore extremely important to keep
up with the course from the start.

COURSE LEARNING OUTCOMES (CLOs)

Upon successful completion of the course, the students should be able to understand

1. Basic cost terms, classifications and purposes;

2. Cost Volume Profit Analysis;
3. Different techniques for the allocation of costs to different cost objects;
4. The difference between traditional and activity based costing methods;
5. The use of accounting information for planning and control through the use of fixed and
flexible budgeting, variance analysis and its use for management control;
6. The use of cost accounting information for managerial decision making
7. Basic management control systems including responsibility centres, performance evaluation
tools and transfer pricing.

MBA PROGRAM LEARNING GOALS & OBJECTIVES

1. Leadership and teamwork: Students will be able to assume leadership roles, perform
leadership tasks responsibly, and work effectively in teams.
2. Functional, integrative and strategic abilities: Students will demonstrate understanding of
the functional and strategic aspects of business and management, be able to integrate across
functional areas, and develop feasible strategies and action plans.
3. Critical thinking and decision making: Students will be able to identify key problems,
collect and use information critically, and generate viable alternatives and solutions.
4. Global perspective and flexibility: Students will demonstrate understanding of global and
multi-cultural perspectives within the local context and be able to work effectively in multi-
cultural settings.
MBA PROGRAM LEARNING GOALS & OBJECTIVES

5. Social, ethical, economic and environmental responsibility: Students will be able to

understand the broader ramifications of their decisions and assess the impact of economic,
ethical, environmental factors on the policies, strategies and operations of the organization.
6. Effective communication: Students will be able to communicate clearly and persuasively in
writing and verbally, in ways appropriate for a variety of objectives and audiences.
7. Entrepreneurialism and innovativeness: Students will be able to create, identify, assess,
shape and act on opportunities in a variety of contexts and organizations.
8. Managing pressures, complexities and uncertainties: Students will be able to manage
pressures and resource constraints, and think, decide and act in complex and ambiguous
situations.
9. Diversity and Inclusion: Students will be able to appreciate differences in gender, class,
religion, ethnicity, learning styles etc. and learn how these differences enrich spaces, teams
and institutions.

Indicate below how the course learning objectives specifically relate to any program learning
goals and objectives.

Program Learning Goals and Course Learning Outcomes Course Assessment Item
Objectives (CLOs)

Goal 1 – Leadership and Students will get an Classroom discussions.

Teamwork opportunity to demonstrate
teamwork through discussion
groups.

Goal 2 – Functional, Fundamental cost accounting CP, Quizzes, and Exams

integrative and strategic concepts and techniques are
abilities covered in the course through a
diverse set of case studies.
(CLO # 1-7)
Goal 3 – Critical Thinking – Analytical thinking and CP and Exams
Decision making capabilities problem solving skills are
embedded in the content of this
course and are essential for
completing this course
successfully. (CLO # 1-7)
Goal 4 – Global perspective Students will have a global CP and Exams
and flexibility perspective through the use of
international cases. Managerial
Accounting principles are
common across most countries.

Goal 5 – Social, Ethical, Ethical and social CP

Economical and Environmental understanding is embedded in
Responsibility the content of this course
through the use of cases set in
multiple contexts.

Goal 6 – Communication Students will have an CP

competency opportunity to demonstrate
their communication skills by
interacting in classroom
discussion

Goal 7 – Entrepreneurialism Many of the cases require CP

Indicate below how the course learning objectives specifically relate to any program learning
goals and objectives.

and innovativeness students to think innovatively

to overcome business problems
faced in different situations.

Goal 8 – Managing pressures, The diverse body of cases CP, Quizzes, and Exams
complexities and Uncertainties enable students to deal with
practical problems in times of
pressure and uncertainty

COURSE ASSESSMENT/GRADES

Grades will be based on the following percentage allocation:

1) Class Participation 25%

2) Quizzes (unannounced) 15%

3) Written Analysis of Case (WAC) 20%

4) Final Exam 40%

CLASS-MANAGEMENT POLICY

You are expected to be punctual for class and Discussion Group sessions. If you are late, you
will not be allowed to participate in class discussions.

Cell/Smart-phones, pagers and other communication devices should be turned off during
class time. Laptops must not be used during class time. Anyone caught using these devices
will get a negative CP for that particular class session.

You will not be allowed to use cell phone calculator for quizzes and exams.

Please also refer to MBA handbook for attendance, timelines and norms of professional conduct.

COURSE REQUIREMENTS

Financial Reporting and Analysis (Semester 1A) is a pre-requisite for taking this course.

All of the key concepts covered in the course will be introduced through cases which you will be
required to prepare individually and discuss in groups before solving (collectively) in class. You are
expected to come to class prepared and participate in the discussions. Large amounts of materials will
be covered quickly and each session builds on previous ones.

RECOMMENDED TEXTBOOKS/SUPPLEMENTARY READINGS ( if Applicable)

Horngren “Cost Accounting: A Managerial Emphasis”, Horngren, Datar, and Rajan, 15th
edition
Hilton “Managerial Accounting: Creating Value in a Dynamic Business Environment” 10th
edition, Ronald W. Hilton and David E. Platt

HM “Cost Management: Accounting and Control”, 5th edition, Don R. Hansen and Maryanne
M. Mowen
RECOMMENDED TEXTBOOKS/SUPPLEMENTARY READINGS ( if Applicable)

Required chapters included in course pack

Various notes / articles (provided in the course pack or distributed during the course)

Various Harvard notes / articles (provided in the course pack)

REQUIREMENTS (FOR PCO OFFICE)

Midterm Exam: Yes Exam format will include objective

questions and short problem. Exam will
be closed book/closed notes. Calculator
is allowed.

Final Exam: Yes It will be a case-based exam, which

will be closed book/closed notes.
Calculator is allowed.

Double Session: No

Joint Session (combined of two No

sections):

Simulation: No

Video Recording: No

IT Lab sessions No

Additional session or review session No

Course Cap (applicable for elective No This is a core course therefore

courses) everyone in the MBA program must
take this course

Any other requirement (e.g. No

laptop/computer etc.):

OTHER REQUIREMENTS

Anyone missing an exam will automatically receive a grade of zero for that exam. Exceptions for
documented medical or family reasons may be permitted. Where possible, either the department office
or the professor should be contacted prior to the time of the exam. At MBA program director’s
discretion, either a make-up exam will be scheduled or a reallocation of the weight of remaining
examinations will be made.
 Module and TITLE OF READING LEARNING ASSIGNMENT QUESTIONS
Session No.
Topic: CASE MATERIAL OBJECTIVES

Session 1 Module 1 – Cost Horngren Ch 1, “The Students will be introduced Be prepared to discuss readings in the session
Accounting Manager and to some basic cost terms,
Fundamentals Management concepts and purposes which
Accounting” they need to become familiar
Cost terms & with for cases to be used in
purposes HM Ch. 2, “Basic Cost the upcoming sessions.
Management
Concepts”
Session 2 Cost terms & Nirala; The cost Review HM Ch. 2, This introductory case is 1. What cost information does Faisal need?
purposes question “Basic Cost used as a springboard to Why?
Management raise a number of issues and
Concepts” questions which will be 2. How should such information be obtained?
answered with the help of
HM Ch. 3, “Cost the tools, concepts and
Behavior” techniques that students will
learn over the span of the
course.

Session 3 Cost-Volume- Pakistan Horngren Ch. 3, " Cost– Students will have an 1. Complete Exhibit 7 of the case for PIA and
Profit Analysis Volume–Profit opportunity to explore the compare the results with three other
International international airlines. At present revenue and
Analysis” problems behind the
Airlines cost structure, what will be the break-even
deepening financial situation
load factor for PIA? What will be the effect on
at PIA through an analysis of
profitability if PIA operates with similar load
its cost structure and factors and hours of flight per aircraft per day
operational performance. comparable to those of other airlines?
2. Based on the results of your analysis of
question 1 and the industry data in Exhibits 1,
2, 3 & 6, what do you think are the major
problems facing PIA?
3. According to the national media, PIA
intends to purchase 30 new aircraft by 2020.
Based on your analysis in questions 1 and 2,
do you think that it is the size of fleet which is
the biggest problem for PIA?
4. Assume that the average number of
passengers flying on the Islamabad-Sukkur
route is 115. Calculate the profitability of this
route based on the following data; and then, on
 the basis of your analysis, make suggestions as
to what should be done?

Aircraft used: Boing 737-200ER

Seating capacity: 300 passengers
KM’s /gallons (based on 300
available seats): 132
Price per gallon of Fuel: Rs.210
Air distance: 1,000 km
Revenue/passenger KM charged for
this route: Rs.6.86 per actual PKM

Repair and maintenance, aviation, and

passenger costs can be assumed to be the same
as are given in the case for PIA
Session 4 MODULE II-Cost Sapphire Textile Hilton Ch. 3 “Product 1. Understanding costing 1. Calculate the cost of the customer orders
Allocations Mills Limited: Costing and Cost systems given in Exhibit 6 of the case using the
Refining the Accumulation in a existing costing system.
Overhead Cost Costing System Batch Production 2. Distinguishing between
Allocation job & process costing 2. Calculate the cost of the customer orders
Environment” given in Exhibit 6 of the case using the
3. Cost accumulation in a proposed costing system.
job order system 3. What do you recommend the company
should do?
4. Understanding cost
allocation decisions

Session 5 Allocation of Rosemont Hill HM Ch. 7, “Allocating Students are introduced to 1. What is the cost per visit for each
support costs Health Centre Costs of Support the concept of cost department?
Departments". allocations by performing a 2. How might this information be used by Mr.
step-down analysis and are Mitchell?
required to discuss the
usefulness of this new
information.

Session 6 Developing an Classic Pen Hilton Ch. 5, “Activity- An introductory case which 1. Calculate the revised product costs for the
ABC Model Company Based Costing introduces the basic concept four pens, based on the activity information
and Management “ of ABC. Students will collected by Dempsey.
develop a simple ABC 2. What actions are stimulated by the ABC
model based on information product costs?
given in the case and
 compare the results with the
traditional model.

Session 7 Activity Based Precision As above Students will gain an insight 1. Calculate the cost of the five orders in
Costing Motors Division into the importance of a cost Exhibit 3 under the traditional and new
system in supporting a systems. (Hint: first calculate the cost of
company’s decision to processing an order and handling a special
component).
change strategies.
2. Calculate traditional and new system costs
for each order if 1 unit, 10 units, 20 units
or 100 units are ordered.
Does the new system support the strategy of
the firm in ways that the traditional system
cannot?

Session 8 MODULE III- MilliChem Hilton Ch. 14 “Decision A detailed numerical Questions in the case
Costs for Decision Limited Making: Relevant exercise in which further
Making Costs and Benefits” relevant costing concepts are
studied in the context of a
Short Term make or buy situation.
decision Making

Session 9 Decision Making Fashion Point As above 1. Understanding Questions in the case
relevant vs irrelevant costs

2. Understanding
opportunity costs

Session10 MODULE IV- Miles High Hilton Ch. 10, Students will be introduced Questions in the case
Planning & Cycle “Standard Costing and to variance analysis tools
Control Analysis of Direct used to analyze production
Flexible Budgeting Costs”. cost variances (including
& Variance direct costs and overheads).
Analysis Hilton Ch. 11, “Flexible
Budgeting and
Analysis of Overhead
Costs”.
Session 11 Return on Enager Hilton Ch. 12, The case introduces the Questions in the case
Investment Industries, Inc. “Responsibility concept of ROI as a tool to
Accounting, Operational evaluate the performance of
Performance Measures, business divisions and
and the Balanced managers. It also helps the
 Scorecard” students to understand the
problems and pitfalls
Hilton Ch. 13, associated with the use of
“Investment Centers and ROI as a performance
Transfer Pricing” evaluation tool.

Session 12 Transfer Pricing Birch Paper Transfer Pricing Understanding transfer Questions in the case
Company (Horngren) pricing as a management
control and performance
evaluation tools & the
possible problems associated
with using it.

Session 13 Performance Empire Glass Blocher Ch. 10, Understanding budgeting as 1. Evaluate Empire’s budgeting process. What
Evaluation systems Company “Strategy and the Master a management control tool changes would you recommend?
Budget”
2. Evaluate the other aspects of Empire’s
Budget Advantages and control systems. What changes would you
recommend?
Disadvantages (handout)

Behavioral Aspects Of
Budgeting (handout)
Session 14 Balanced Citibank: HM Ch. 13, “The The case is used to introduce 1. Why has Citibank introduced a
Scorecard Performance Balanced Scorecard: the concept of non-financial performance scorecard
Evaluation Strategic-Based measures to evaluate the
Control” performance of managers 2. Assume that you are Liza Johnson,
and the problems associated Complete Exhibit I to evaluate Jam’s
with this approach. performance.