COMM 354 - Cost Accounting

This course is a continuation of COMM 294. It explores more deeply the reporting and analysis of costs in the management of the firm. Management accounting has two major roles:

• Decision-Facilitating role: Managers have the responsibility and authority for making decisions with respect to the use of the firm’s resources. To do this effectively they must identify the alternative actions and strategies available to them, predict the possible consequences of those actions or strategies, and then choose the strategy course of action that has the most preferred predicted 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.
• Decision-Influencing role: A manager is sometimes the sole owner of a firm, but more generally managers are employees or own the firm jointly with others. The choices made by a manager will depend on the predicted consequences that are of personal concern to her/him and her/his preferences with respect to those consequences. Consequently, the manager may not make the choices most preferred by the owners. 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 that they prefer.

Both roles are considered in COMM 354 and 454, but the primary focus in COMM 354 is on the decision-facilitating role of management accounting. It is important to recognize that the management accounting system can report its information in any way that is useful to management. In particular, this system need not apply the generally accepted accounting principles (GAAP) that must be applied in the preparation of externally reported financial statements. The objective is to help you develop the tools you need to find and analyze the relevant data necessary to make good business decisions. Learning will be structured around an interactive class environment.

Learning objectives

Upon successful completion of this course, students will have the knowledge and skills to:

• develop a business decision-making model which provides the foundation for analytical decision-making which incorporates uncertainty amidst qualitative and quantitative components and constraints.
• assess a business situation, determine alternatives, select the most appropriate management accounting tool, implement the tool, build a comprehensive analysis and produce a thoughtful recommendation.
• make well-reasoned recommendations for business decisions in settings where the information that is provided is relatively unstructured and where there is a dependence on data emanating from accounting systems.
• position recommended decisions within the business context and strategy.
• logically critique cost allocation mechanisms used in a various business contexts and provide recommendations for improving those mechanisms.
• understand the informational needs of management and how they contrast with the financial information required by external entities, such as investors.
• demonstrate competency in applying cost analysis tools, particularly linear programming and regression analysis and use the output from these tools to assist in decision-making.

Prerequisite: All of COMM 190 (formerly numbered as COMM 290)., COMM 191 (formerly numbered as COMM 291), COMM 293, COMM 294.