Graduate Managerial Accounting Course

There seems to be demand for an advanced graduate managerial accounting seminar.  I designed and offered an eight week course meeting three hours per week for students who have already completed an undergraduate cost accounting course. Students reacted positively to the experience.  The focus of this course is to explore the decision support aspects of managerial accounting as opposed to the cost accounting function.  Cost accounting is heavily influenced by generally accepted accounting principles (for instance, inventory costing) as well as tax accounting principles (think of inventory costing and the UNICAP rules of Section 263A) while the decision support methodologies are influenced by other disciplines such as managerial economics, industrial engineering,  and managerial finance. The course is designed as a “feeder course” (not a prerequisite course) to a graduate decision analysis course.  While the principles discussed are geared to a manufacturing environment they are also applicable to service industries as well. 

Course objectives: 

  • Distinguish between the two branches of managerial accounting
  • Identify and list new trends in managerial accounting
  • Apply knowledge learned in this class to predictive methodologies such as probabilistic budgeting, enterprise risk management, and business analytics
  • Compare and contrast customer profitability versus product profitability
  • Compare and contrast dashboards versus balanced scorecards
  • Utilize nonfinancial information on a balanced scorecard. 

The weekly modules of the course are:

Week 1—Class Introduction

Introduction of instructor and students. Review of syllabus. Discussion of the two branches of managerial accounting: cost accounting and decision support and how they differ. How managerial accounting and decision analysis are related.  Initial discussion of trends in cost accounting: Tracking rather than allocating costs; New  technologies affecting managerial accounting;  Product profitability and customer profitability; Integration of budgeting and forecasting into the strategic plan; more attention to the predictive aspects of managerial accounting; Increased involvement in enterprise risk management;  Measuring new things for the balanced scorecard; Increased use of data analytics and business intelligence;

Week 2– Tracking rather than allocating costs (“Everything Inventory!”)

This week is devoted to reviewing basic concepts in cost and inventory accounting and discussing Activity based costing.  Different types of costs and their behavior.  Financial accounting inventory costs. Inventory methods. Lower of cost or market and net realizable value. Tax accounting rules. IFRS inventory accounting. Pricing methodologies. Review of elasticity, marginal revenue and marginal cost. The special run.  ABC. The importance of tracking costs rather than allocating costs. How many cost drivers are enough?  How many cost drivers are too many?  Is ABC too much work with too little return? 

Week 3–New Technologies Affecting Managerial Accounting (“Open the Pod Bay Door, Hal!)

Each student or group of students will research and report on one of the following:  blockchain technology, RPA, the Cloud, AI, Big Data, VR/AR. Additional topics may be added depending on the knowledge and interests of the student. The emphasis of the presentations should be on how the new technology will impact managerial accounting in the future.  For instinct, blockchain is always linked to cryptocurrency, but the emphasis of the presentation should be on how it will change accounting in the future.

Week 4– Product Profitability and Customer Profitability (“Am I making any money here?”)

The initial discussion will focus on the importance of customer profitability as opposed to product profitability.  How product profitability does not capture all of the costs associated with inventory or a sale. Each student or group of students will research and report on one of the following:  ERP, CRM, MRP, ERM,  Balanced Scorecards and Dashboards.  The focus of the presentations will be to familiarize the class with the capabilities and information produced by these systems as well as providing the names of some of the more prominent providers in the field.  Final discussion will be managing MIS as a business. 

Week 5–Predictive Tools of Management Accounting and Integration of Risk Management into the Budgeting Process (“ I hate budgeting!”)

Why does the typical budgeting process fail?Why is the budgeting exercise so hated?  Integrating budgeting into the strategic plan. Importance of ABC to the budget. Importance of frequent forecasting. Distinguish between capex, opex, stratex, and riskex. Risk vs. Uncertainty. Review of expected value. Review of GAAP probability. Probabilistic budgeting.  Students will be assigned a probabilistic budgeting simulation as homework. The answer can be covered this week or in a subsequent week in class. 

Week 6–Measuring New Things (“What Does This Mean?”)

Balanced Scorecards versus Dashboards. KPIs vs. PIs. Information systems will be called on to track nonfinancial numbers more and more. Example:  student graduation rates when measuring the performance of a college president. ESG. CSR.  Student groups will research and present on the latter topics.  Each student will prepare a short paper on one of the topics. 

Week 7–Business Analytics and Business Intelligence (“How Smart is Smart?”)

Description of Business Analytics data:  Structured, Unstructured, Streaming. Characteristics of Big Data: Volume, Variety, and Velocity. Characteristics of business analytics: use of statistics, aids in forecasting and modeling, and leads toward optimization. Characteristics of business intelligence:  standard and ad hoc reporting, drill down capabilities, flash alerts. How BA can lead to increased ROI and ROE.  Increased need to be familiar with statistical methods. 

Week 8–Class Wrap Up (Its Over Already?”)

Review of the trends in managerial accounting. Wrap-up comments.  Class evaluation. Final Exam. (If time permits, students have expressed an interest in learning more complex LIFO subjects: link chain LIFO, retail LIFO, etc. While not directly related to the course, these topics are not covered in sufficient detail in other undergraduate or undergraduate courses.)