Managerial Accounting Syllabus - MBA (PU)

Course Objectives:

The course aims to provide the students with an in-depth understanding of the concept of Managerial Accounting together with application of various Managerial tools and techniques in analyzing, decision making, planning and controlling process of managers.

Course Description

The course deals with measurement, presentation, interpretation, and communication of economic information for managerial functions. Students will be acquainted with activity based costing, CVP analysis, decision regarding alternative choices, pricing products and services, planning profit through budgets, controlling direct material, direct labour and factory overheads. The course uses case studies and practical exercises to emphasize the application of concepts.

Learning Outcome

Upon completion of this course, students will be able to:

• understand the concept, impotence and use of managerial accounting and controllership functions;
• classify the costs in different ways and estimate the costs using high low method and least square methods;
• measure income under absorption costing and variable costing for analyzing, decision-making, planning and controlling activities of the organization;
• analyze costs volume profit relationship for various business decisions;
• make decision on special order, drop or continue product line and make or buy subassembly;
• price the product or services;
• analyze the direct material and direct labour variances;
• assemble all the information and prepare a master budget;
• prepare flexible budgets and analyze overhead costs variance

Learning Activities and Procedures

The instructor decides on the teaching methods for this course, which may include lectures, exercises, cases analysis and supervised problem solving group work. Part of this course, students will be assigned real life case analysis and make participate in field work. The learning activities will be centered on the following activities:

• Class lectures and discussion. Students are expected to come in class being prepared by pre-reading material assigned in previous classes. They are expected to contribute ideas, thoughts, experiences and arguments to the class discussion. Thus class participation is highly encouraged.
• Problem solving class work. Students are assigned real life or hypothetical problems in the class to discuss and getting a conclusion.
• Class presentation and discussion following the presentation. Each student will be assigned some cases for analysis and made responsible making presentation.
• Examinations (mid-term and final) will be given during the trimester. These tests enable the students in improving their ability in solving problems in limited time constraints and also evaluate the students’ learning achievements.

Course Outline

The course will be organized into the following sections and sub-section:

               Unit 01 Introduction of Managerial Accounting

Managerial process; Objectives and scope of managerial accounting, The controllership function; Managerial accounting vs Financial accounting;

          2 LH

               Unit 02 Costs classification and estimation

Cost concept, Cost Classification: Manufacturing and Non-manufacturing costs, Variable, Fixed and Semi-variable costs,  Direct and Indirect costs, Product costs and Period costs, Relevant costs and Irrelevant costs, Sunk costs and Future costs, Opportunity costs; Cost Estimation: High low method and Least square method,

2 LH

               Unit 03 Income Measurement and Recognition

Concept of product costs and period costs; Marginal and Absorption costing system of inventory; Reporting of income under absorption costing and variable costing; Reconciliation of difference in net income  

3 LH

Unit 04 Cost Volume Profit Analysis:

Concept of contribution margin; Break-even analysis; Margin of safety; Sensitivity analysis; Multi-product (Sales mix) cases; Cost-Volume-Profit Analysis for decision making; Linear Programming Model for optimal sales mix; CVP analysis in Nepalese organization; (Field work)

4 LH

Unit 05 Decision Accounting for Value Maximization:

Concept and application of relevant cost; Differential costs; Opportunity costs, Accept or reject of special order; Drop or continue of product lines; Outsourcing decision; Use of Activity Based Costing System in decision accounting; Concept of capital investment model; (Nepalese business cases analysis)

6 LH

Unit 06 Pricing Decision:

Managerial analysis for pricing decisions; Pricing for market sale: Cost plus pricing; Pricing for vertical integrated company (Transfer Price); Pricing practices in Nepal (Project work)

3 LH

Unit 07 Budgeting for Profit Planning:

Sales forecast; Preparation of functional budgets; Preparation of cash budget, Preparation of master budget, Budgeting practices in Nepal (Case study)

5 LH

Unit 08 Behavioral Accounting and Standard Costing System:

Concept of managerial control system; Responsibility accounting; Application of Standard costing: Direct material cost and Direct labor cost control

3 LH

Unit 09 Flexible Budgeting and Overhead Costs Control:

Fixed planning versus flexible expense budget, Preparation of Flexible budget; Factory overhead cost variances: three way analysis

Basic Books:

1. Horngren, CT; Sundem, G. L; Stratton, W.O.; Burgstahler, D. & Schatzberg, J. (2008): Introduction to Management Accounting (14^th edition), New Delhi, Prentice Hall of India Ltd.P. Ltd.
2. Hilton, Ronald W. and et. al. (2009): Managerial Accounting (7^th edition), New Delhi. Tata McGraw hill, Publishing Company Limited.
3. Bajracharya, P.; Ojha, K.P. and et.al.( 2009), Managerial Accounting: Nepalese Perspective, Kathmandu, Asmita Books Publishers and Distributors (P) Ltd.

Reference Books:

1. Garrison & Noreen, Management Accounting, Irwin, USA, 8th ed. 1997
2. Lynch, RM and Williamson, Accounting for Management, Tata McGraw Hill, India
3. Drury, Colin, Management and Cost Accounting, ELBS, London.

Chapters in Basic Books

Indicative Assessments:

There will be two types of assessments during the trimesters: Internal Assessment and Final Assessments.

Final assessment is a university level assessment taken by University.

The Internal Assessment is college level assessment taken by the subject teacher.  The Internal Assessment includes individual home assignments, individual projects, term-paper writing, case analysis, article reviews, class presentations, in-class assignments and exercises. Apart from this, there will be two examinations – mid-term and final. Both of these examinations will be of 3 hours durations.

The internal evaluation scheme will be as follows:

Class behavior and participation         : 10%

Term paper writing                             : 10%

Case analysis and Presentation          : 10%

Project work                                       : 15%

Home assignments                             : 15%

Term examination                               : 40%

Total                                                   : 100%

Work Load:

A class of 1.5 hours per day and 3 classes per weeks (12 weeks in total) will be required.

Class Participation:

Each student is expected to attend every class and participate in all activities of the class. This requires that students devote some thoughtful time to the readings prior to the class so that you have ideas to contribute to the class discussion. Good participation also includes asking questions and helping others to develop or clarify their ideas or questions. Lack of participation will be interpreted as lack of adequate preparation which will result in a lower participation grade. Students are strongly encouraged to provide feedback to the instructor through the trimester in order to improve the class.

Class Attendance:

Attendance is expected and absences must be justified. Absences from class do not excuse students from being responsible for contents missed. Because a portion of your grade for this course is based on class participation and attendance, missed classes will mean that you did not participate on those days. Therefore, attendance will definitely result in a poor class participate grade. Eighty percent class attendance is required. If students must miss class, contact the instructor in advance and make arrangements to get assignments, announcements, etc. from your colleagues.