Post-Graduate Diploma in Management

[PGDM]

Area: Finance

Course Title:
Management Accounting
PGDM Term I (2017-19)
(2 credit)

Instructors

Dr. Ashish Varma, Dr. N. L. Ahuja, Prof. Puja Aggarwal Gulati,

Dr. Sudhir S. Jaiswall, Prof. Alok Kastia

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Course Description:

In the emerging competitive business environment, an excellent managerial accounting

system is imperative for organizations to understand and manage their cost structures, as
well as make better decisions for achievement of corporate goals. As business success
cannot be left to luck or chance factors, it is important that all managers from finance as
well as marketing, operations, human resources, technology and other functions should
understand the financial implications of their decisions and be able to evaluate alternative
strategies taking into account the accounting and other relevant information. This course
therefore, deals with firms internal accounting systems and their use in decision-making,
planning and control.

Major topics include cost classification, cost behavior, cost-volume-profit analysis,

budgeting system & variance analysis, cost analysis for short-term decision-making,
Standard Costing, Activity Based costing and Transfer Pricing. The course would help
participants in understanding the relevant concepts and develop skills in using cost
accounting information for planning of business operations and decision making
including product mix decision, pricing strategy, choosing between alternatives and
performance evaluation.

The role of managerial accounting has evolved from mere accumulation and
dissemination of cost accounting information, or simple CVP analysis, to a deeper and
greater involvement in almost all aspects of management including strategy formulation,
decision making, planning and control; indeed, management accountants are now
expected to play a vital role in evaluating growth strategies, valuation of businesses,
mergers and acquisitions and so on. Also, as businesses become more and more
globalized, issues related to transfer pricing and evaluation of divisional performance are
assuming greater significance. The course will strive to cover the traditional as well the
recent developments in the relevant topics.

The Learning Objectives:

i. Recognize the importance of management accounting in an organization and how

it can be used together with other functions of the company.
ii. Calculate costs and analyze decisions that involve cost data and financial
data, and interpret them in a decision-making context. ( Goal 1.1)
iii. To develop an understanding of the costing systems, including cost classification,
and cost behavior for planning and control
iv. To highlight the differences between absorption and marginal costing, explain
their respective suitability and introduce activity based costing.
v. To excel in decision making by the analysis of financial and cost data.
vi. To use management accounting techniques for business planning , control and
performance measurement .

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Pedagogy

The course will be delivered through a blend of lectures, exercises, case discussions,
industry/research based projects, assignments and students presentations. The success of
the course is a joint responsibility of the instructor and the students and hence it is
important that you should regularly attend classes and actively participate. In addition to
the prescribed reading materials, additional readings and cases may be
suggested/distributed in the class from time to time. Keeping a track of related corporate
developments through business journals/newspapers is essential.

Course Requirements

i. As the success of the course is the joint responsibility of the instructor and the
students, it is important that prior to each class, students must read the relevant
text/readings and prepare for case-discussions, exercises and assignments.
ii. Case discussions are an important part of the course. Typically, a case would ask
you to identify the major issues/problems, evaluate alternative strategies or
courses of action using qualitative and quantitative analysis, and present your
recommendations. The class will be divided into a number of groups and for
assigned cases, each group will be required to submit case analysis report and
power point presentation on schedule.
iii. There will be several home assignments which should be submitted in time.
There will also be announced and unannounced quizzes during the term. Late
homework will not be accepted and there will be no make-up quizzes.
iv. Each group is will take up a research project or live problem related to
managerial accounting. Detailed guidelines on group projects are provided later.
Each group will be required to submit a report and give a presentation.
Evaluation for this assignment will be done based on individual as well as group
performance.
v. Evaluation of Class participation will be based on the value you add to the class
discussions through your questions, analytical inputs and positive contribution.
vi. The nature of the subject matter requires significant amount of numerical
computations. Students are expected to bring a simple non-programmable
calculator to every class session and to all examinations. Students are not allowed
to use/carry cell phones into the class room and exam-halls. Use of laptops by
students in the classroom is strictly prohibited (except when specifically
permitted for project presentations etc).

Evaluation

Internal Assessment : 30%

AACSB Test : 20%
End Term Examination : 50%

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Specific Assessment Intended objectives to be assessed
Method Weight 1 2 3 4 5 6
( Goal 1.1)*
AACSB Test 20%

Internal Assessment 30%

End Term 50%

Examination
*Demonstrate technical and analytical capabilities.

Guidelines for Group Project

The group project will be an important learning tool of the course. The project shall be
assigned by the faculty at the end of 10 session. . The project, although will not be too
complicated, yet would require application of the concepts and critical analysis by the
students.

Text and references

Text Book
Introduction to Management Accounting (Latest Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg: Pearson.

Reference books:

Anthony RN, Hawkins D.F, and Merchant K.A., Accounting: Text and Cases, TMH.
Hansen Don R & Mowen MM, Cost Managenment Accounting and Control, Thomson
Khan M.Y. and Jain P.K., Management Accounting, TMH
Pandey I.M., Management Accounting, Vikas Publishing House
Bhattacharya Ashish K., Principles and Practice of Cost Accounting, PHI
James Jiambalvo, Managerial Accounting, Wiley Student Edition
Kishor Ravi M, Advanced Management Accounting, Taxmann.
Colin Drury, Management & Cost Accounting, Thomson Learning-Taxmann India, Fifth
Edition

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Journals:
The Chartered Accountant,
The Management Accountant,
Indian Management,
Chartered Secretary,
Chartered Financial Analyst,
HBR,
The Smart Manager
Vikalpa
The Decision
IMT Case Journal
Global Business Review.

Websites:
www.icai.org,
www.cimaglobal.com,
www.myicwai.com/manacc etc.
www.icwai.org
www.aicmas.com/
www.accountingformanagement.com
www.thesmartmanager.com/,
www.economictimes.com/

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Course Outline: Session/ Module / Reading Material

Session 1

Management Accounting- An overview (Nature, objectives, scope and significance).

Difference between management accounting, financial accounting and cost accounting.
Scope of management accounting. Cost concepts and terminology. Elements of cost and
their nature.

Sessions 1
10 minutes 30 minutes 20 minutes 10 minutes 5 minutes
Managemen Difference Scope of Elements Concluding
t between managemen of cost and the
discussion.
Accounting- management t their
An accounting, accounting. nature.
overview, financial Cost
Nature, accounting concepts
objectives, and cost and
scope and accounting terminology
significance

Reading:
Introduction to Management Accounting ( 16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson ; Chapter 1

Session 2-3

Cost behavior: fixed, variable and semi-variable costs. Absorption and Variable costing:
reconciliation and comparison of the two. Cost Statements/ Cost Sheets.

Sessions 2 and 3
20 minutes 50 minutes 30 minutes 45 minutes 5 minutes
Cost Absorption Cost Practice Concluding
behavior: and Variable Statements/ Exercises the
discussion
fixed, costing: Cost Sheets
variable and reconciliation
semi- and
variable comparison
costs. of the two.

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 2 and 12

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Session 4 - 5

Cost Allocation and Traditional cost management system

45 minutes 45 minutes 10 minutes 45 minutes 5 minutes

Cost Traditional Merits and Practice Concluding
Assignment, cost shortcomings of Exercises the
Apportionment, management Traditional Cost discussion
Absorption, system Management
Allocation Systems

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 3 and Chapter 11.

Session 6

Activity based cost system

Sessions 6
10 minutes 50 minutes 10 minutes 5 minutes
Activity based Detailed Advantages of
costing Illustration of ABC systems
system: Activity Based and challenges Concluding
Introduction to Costing System in the
the concept, implementatio discussion
Application of n of ABC
the concept

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 3 and Chapter 11.

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Session 7-8

Cost-volume-profit analysis: break-even point, Multi product BEP Contribution analysis

for profit planning, pricing and product mix decisions, Impact of Limiting Factor

Sessions 7 and 8
20 minutes 50 minutes 30 minutes 40 minutes 10 minutes
Cost-volume- Break-even Contribution Practice Concluding
profit analysis point, units and analysis for Exercises the
, Concept and in monetary profit discussion
Assumptions terms planning,
pricing and
product mix
decisions.

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 2, 4 and 5.

Session 9-11

Relevant costing for decision making. Choosing between alternatives. Make-buy and
other situations in decision-making.

Sessions 9, 10 and 11
20 minutes 60 minutes 60 minutes 75 minutes 10 minutes
Relevant Choosing Practice Practice Concluding
costs, between Exercises: Exercises: the session
identification alternatives. Choosing Profit
and treatment Make-buy and between Planning,
other situations alternatives Pricing, and
in decision- product mix
making. decisions

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 4 and 5.

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Session 12-13

Budgetary control: Nature, Uses and advantages of budgets. Functional and Master
budgets. Fixed and Flexible budgets, Cash Budget

Sessions 12 and 13
20 minutes 20 minutes 60 minutes 50 minutes
Budgetary Advantages and Functional and Practice
control: illustrations of Master Exercises
Nature and budgets and budgets. Fixed
significance types of budgets and Flexible
budgets

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 6 and 7.

Session 14-15

Standard Costing: Meaning and significance. Determination of standard costs. Types of

standards. Standards as a tool for control. Analysis of cost and revenue variances.

Sessions 14 and 15
20 minutes 15 minutes 30 minutes 10 minutes 75 minutes
Standard Determination Types of Standards as Analysis of
Costing: of standard standards. a tool for cost and
Meaning and costs. control revenue
significance. variances.

Reading:
Introduction to Management Accounting (16th Edition) Horngren, Sundem, Stratton,
Burgstahler, Schatzberg : Pearson Chapter 7.

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Session 16

Target costing and Zero Based Budgeting

40 minutes 10 minutes 15 minutes 10 minutes

Target Advantages, Zero Based Concluding
costing Disadvantages, Budgeting the session
and Problems
techniques in
and implementing
applications Target costing

Reading:

Additional Reading

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