BUS 555Accounting for Managers

Day and Dates of Course: Saturday (September 9 – Oct 28)Class Site: SouthpointeRequired Text(s): Accounting: Concepts and Applications,

9th edition by Albrecht, Stice, Stice, & Swain.ISBN: 0324187564

Facilitator: Raymond L VargoContact Information: 412-624-1199 work

412-302-3765 cellraymondlvargo@comcast.net

Facilitator Bio:

Mr. Raymond L. Vargo is the Senior Management Consultant for the University of

Pittsburgh Small Business Development Center (SBDC). Ray has received

certification by The National Development Council as an Economic Development

Finance Professional. He currently is a member of the Urban Redevelopment

Authority of Pittsburgh and the Allegheny County Department of Economic

Development loan review committees. Currently, Mr. Vargo is a member of the

Board of Director of CL 504, Inc. Prior to his current position with the University of

Pittsburgh SBDC, he worked at California University of Pennsylvania’s Entrepreneurial

Assistance Center. Mr. Vargo is an adjunct faculty member for the University of

Pittsburgh and Waynesburg College - teaching courses in accounting and small

business management at both the graduate and undergraduate levels. He received

his BS in Accounting with a minor in Business Logistics from The Pennsylvania State

University and his MBA from California University of Pennsylvania.

Facilitator Attendance Policy: Discussed in classPolicy For Make-up work and Late Assignments:

Discussed in class

Extra Credit Assignments: Not applicable.

Grading Scale

Grading Scale

A = 100% to 92.5% B = 86.4% to 82.5% C = 76.4% to 72.5%.A- = 92.4.% to 89.5% B- = 82.4% to 79.5% C- = 72.4% to 69.5%.B+ = 89.4% to 86.5% C+ = 79.4% to 76.5%

Graduate Courses do not offer a passing grade below a C or C-.

Course Requirements and Points/Percentages

Classroom discussion and workshop participation:

100 points Midterm Exam 50% of Total Grade

Clarity of expression in written assignments:

100 points Final Exam 50% of Total Grade

Other:

Total: 200 Points

Additional Information and/or Directions

Assignments and Activities

Assignment Prior to Start of First Class: In preparation for the first night of class, please read chapters 2 and 3 and attempt to solve the following exercises:

Chapter 2 E2-1, E2-5, E2-6, E2-7, E2-8, E2-9, E2-11, E2-12Chapter 3 E3-2, E3-3, E3-5, E3-6, E3-7, E3-8, E3-9, E3-14

In order to help you understand the assigned exercises, I will send you the solutions via email. Please forward your email address to me by August 25, 2006 to the following address:

raymondlvargo@comcast.net

Please note BUS 555 in the Subject line.

I strongly suggest that you bring a calculator, pencils, erasers, and extra paper to class.

If you have any questions or concerns please feel free to contact me at 412-302-3765.

Waynesburg CollegeWaynesburg College

BUS 555BUS 555

Accounting for ManagersAccounting for Managers

Class ModuleClass Module

Week Chapter Subject

1 2 Financial Statements: An Overview3 The Mechanics of Accounting

2 14 Statement of Cash Flows 5 Introduction to Financial Analysis

3 15 Introduction to Management Accounting16 Analyzing Cost-Volume-Profit Relationships

4 GROUP MIDTERM EXAM

5 17 Product Cost Flows and Business Organizations

21 Traditional Cost Management

6 19 Planning23 Evaluating Products and Processes

7 20 Evaluating Personnel and Divisions18 Capital Investment Decisions

8 FINAL EXAM

Chapter 2Financial Statements: An OverviewLearning Objectives

After studying this chapter, the student should be able to:

1. Understand the basic elements and formats of the three primary financial statements – the balance sheet, income statement, and statement of cash flows.

2. Recognize the need for financial statement notes and identify the types of information included in the notes.

3. Describe the purpose of an audit report and the incentives the auditor has to perform a good audit.

4. Use financial ratios to identify a company’s strengths and weaknesses and to

forecast its future performance. 5. Explain the fundamental concepts and assumptions that underlie financial

accounting.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 2-1 Classification of Financial Statement ElementsExercise 2-5 Balance Sheet RelationshipsExercise 2-6 Balance Sheet PreparationExercise 2-7 Income Statement ComputationsExercise 2-8 Income Statement PreparationExercise 2-9 Preparation of Income Statement and Retained Earnings

Statement Exercise 2-11 Retained Earnings ComputationsExercise 2-12 Preparation of Income Statement and Retained Earning

Statements

Chapter 3The Mechanics of AccountingLearning Objectives

After studying this chapter, the student should be able to:

1. Understand the process of transforming transaction data into useful accounting information.

2. Analyze transactions and determine how those transactions affect the accounting equation (step one of the accounting cycle).

3. Record the effects of transactions using journal entries (step two of the accounting cycle).

4. Summarize the resulting journal entries through posting and prepare a trial balance (step three of the accounting cycle).

5. Describe how technology has affected the first three accounting cycle.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 3-2 Accounting Elements: Increase/Decrease, Debit/Credit RelationshipsExercise 3-3 Expanded Accounting EquationExercise 3-4 Classification of AccountsExercise 3-5 Normal Account BalancesExercise 3-6 Journalizing TransactionsExercise 3-7 Journalizing TransactionsExercise 3-8 Journal EntriesExercise 3-9 Posting Journal EntriesExercise 3-14 Trial Balance

Chapter 5Introduction to Financial Statement Analysis

Learning Objectives

After studying this chapter, the student should be able to:

1. Explain the purpose of financial statement analysis.

2. Understand the relationships between financial statement numbers and use ratios in analyzing and describing a company’s performance.

3. Use common-size financial statements to perform comparison of financial

statements across years and between companies.

4. Understand the DuPont framework and return on equity can be decomposed into its profitability, efficiency, and leverage components.

5. Use cash flow information to evaluate to evaluate cash flow ratios. 6. Understand the limitations of financial statement analysis.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 5-1 Computation of RatiosExercise 5-4 Common-Size Income StatementExercise 5-5 Common-Size Balance SheetExercise 5-8 Income Statement AnalysisExercise 5-10 DuPont FrameworkExercise 5-11 DuPont FrameworkExercise 5-12 DuPont FrameworkExercise 5-13 DuPont Framework

Chapter 14Statement of Cash Flows

Learning Objectives

After studying this chapter, the student should be able to:

1. Understand the purpose of a statement of cash flows.

2. Recognize the different types of information reported in the statement of cash flows

3. Prepare a simple statement of cash flows.

4. Analyze financial statements to prepare a statement of cash flows.

5. Use information from the statement of cash flows to make decisions.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 14-1 Classification of Cash FlowsExercise 14-2 Classification of Cash FlowsExercise 14-5 Preparing a Simple Cash Flow StatementExercise 14-8 Cash Flows From Operations (Direct Method)Exercise 14-14 Net Cash Flows (Indirect Method)Exercise 14-15 Net Cash Flows (Direct Method)Exercise 14-16 Statement of Cash Flows (Indirect Method)Exercise 14-17 Statement of Cash Flows (Direct Method)

Chapter 15Introduction to Management Accounting

Learning Objectives

After studying this chapter, the student should be able to:

1. Understand the essential differences between management accounting and financial accounting, as illustrated by managerial use of the ROI formula.

2. Understand that successfully managing a company requires good information that supports effective.

3. Know the concepts of fixed and variable costs are used in C-V-P analysis in the management planning process.

4. Realize how the product cost classifications of direct materials, direct labor,

and overhead are used in the management controlling process.

5. Be able to perform a simple segment analysis using the concepts of direct, indirect, and opportunity costs in the management evaluating process.

6. Understand that management accounting still continues to evolve.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 15-4 Period Costs and Product CostsExercise 15-5 Manufacturing CostsExercise 15-8 Cost ClassificationsExercise 15-9 Cost ClassificationsExercise 15-10 C-V-P AnalysisExercise 15-11 C-V-P AnalysisExercise 15-17 C-V-P AnalysisExercise 15-18 Product Cost

Chapter 16Analyzing Cost-Volume-Profit Relationships

Learning Objectives

After studying this chapter, the student should be able to:

1. Understand the key factors involve in cost-volume-profit (C-V-P) analysis and why it is such an important tool in management decision making.

2. Explain and analyze the basic cost behavior patterns- variable, fixed, mixed, and stepped.

3. Analyze mixed costs using the scattergraph and high-low methods. 4. Perform C-V-P analyses, and describe the effects potential changes in C-V-P

variables have on company profitability.

5. Visualize C-V-P relationships using graphs.

6. Identify the limiting assumptions of C-V-P analysis, and explain the issues of quality and time relative to C-V-P analysis decisions.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 16-1 Variable and Fixed Costs Over the Relevant RangeExercise 16-2 Fixed Costs – The Relevant RangeExercise 16-5 High-Low of Analyzing Mixed CostsExercise 16-6 High-Low Method of Analyzing Mixed CostsExercise 16-7 Contribution Margin CalculationsExercise 16-8 Contribution Margin Income StatementExercise 16-10 Analysis of the Contribution Margin Exercise 16-12 Break-Even Point and Target IncomeExercise 16-17 C-V-P AnalysisExercise 16-18 C-V-P – Change in Variables

Chapter 17Product Cost Flows and Business Organizations

Learning Objectives

After studying this chapter, the student should be able to:

1. Understand the difficulty, yet importance of having accurate product cost information.

2. Explain the flow of goods and services in a manufacturing organization of product costs in its accounting system.

3. Understand the process of accounting for overhead. 4. Explain the flow of goods and services in a merchandising organization and

follow the accumulation of product costs in its accounting.

5. Explain the flow of goods and service organization and follow the accumulation of product costs in its accounting system.

6. Understand the impact of e-business on product costs.

7. Use the FIFO method to do process costing.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 17-2 Manufacturing CostsExercise 17-3 Predetermined Manufacturing Overhead RatesExercise 17-6 Flow of Manufacturing CostsExercise 17-8 Applying Manufacturing OverheadExercise 17-11 Analyzing Manufacturing CostsExercise 17-12 Total Manufacturing Costs and Cost of Goods ManufacturedExercise 17-13 Total Manufacturing Costs and Cost of Goods Manufactured/SoldExercise 17-16 Predetermined Service Overhead RatesExercise 17-17 Applying Overhead

Chapter 21Traditional Cost Management

Learning Objectives

After studying this chapter, the student should be able to:

1. Outline the different cost flow patterns in manufacturing, merchandising, and service organizations and understand how these costs are reflected in the income statement and balance sheet.

2. Interpret a cost of goods manufactured schedule and analyze the levels of raw materials, work-in-process, and finished goods inventories in a manufacturing organizations.

3. Understand how merchants manage cost information in their organizations. 4. Measure profitability and personnel utilization in a service organization.

5. Calculate and interpret holding costs in merchandising and service businesses.

6. Use classic quantitative tools in inventory management (economic order quantity, reorder point and safety stock).

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 21-1 Inventory Turnover in a Manufacturing CompanyExercise 21-2 Inventory Turnover in a Merchandising Company.Exercise 21-5 Analysis of Return on Inventory InvestmentExercise 21-7 Personnel Utilization in a Service OrganizationExercise 21-9 Financial Holding CostsExercise 21-12 Reorder PointExercise 21-13 Economic Order Quantity

Chapter 19Planning

Learning Objectives

After studying this chapter, the student should be able to:

1. Describe different types of budgeting and identify the purposes of budgeting.

2. Describe the budgeting process and its behavior implications.

3. Explain the master budget and its components for manufacturing firms, merchandising firms, and service firms.

4. Prepare pro-forma financial statements.

5. Distinguish between static and flexible budgets.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 19-1 Personal BudgetingExercise 19-4 Production BudgetingExercise 19-5 Production BudgetingExercise 19-6 Direct Materials BudgetingExercise 19-8 Direct Labor BudgetingExercise 19-13 Cash Budgeting Exercise 19-14 Cash Budgeting for a Service CompanyExercise 19-15 Cash BudgetingExercise 19-16 Pro-Forma Income Statement

Chapter 23Evaluating Products and Processes

Learning Objectives

After studying this chapter, the student should be able to:

1. Explain how evaluation leads to planning and why products and processes must be continuously evaluated.

2. Understand why benchmarking is so important and how it is conducted.

3. Understand the concept of differential costs and revenues, and be able to identify those costs and revenues that are relevant to making product and process decisions.

4. Identify several examples of products and process evaluation decisions, and

be able to analyze and select the best alternative for each example.

5. Understand theory of constraints and how focusing on scarce resources can direct activities in manufacturing companies.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 23-2 Relevant CostsExercise 23-5 Make-or-Buy DecisionsExercise 23-6 Make-or-Buy DecisionsExercise 23-7 Make-or-Buy DecisionsExercise 23-8 Purchasing Services from OutsideExercise 23-11 Discontinuing a Product LineExercise 23-12 Adding a New Product

Chapter 20Evaluating Personnel and Divisions

Learning Objectives

After studying this chapter, the student should be able to:

1. Explain why evaluating personnel and divisions is such an important activity in organizations.

2. Identify different kinds of organizational units in which evaluation occurs.

3. Explain how performance is evaluated in cost centers. 4. Explain how performance is evaluated in profit centers.

5. Explain how performance is evaluated in investment centers.

6. Compute and interpret variable overhead variance in costs centers.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 20-2 Materials Price VarianceExercise 20-3 Materials Price and Quantity Variances – Journal EntriesExercise 20-6 Materials Price and Quantity VariancesExercise 20-8 Labor Rate and Efficiency VarianceExercise 20-10 Labor VariancesExercise 20-12 Labor VariancesExercise 20-15 Measuring Performance with Segment and Contribution MarginsExercise 20-17 Revenue Variances Exercise 20-18 Return on InvestmentExercise 20-19 Return on InvestmentExercise 20-20 Measuring Performance: Residual Income and ROI

Chapter 18Capital Investment Decisions

Learning Objectives

After studying this chapter, the student should be able to:

1. Understand the importance of capital budgeting and the concepts underlying strategic and capital investment decisions.

2. Describe and use two nondiscounted capital budgeting techniques: the payback method and the unadjusted rate of return method.

3. Describe and use two discounted capital budgeting techniques: the net present value method and the internal rate of return method.

4. Understand the need for evaluating qualitative factors in strategic and capital

investments decisions.

5. Use sensitivity analysis to assess the potential effects of uncertainty in capital budgeting.

6. Explain how to use capital budgeting techniques in ranking capital investment projects.

7. Explain how income taxes affect capital budgeting decisions.

Prior coming to class, the student should attempt to solve the following exercises:

Exercise 18-1 Present ValuesExercise 18-5 Net Present Value MethodExercise 18-7 Internal Rate of ReturnExercise 18-9 Net Present Value and Internal Rate of ReturnExercise 18-13 Sensitivity AnalysisExercise 18-15 Ranking Projects

Waynesburg College BUS 555 - ACCOUNTING FOR MANAGERS

Instructor: Raymond L Vargo Phone: 412-302-3765 or 412-624-1199

PURPOSE OF COURSE: The primary objective of the course is to provide an opportunity for the student to learn some of the ways in which accounting information may be utilized to solve common business management problems.

REQUIRED TEXT: Accounting: Concepts and Applications, 9th edition by Albrecht, Stice, Stice, and Swain.

ATTENDANCE: Due to the accelerated nature of the MBA program it is critical that you attend each class. Although there are no penalties if you miss class, traditionally those who miss receive lower grades.

HOMEWORK: Each week two chapters will be covered. Prior to coming to class the student is expected to attempt to solve the homework exercises stated in the syllabus. I do not collect the homework but the exercises that are discussed in class are similar to questions on the exams. Please keep in mind these exercises have been selected to assist you in understanding the key element of each chapter. Do not get frustrated if you cannot solve some of the exercises – that is why there is class!

GRADING: Your grade will be determined using two forms of evaluation.

1) Group Midterm Exam – 1/2 of Total Grade2) Final Exam – 1/2 of Total Grade

Week Chapter

Week of Homework Exercises

1 2 9-Sep-06 E2-1, E2-5, E2-6, E2-7, E2-8, E2-9, E2-11, E2-123 9-Sep-06 E3-2, E3-3, E3-5, E3-6, E3-7, E3-8, E3-9, E3-14

2 14 16-Sep-06

E14-1, E14-2, E14-5, E14-8, E14-14, E14-15, E14-16, E14-17

5 16-Sep-06

E5-1, E5-4, E5-5, E5-8, E5-10, E5-11, E5-12, E5-13

3 15 23-Sep-06

E15-4, E15-5, E15-8, E15-9, E15-10, E15-11, E15-17, E15-18

16 23-Sep-06

E16-1, E16-2, E16-5, E16-6, E16-7, E16-8, E16-10, E16-12,E16-17, E16-18

4 30-Sep-06

Group Exam

5 17 7-Oct-06 E17-2, E17-3, E17-6, E17-8, E17-11, E17-12, E17-13, E17-16, E17-17

21 7-Oct-06 E21-1, E21-2, E21-5, E21-7, E21-9, E21-12, E21-13

7 19 14-Oct-06

E19-1, E19-4, E19-5, E19-6, E19-8, E19-13, E19-14, E19-15, E19-16

23 14-Oct-06

E23-2, E23-5, E23-6, E23-7. E23-8, E23-11, E23-12

7 20 21-Oct-06

E20-2, E20-3, E20-6, E20-8, E20-10, E20-12, E20-15, E20-17, E20-18, E20-19, E20-20

18 21-Oct-06

E18-1, E18-5, E18-7, E18-9, E18-13, E18-15

8 28-Oct-06

FINAL EXAM

COURSE OUTLINE: