Debre Markos University

College of Business and Economics

Department of Accounting
(MSc program)
Course Outline
Course Title : Advanced Cost and Management Accounting
Course Code : ACFN 521
Credit Hours : 3
ECTS :7
Course Description:
This course describes the cost functions and behaviors, C-V-P analysis under multiple-product
conditions and uncertainty, cost estimation techniques, cost analysis for pricing decisions, profit centers
approach for decisions regarding transfer pricing; and investment centers approach for determining ROI
and Residual Income. The course also covers recent developments in cost and management accounting
like management control systems; results controls, action, personnel and cultural controls; control
system tightness; control system cost; designing and evaluating management control systems; financial
responsibility centers including transfer pricing; planning and budgeting; financial and non-financial
performance measures; incentive systems, the myopia problem; uncontrollable factors.
Course Objective: the course acquaints students with the specific skills to use the costing data and the
cost and management accounting tools and techniques for analyzing the cost behavior and its influence
on the operating performance of the organization for efficient decision making and control.
After taking this course, a student should be able to:
 Understand cost behavior patterns, cost functions and the different methods of estimating costs.
 Define and understand Activity-Based Costing (ABC) and Activity-Based Management (ABM).
 Analyze costs for making appropriate pricing decisions.
 Understand the use of transfer pricing among organizational units.
 Understand the financial and non-financial measures of performance in decentralized business
organizations.
 Recognize current developments and issues in cost and management accounting, cost management,
control system.
 explore the integrative and interdisciplinary role of management accounting and its contribution to the
strategic management process and the provision of quantitative and non-quantitative information for
planning, control, and decision making.
 Evaluate the different types of management control systems
 Differentiate operational controls, management controls and strategic controls
 Develop and apply performance evaluation methods ( financial and nonfinancial)
 Decision an incentive system to motivate business unit managers and employees
 Apply management control principles in varying types of organizations (service, not-for-profit,
governments, multinational companies, projects)

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 COURSE CONTENTS:
Course Contents:
Chapter One: Cost Concepts, Behavior and Estimation
1.1. Introduction
1.2. Cost Definition and Concepts
1.3. Cost Classification and Behavior
1.4. Cost Estimation
Chapter Two: CVP Analysis and Product-Mix Decisions – Focus on Multiple Product Companies
2.1. CVP analysis overview
2.2. Managers use of CVP analysis in decision making
2.3. Sensitivity analysis and Uncertainty
2.4. CVP analysis for planning variable and fixed costs
2.5. CVP analysis in companies producing multiple products
2.6. Multi Product CVP Analysis without Constraints
2.7. Multi product CVP Analysis with constraints
2.8. Product-Mix Decisions with constraint(s)
Chapter Three: Activity Based Costing (ABC)
3.1. Introduction
3.2. Traditional Cost Allocation vs. ABC
3.3. Hierarchy of Resources and Activities
3.4. Activity-based Costing – Illustration
3.5. Activity-based Management (ABM)
Chapter Four: Cost Analysis and Pricing Decisions
4.1.Introduction
4.2.Major influences on pricing decisions
4.3.Short-run and Long-run pricing decisions
4.4.Profit maximizing pricing models
4.5.Pricing products using the target costing approach
4.6.The concepts of cost incurrence and locked-in costs
4.7.Pricing products using the cost-plus approach
4.8.Life-cycle budgeting and costing in pricing decisions
4.9. Non cost factors in setting prices and strategic pricing for new products
4.10. The effects of antitrust laws on pricing
Chapter Five: Responsibility Centers and Performance Measurement
5.1. Profit Centers and Transfer Pricing
5.1.1. Profit as a Performance Measure
5.1.2. Transfer pricing
5.1.3. Non-profit measures of Performance
5.2. Investment Centers
5.2.1. Relating Profits to assets employed
5.2.2. ROI and Residual Income
5.2.3. Economic Value Added (EVA)

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 Chapter Six: Current Developments and issues in Cost and Management Control System (Group
Project Work with Presentation)
Course delivery strategy: Lecture Presentations, Discussion/Seminar/Presentation, Co-operative Work
Groups, Individual/Group Assignments Presentation and Students will also be required to critically
review journal articles and present in class.
Course Assessment:
The assessment will involve both group work and individual performance during the semester and final
exam. Submitted assignments may involve a practical project work or case analysis report.
Term paper/project work and presentations 30%
Article review and case analysis 20%
Final exam 50%
Total 100%
References:
1. Robert S. Kaplan & Anthony A. Atkinson, Advanced Management Accounting, 2nd ed. Prentice-hall,
1989
2. Robert S. Kaplan, Advanced Management Accounting, Prentice-hall, 1988
3. Charles T. Horngren, George Foster, and Srikant M. Data, Cost Accounting: A Managerial Emphasis,
Prentice Hall, 2012
4. Ronald W. Hilton, Michael W. Maher, and Frank H. Selto, Cost Management: Strategies for Business
Decisions, McGraw-Hill, 2006
5. Michael W. Maher, Clyde P. Stickney, and Roman L. Weil, Managerial Accounting: An introduction to
Concepts, Methods, and Uses, 2001
6. Ronald W. Hilton, Managerial Accounting, McGraw-Hill, 1999
7. Charles T. Horngren, Introduction to Management Accounting, Prentice Hall International,
8. Colin Drury, Management Accounting for Business Decisions, ITP, 1997
9. Arnold and Hope, Accounting for Management Decisions, Prentice- Hall, 1990
10. Robert T. Anthony and David W. Young, Management Control in Nonprofit Organizations, IRWIN,
1988.
11. Anathony and Govindarajan, 2008, Management control systems, 12th ed. IRWIN
12. Merchant and Van Der Stede, 2007, Management control systems, 3nd ed. McGrowHill
13. Robert N. Anthony, John Dearden, and Norton M. Bedford, Management Control Systems, IRWIN,
1989.
14. Anthony G. Hopwood, Christopher S. Chapman, Michael D. Shields(Editors)2006, Handbook of
Management accounting research, Elsevier, in 3 Volumes

Journals
 Journal of Management Accounting Research, AAA
 Management Accounting
 Journal of Accountancy, AICPA
 Accounting Review
Articles
 Kaplan R.S. 1998, The Evolution of Management Accounting, Accounting Review, Vol LIX, No 3, July
1998
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 Boer, G. 1990, Contribution margin analysis: no longer relevant/strategic cost management: the new
paradigm, Journal of Management Accounting Research (USA), Fall 24-8
 Kaplan R.S. 1990, Contribution margin analysis: no longer relevant/strategic cost management: the new
paradigm, Journal of Management Accounting Research (USA), Fall 1-32
 Horngren, C. T. 1989. Cost and management accounting: Yesterday, and today. Journal of Management
Accounting Research (1): 21-32. 
 Shillinglaw, G. 1989. Managerial cost accounting: Present and future. Journal of Management Accounting
Research (1): 33-46.
 Vollmers, G. L. 1996. Academic cost accounting from 1920-1950: Alive and well. Journal of
Management Accounting Research (8): 181-199.
 Swenson, D. 1995. The benefits of activity-based cost management to the manufacturing industry. Journal
of Management Accounting Research (7): 167-180.
 Noreen, E. 1991. Conditions under which activity-based cost systems provide relevant costs. Journal of
Management Accounting Research (3): 159-168.
 Sunder, S. 2002. Management control, expectations, common knowledge, and culture. Journal of
Management Accounting Research (14): 173-187
 Shank, J. K. and V. Govindarajan. 1992. Strategic cost management: The value chain perspective. Journal
of Management Accounting Research (4):
Websites:
www.blackwell-synergy.com
www.search.epnet.com
www.JSTOR.ORG
www.berkley.edu
www.bettermanagement.com
www.elvira.emeraldinsight.com