Beijing International MBA Program at Peking University (BiMBA)

FULL-TIME MBA (2010)

March-April, 2011

Managerial Accounting

I. Course Objective and Content

An introduction of managerial accounting topics and the methodologies employed in

the preparation and interpretation of financial information and non-financial tools for
internal decision makers is the overall objective for this course. Accounting is
considered to be the language of business. As such, this course provides an
understanding of an essential part of executive decision making process. This course
covers the following educational objectives:

a. Develops a knowledge of managerial accounting -- preparation and

application (text, homework assignments, cases, and class discussions).
b. Develops problem solving and analytical skills (homework assignments,
class discussions, and cases).
c. Develops the ability to work with others (teamwork projects).

This course is designed to introduce students to the following managerial accounting

subject areas:

1. Cost behavior
2. Job order costing
3. Process costing
4. Cost-Volume-Profit (CVP) relationship
5. Absorption costing and variable costing
6. Activity-based costing
7. Standard costs
8. balanced scorecard
9. Segment reporting and decentralization
10. Capital Budgeting

II. Format:

Class time will be devoted to lectures, coverage of exercises and problems, and
analysis of cases. All students are expected to have read and studied the material
thoroughly and have questions ready on points not understood. Students are
encouraged to participate in classroom discussions of material covered and how they
might find it useful in job situations. Specifically, students' comments as to how
materials covered in this class relate to their work experience are encouraged.

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III. Homework Assignments:
To do well in this course, it is important that students work on as many exercises and
problems as possible. Homework assignments with two (**) next to them will be
collected. Please note that the exercises and problems assigned for a day are due on
that day.

IV. Required Materials:

1. Managerial Accounting, 13th Edition, by Garison and Noreen (McGraw Hill,
2010).
2. Paul A. Dierks and Patel, Ajay, “What Is EVA, and How Can It Help Your
Company?” Management Accounting, (November 1997), PP. 52-58.

V. Required Cases:
1. Salem Telephone Company, HBSP Case No. 9-104-086, June 7, 2004.
2. Classic Pen Company: Developing an ABC Model, HBSP Case No. 9-198-
117, September 17, 1998.
3. Using EVA and MVA at Outsource, Inc., Management Accounting, January
1997.
4. BW Manufacturing Company, Case # UV 1768, July 8, 2009.
5. Healthy Dairy Products.

VI. Suggested Readings:

a. Kaplan, Robert and Norton, David, “Linking the Balanced Scorecard to

Strategy,” California Management Review, Vol. 39, No. 1, (Fall 1996), pp.
53-79.
b. Kaplan, Robert and Norton, David, “The Balanced Scorecard – Measures
that Drive Performance, Harvard Business review, (January-February
1992), pp. 71-79.
c. Robert Kaplan, “Integrating Shareholder Value and activity-Based Costing
with the Balanced Scorecard, Harvard Business School Publishing (1991),
Article Reprint No. B0101C.

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VII. COURSE OVERVIEW

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Homework Homework
Date Chapters/topics Assignments Assignments
Wed. Chapter 1 (Managerial Accounting)
March 23, Chapter 2 (Cost Terms and concepts), E2.2,5,11 P2.29**
2011 Chapter 5 (Cost Behavior) E5.4,67; P5.21 P5.16**

Friday Chapter 6 (Cost-Volume-Profit) E6.1,10,12,13; P.6.18 P6.19**

March 25 Chapter 4 (Process Costing) App B E4.3,11;P4.21 P4.24**
Chapter 3 (Job Order Costing), App. A E3.15, 16 P3.28**

Tuesday EXAM I (chapters 1-5); 4 points Case 1, Salem Tel. Co.* (1 points)
March 29 Chapter 7 (Variable Costing) E7.1,8,9; P7.15 P7.17**
Chapter 8 (ABC)
Review of Test I

Thursday Chapter 8 (cont.) E8.2,3 P8.22**

March 31 Chapter 9 ( Profit Planning and Control) E9.1,2,3;P9.17 P9.15**
Chapter 10 (Standard Costs and BSC)

Friday Case 2, Classic Pen Co.* (1.5 points)

April 1 Chapter 10 (cont.) E10.2,6,12, P10.19 P10.27**
Chapter 11 (Flexible Budget and Overhead Analysis)
E11.2,7,8 P11.20**
Chapter 12 (Segment Reporting and Decentralization)
read “What Is EVA, and How Can It Help Your Company?”

Wed., Exam II (chapters 6-9), (4 points)

April 6 Chapter 12 (cont.) E12.1,18 P12.21**

Friday Case 3, OutSourse Inc. Case (1.5 points) – individual project

April 8 Chapter 13 (Relevant Costs for Decision Making) E13.7,8,11,14, P13.22**
Chapter 14 (Capital Budgeting) E14.1,2,4,18,19

Monday Chapter 14 (cont.) P14.26**

April 11 Overall review of cost allocation Case 4, BW Manufacturing Co., * (1 points)

Wed., Final Exam, Part I, individual exam (chapters 10-14), 4 points

April 13 Final Exam, part II, team project (comprehensive),* 1 point

Friday Case 5, Healthy Dairy Products (2 points)*

April 15 This case is a team project and it is due by 5:00 p.m., Beijing time

Note: * Team projects

** homework assignments to be collected

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VIII. Case Analysis and Presentation:

There are five cases assigned for this course. You are responsible to have
read these cases before each session and to be prepared to discuss them in
class. You should submit a typewritten analysis for each case. The case
analysis should respond specifically to the case questions outlined at the end of
this syllabus. The report should be no longer than two pages of text (single
spaced), with no more than three pages of supporting exhibits. To maintain
these limits, it is important that you focus on answering the questions and avoid
repeating the facts that have already been covered in the case. These cases
are team projects, except for case # 3, EVA, which is an individual
project.

1. Salem Telephone Company (1 point)

Answer questions 1-5 outlined on pp. 3 and 4 of the case.

2. Classic Pen Company: Developing an ABC Model (1.5 points)

Answer the following questions:
a. Identify appropriate activity pools
b. Calculate overhead rate for each activity pool.
c. Calculate the revised product costs for the four pens,
based on the activity information collected by Dempsey.
d. What actions are stimulated by the ABC product
costs?

3. Using EVA and MVA at Outsource, Inc. (1.5 points) this is an

individual case

Using the following templates provided on next page, calculate OutSource’s

EVA and MVA for 1995. Following is a list of the steps to be completed in
calculating OSI’s EVA and MVA.
1. Review the balance sheet and income statement for 1995;
2. Review the footnotes to those statements;
3. Analyze the footnotes for information on equity equivalent
adjustments;
4. Obtain information on the firm’s stock, debt and interest rates;
5. Determine equity equivalent amounts by analyzing the footnotes;
6. Calculate the firm’s weighted average cost of capital;
7. Complete the following templates to calculate the firm’s EVA Capital
and EVA NOPAT.
8. Based on the information obtained in steps 6 and 7, compute the
firm’s total cost of capital;
9. Based on the information obtained in steps 7 and 8, compute the
firm’s EVA for 1995;
10. You now have all the information to compute the firm’s MVA for 1995.
HAVE FUN!

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4. BW Manufacturing Co. (1 point)
1. Calculate the impact of dropping Grill A. Assume no other changes to the
plan.
2. Calculate the impact of reducing the Grill C price to $75, with the expectation
that the volume of that product will increase to 220,000 units. Assume no
other changes to the plan.
3. Calculate the impact of a 10,000-unit decrease in Grill A and a 10,000-unit
increase in Grill C volume due to a change in advertising focus. Assume no
other changes to the plan.
4. Calculate the impact of a $5 decrease in Grill C’s price and a change in
advertising focus leading to a 10,000-unit decrease in Grill A volume and a
30,000-unit increase in Grill C volume. Assume no other changes to the
plan.
5. Prepare a revised 2009 profit budget assuming the owners chose option 2,
lowering the price of Grill C to $75 and expecting sales volume of that grill to
increase to 220,000 units.
6. The actual results for 2009 are shown below (Table 1). Was the 2009 net
income more or less than what should have been expected given these
actual volumes and prices? If the results were different, why? Prepare an a
schedule to support your position.

Table 1 – 2009 Results

Grill A Grill B Grill C
Price $150 $110 $75
Volume (units) 115,000 110,000 225,000

5. Healthy Dairy Products (2 points)

Answer questions 1-8 as outlined on page 5 of the case.
Your analysis for this case should be typed and in good format, no more than 3
pages. Your position should be supported. You will e-mail your analysis of this
case to me at jsoroosh@bimba.edu.cn by Friday, April 15, 2011, 5:00 p.m.,
Beijing time. Cases received after this time will not be accepted.
You need to include your names and your student ID numbers on each
page of your analysis, so I can identify whose case it is.

IX. Examination and the Grading Policy:

Students’ learning of the course content will be evaluated thorough class

discussions, case analysis and presentation, and exams. There will be three
exams for this course. They will cover items discussed in the text and material
talked about in class. Exams may be all individual or a combination of
individual and a team project. Part I is in class individual exam. The in class
exam is short (about one hour) and consists of 10-15 multiple choice questions
and a problem. The purpose for this part is to make sure that each student has
a good grasp of the materials covered in the chapters. Part II consists of a
problem or a short case.

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All students are expected to take the tests as scheduled. In case a student
cannot take a test on the date scheduled, due to unanticipated events such as
illness, the instructor should be informed as soon as possible to arrange for a
make up test. All other absences must be approved at least one week prior to
the date of the test. A mark of zero will be given to a student who misses a test
without a good reason. Your final grade will be determined based upon your
accumulated point.

3 Exams 13.0 points

4 team case analysis(*) 5.5 points
1individual case analysis 1.5 points
Total Points available 20.0 points

Grading System:

Outstanding Excellent Very Good Good

(18-20 points) (16-17.99 points) (15-15.99 points) (14-14.99 points)
Fair Sufficient Insufficient Failure
(12-13.99 points) (10-11.99) (7-9.99 points) (0-6.99)

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Instructor: Jalal Soroosh, Ph.D., CMA
e-mail: jsoroosh@BiMBA.edu.cn
jsoroosh@loyola.edu

Office Hours: 30 minutes before and 30 minutes after each class

by appointment other times

About Your Instructor:

JALAL SOROOSH, Ph.D., CMA

Jalal Soroosh is a professor of accounting and a former KPMG Alumni Fellow at

Loyola University Maryland. He received his Ph.D. in accounting from The
University of Mississippi and holds a Certificate in Managerial Accounting (CMA).
His teaching and research interests are primarily in financial and managerial
accounting. In 2007, he was recognized as the Most Valued Professor in the
Loyola University’s XMBA-Fellows program.

He has published numerous articles in practitioners and academic journals such

as the CPA Journal, Management Accounting, Corporate Controller and the
Journal of Business and Economic Perspectives. His article in the July 2004
issue of the CPA Journal received the 2004 Max Block Award from the New York
State Society of CPAs.

Jalal has extensive teaching experience in China since 2002. He has taught
financial statement analysis courses in the XMBA at CEIBS and fundamental and
managerial accounting at BIMBA. Jalal brings a good mix of teaching and work
experience to the classroom. In addition to over twenty five years of teaching
accounting, he has a variety of practical experiences with Arthur Andersen & Co.,
Coopers & Lybrand, C.W. Amos & Company, McCormick, Reznick Fedder &
Silverman, and NeighborCare

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