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LEARNING OBJECTIVES:
After following this course, students should be able to
COURSE DESCRIPTION:
Accounting has two major roles: a decision-facilitating role, and a decision-influencing role. Effective management must identify the available alternative actions, predict the possible consequences of those actions, and then choose that action which has the most preferred outcome. Management accounting systems can be effective tools both in providing information that is useful in predicting the possible consequences of alternative actions and in structuring the description of those consequences - the decision-facilitating role. Managers may not make the choices most preferred by a firm's owners (or higher level managers). To mitigate this problem, the firm's owners (or higher level managers) frequently establish formal or informal incentive systems that are designed to motivate the manager to choose the actions which they prefer. Management accounting systems are often an important part of these incentive systems as the provider of measures of management performance - the decision-influencing role.
COURSE SUBJECT AREAS:
REQUIRED COURSES (progression): 3354: Managerial and Cost Accounting
LECTURER: Hans Frimor
TEACHING METHOD: Lectures and discussion of cases
TEACHING LANGUAGE: English
LITERATURE:
Gerald A. Feltham, Sauder School of Business, UBC:
Teachingnotes:
The Relation Between Market Values and Accounting Numbers
Impact of Capital Cost Allowance on Decision Analysis
Decision Making under Uncertainty and the Impact of Decision-facilitating Information
Economic Impact of Cost Model Specification Errors
Basic Cost/Production Activity Relations
Basic Resource Allocation Models
Sensitivity Analysis
Extensions to the Basic Resource Allocation Models
Multiple Period Production Planning
Wealth and Risk Sharing
Optimal Incentive Contracts
Decision-influencing Information
Cases and Solutions:
Albert's Gadgets (A and B)
Albert's Wizzers
Electoad
Albert's Machine Shop
Albert's Rules-of-Thumb
Cholesterol Producers (I - IV)
Katastrofik Kemikals
Albert's Chemical Plant
Albert's Phantom Stock Plan
Albert's Partnership
Marion's Pie Shop (A and B)
Ralph's Informativeness Criterion
Albert's Divisions
Investment Center Problems
Peter Ove Christensen:
Lecture notes and Case Solutions: A1 - A3; B1; C1 - C5; D1 - D3; E1 - E4; F1 - F2.
Demski, Joel S.:
Managerial Uses of Accounting Information, Kluwer Academic Publishers, 1994, Chapter 19-21.
Zimmerman, Jerold L.:
Accounting for Decision Making and Control, McGraw-Hill, latest edition, 2006, Chapters 4 - 5.
Christensen, P.O., G.A. Feltham and F. Sabac (2003): Dynamic incentives and responsibility accounting: a comment, Journal of Accounting and Economics , pp. 423-436.
Christensen, P.O., G.A. Feltham and M. Wu (2001): "Cost of Capital" in Residual Income for Performance Evaluation, The Accounting Review , pp. 1-23.
(approx. 800 pages)
FORM OF ASSESSMENT: Oral examination, 20 min. preparation time
EXAMINATION AIDS ALLOWED: All - except any means of electronic communication including calculators, mobile phones and PCs.