Issues in Accounting Education Main Section

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A Note on the Roles of Aggregation and Delay in Management Control

Anthony D. Nikias, Steven T. Schwartz, and Richard A. Young
No. 3, August 2005, pp. 273-294

Abstract: Accounting information is often produced in an aggregate format and is delayed in its arrival. This teaching note examines the effects of aggregation and delayed arrival in the context of management control. One might expect that a reduction of information about managerial performance would reduce the efficiency of incentive schemes designed to increase goal congruence within the firm. Contrary to this intuition, aggregation, which reduces information, in some circumstances increases the efficiency of incentive schemes. This potential improvement in efficiency results because under aggregation the superior can exploit the subordinate's uncertainty about his future compensation. However, the resultant information loss from aggregation is generally costly, and these costs may outweigh the benefits of aggregation. We further illustrate that delayed arrival of information may allow an owner to enjoy the benefits of aggregation without incurring its costs. The approach taken in this note is similar to Antle and Demski (1988), in that the discussion is centered on numerical examples and placed within the context of a simple model of management control that is accessible to upper-level undergraduate and master's students. The advantage of this approach over having students go directly to the academic literature is that the simple linear structure of the illustrations facilitates construction and solution of numerical examples using spreadsheet analysis and also exposes the intuition more easily.

Using the Team-Learning Model in a Managerial Accounting Class: An Experiment in Cooperative Learning

Kathryn A.S. Lancaster and Carolyn A. Strand
Vol.16, No.4, November 2001, pp.549-568

Abstract: This paper reports on an experiment at one university where the professor changes two lecture-based managerial accounting classes to cooperative learning classes based on the Team-Learning Model advanced by Michaelsen (1998). For the professor who would like to implement cooperative learning, we provide a description of our experience with the Team-Learning Model. In addition, we investigate academic performance and student perceptions regarding the cooperative learning format. Although we do not find academic performance or student attitudes to differ significantly between the two learning environments, we document additional insights on cooperative learning, which extend the literature regarding this pedagogical method in accounting education.

The Role of Behavioral Research in Management Accounting Education in the 21st Century

Jacob G. Birnberg
Vol.15, No.4, November 2000, pp.713-728

Abstract: Behavioral accounting research (BAR) has a long history in management accounting. It has not had as significant a presence in the management accounting courses. It has tended to be relegated to the responsibility accounting chapter in textbooks. Thus, the extent to which behavioral materials appeared in a course depended on the interests of the instructor. It can safely be described as a matter of taste. In this paper the history f management accounting dating back to the end of World War II is divided into three periods. In each period, the extent of behavioral materials in the management accounting curriculum is reviewed. These periods, called the "cost accounting," "modern management accounting," and "post-modern management accounting" periods, reflect increasing emphasis on behavioral materials in the management accounting courses. The paper focuses on the reasons why the demand for behavioral material in the management accounting curriculum is likely to increases and offers conjectures about what form those materials will tale. It is, implicitly, also a call for research on the issues discussed here.

An approach to Organizing a Management Accounting Curriculum

Peter C. Brewer
Vol.15, No.2, May 2000, pp. 211-236

Abstract: In recent years, numerous tools such as activity-based costing, the balance scorecard, and target costing have gained prominence within business organizations (Kaplan and copper 1998; Kaplan and Norton 1996; Ansari et al. 1997). Nonetheless, traditional management accounting practices such as standard costing and contribution margin analysis continues to be prevalent (Szendi and Elmore 1993). The traditional topics, when coupled with all the recent advancements, creates a sizable body of knowledge that presents a challenge to management accounting educators, who bear the responsibility of organizing this subject matter into a coherent whole. In an effort to aid professors wrestling with this challenge, this article presents a new framework for organizing an entire management accounting curriculum. The article also includes one possible application of the framework that is being used at Miami University. The benefits of adopting the framework include: (1) less redundancy within the curriculum, (2) logical distinctions between the topics taught in each course, and (3) more opportunities for in-depth coverage of particular content areas.

The Balance Scorecard: A Potential Tool for Supporting Change and Continuous Improvement in Accounting Education

Otto H. Chang and Chee W. Chow
Vol.14, No.3, August 1999, pp. 395-412

Abstract: Rapid changes in the technological and competitive environment are posing serious challenges to accounting education. Meeting these challenges will required accounting educators and programs to undergo fundamental changes and to continuously seek ways to increase the value of their contributions. This article illustrates how the balanced scorecard may be used by accounting educators to stimulate, guide and sustain such continuous improvement efforts. Survey and interview responses from 69 accounting department heads are generally supportive of the balanced scorecard's potential and benefits to accounting programs. These department heads also provide suggestions on the items that can comprise an effective balanced scorecard for an accounting department, as well as factors that can affect its successful implementation.

Capital Budgeting: Some Exceptions to the Net Present Value Rule

Anil Arya, John C. Fellingham and Jonathan C. Glover
Vol.13, No.3, August 1998, pp.499-508

Abstract: Textbooks tend to emphasize the next present value (NPV) rule, often arguing that it is theoretically superior to other methods. Yet other methods, many of which do not involve discounting, are also used in practice. Hence, one of two conclusions can be drawn: (1) firms are making suboptimal decisions or (2) the assumptions underlying the NPV rule are not always met in practice. The purpose of this paper is to present simple numerical examples wherein applying the NPV rule leads to erroneous decisions. The examples highlight the assumptions underlying the NPV rule.

Using a System Perspective in Cost/Management Accounting to Teach Learning and Thinking Skills

Penelope Sue Greenberg
Vol.11, No.2 , Fall 1996, pp.297-313

Abstract: The purpose of this paper is to illustrate how learning and thinking skills can be enhanced by integrating a systems perspective into the cost/management accounting course. Five metacognitive skills (motivation, attention, organization, elaboration and monitoring) are needed for students' learning to learn and their development of higher level thinking skills. A systems approach for teaching cost/management accounting is presented which can be used to develop these skills. The systems approach not only enhances the development of metacognitive skills, but also facilitates the students' transition to the profession by emphasizing the environment in which managerial accounting information is used. The approach incorporates the skills into the teaching of domain-specific (in this case, cost accounting) knowledge. The respective roles of the instructor and the student in using the systems perspective to develop metacognitive skills are identified. Sample course materials are presented.

Interpreting and Measuring Operating Leverage

Richard A. Lord
Vol.10, No.2 , Fall 1995, pp.317-330

Abstract: This paper has two objectives. First, the relationship between changes in the degree of operating leverage and break-even point with changes in fixed and variable costs is explored. It is shown that changes in these measures are positively related to changes in both fixed and variable costs. In fact, the present study shows that it is possible for fixed costs to rise while unit variable costs fall and, still for both the degree of operating leverage and break-even point to decrease. This is contrary to the impression given in many accounting and finance texts. Second, the study examines alternative methodologies for calculation of the degree of operating leverage and the interpretation of the different signs and magnitudes of the measures. There are important differences in the several methods of computing the degree of operating leverage0 which can produce misleading notions about he firm's operating characteristics.

Cooperative Learning Activities: Managerial Accounting

Lucia E. Peek, Charlene Winking and George S. Peek
Vol.10, No.1 , Spring 1995, pp.111-126

Abstract: The Accounting Education Change Commission (AECC) has urged faculty members to move away from lecture format and to experiment with new instructional methods where students become active participants in the learning process. The Commission suggests that students learn best by doing and should be encouraged to work in groups on unstructured problems. This paper provides a discussion of the concepts of cooperative learning which can be used to enhance students' active participation in the learning process. Cooperative learning techniques are formal structured group methods that have been widely used across many disciplines and grade levels. We present four lessons based on cooperative learning techniques which have been used successfully in an introductory managerial accounting principles class.

Some Performance and Attitude Effects on Students in Managerial Accounting: Lecture vs. Self-Study Courses

Frank P. Daroca and Mahmoud M. Nourayi
Vol.9, No.2 , Fall 1994, pp. 319-329

Abstract: Because of changing student populations and budget constraints, teaching via traditional lecture and discussion classes (TC) has been questioned because of relative cost inefficiency when compared to self-study classes (SSC). This study examines student performance on examinations, and attitude changes towards accounting and business, by comparing managerial accounting courses across three semesters in TC and SSC modes. It was found that students earned similar grades in either format. This supports arguments in favor of less expensive methodologies. However, the study also found that students with higher SAT scores (and higher grades) had a positive shift in their attitude toward accounting and business in TC; this did not occur in SSC. Implications concerning live instruction and AECC recommendations are considered.

The Learning Curve: Wright's Model vs. Crawford's Model

Shu S. Liao
Vol.3, No.2 , Fall 1988, pp. 302-315

Abstract: This paper discusses the difference between two different learning curve concepts, the cumulative average model (Wright's model) and the incremental model (Crawford's model), and illustrates why the latter has gained the favor of practitioners and how it is used in practice. We recommend that cost and managerial accounting instructors focus on the incremental unit concept.

A Graphic Approach to Variance Analysis Emphasizes Concepts Rather Than Mechanics

James R. Martin and Eugene J. Laughlin
Vol.3, No.2 , Fall 1988, pp.351-364

Abstract: This paper demonstrates how a graphic approach to variance analysis can be used as a supplement to the usual diagrammatic and algebraic techniques in order to emphasize the concepts involved. The approach involves placing a series of transparency overlays on an overhead projector to produce a logical progression of ideas that provides the student with visual impressions of the analysis. Illustrations of the graphs for several types of analysis are provided along with discussions of how the presentations may be developed in stages to provide a more effective learning experience for students. The paper also includes a discussion of how a variety of extensions to the usual types of variance analysis may be incorporated into the graphic approach. The visual impressions provided by the graphic illustrations enhance the students' understanding of the underlying concepts and establish the foundation for a discussion of responsibility accounting, the concept of controllability, the problems of establishing points of control, and the broader concept of management by exception.

Direct Material Variances: Review of the Mix and Yield Variances

Edward A. Becker and K.J. Kim
Vol.3, No.1 , Spring 1988, pp.1-16

Abstract: Various articles and textbooks have developed different models for the calculation of the direct material variances. This has led to considerable confusion. This paper examines the area of direct material variance, provides definitions, and establishes evaluation criteria. Correct calculation of direct material variances (i.e., price variance, direct material mix variance (MV), and direct material yield variance (YV)) are a function of the production function assumed and the calculation model's ability to comply with the established variance analysis criteria. The three production functions are (1) partial linear substitution, (2) the fixed proportion production function, and (3) the nonlinear production function. The three criteria are (1) the computational models of MV and YV must be constructed in conformity with their definitions, (2) the computational models of MV and YV must be consistent with the characteristics of the underlying production function, and (3) the total of MV and YV must be equal to the total direct material quantity variance. This paper reviews the existing direct material variance calculation models. It suggests that Hasseldine's fixed-proportion production function model is the only one that meets the criteria and recommends its use. For partial linear substitution, this paper recommends the model proposed by Kellogg and Leininger, and for the nonlinear production function, none of the existing models fit all of the established criteria, so this paper develops a new model and recommends its use.

Capital Investment Analysis: The Index Method

Keith Wm. Fairchild and Dennis Bline
Vol.3, No.1, Spring 1988, pp. 72-78

Abstract: Adjusting for inflation in the analysis of capital investments can be achieved by employing either nominal cash flows and discount rates, or real cash flows and discount rates. This paper introduces a third methodology that is consistent with both the nominal and real approaches, yet simplifies the procedure through the use of an index that simultaneously adjusts for differential rates of inflation in the cash flows and general price levels. The index is the ratio of one plus the nominal required rate of return, divided by one plus the rate of inflation in a particular cash flow, and yields the appropriate discount rate for implementation of the technique.

Identifying a Common Body of Knowledge for Management Accounting

Gerald H. Lander and Alan Reinstein
Vol.2, No.2, Fall 1987, pp.264-280

Abstract: A hallmark of any profession is the presence of a common body of knowledge (CBK) whose parts can be defined and defended. The CBK determines the professional requirements of the beginning management accountant, the content of professional examinations, and the curricula that provide that knowledge. Using Flanagan's Critical Incident Technique, interviews were held with 41 management accountants from 11 Fortune 100 firms. The results of the interviews helped form a questionnaire to establish the content of a CBK for management accounting. Based upon responses to questionnaires, a CBK was identified and validated. This CBK consists of 13 management accounting objectives and 168 specific knowledge items. We compared the results of our study with those of similar studies to help validate the CBK.

A Matrix Solution to Process Cost Problems

Sara H. Dinius
Vol.2, No.1, Spring 1987, pp.44-56

Abstract: Process cost problems are unnecessarily confusing to students because the traditional solution approach is not sufficiently organized. In response to this difficulty, a procedure is described that facilitates solving these problems. Control of costs and units is initially established in a Work in Process account, and a matrix format is used to organize equivalent unit and cost allocation calculations within the comprehensive framework.

Integrating the Major Concepts and Techniques of Cost and Managerial Accounting: A Recommendation

James R. Martin
Vol.2, No.1, Spring 1987, pp.72-84

Abstract: This paper provides an illustration and recommendation concerning how cost accounting instructors and textbook authors can help students acquire a better understanding of the major concepts and interrelationships in cost and managerial accounting. It involves integrating the master budget, standard absorption costing (including alternative denominator activity levels), and standard direct costing with an underutilized technique referred to as the income statement approach to profit analysis. Combining these techniques provides an effective method of revealing how the major topics in cost accounting are connected and a powerful learning experience for accounting students.

Teaching Process Costing

G.H. Partington
1984, pp.75-80

Abstract: Students have long experienced difficulties in tackling process-costing problems. This paper outlines a problem-solving method which can help students overcome these difficulties.

Teaching Managerial (Cost) Accounting with Electronic Spreadsheet Software

Frederick H. Wu
1984, pp.81-97

Abstract: This paper attempts to show that the use of electronic spreadsheet software (ESS) in teaching managerial (cost) accounting can accomplish two objectives. First, students' learning can take place more effectively since ESS requires students to think analytically. The construction of accounting procedures in ESS and simulation through the constructed procedures in ESS make it mandatory that students understand the logical relationships underlying accounting procedures. ESS makes simulation easy to understand as well as to apply. Second, accounting schools are responsible for preparing students to enter the accounting profession, they can no longer teach students using only traditional manual accounting procedures. The second objective is a logical consequence of the first objective.