Management Accounting Education-based Journal Content

Journals Publishing Management Accounting Cases and Other Pedagogical Articles

IMA Education Case Journal

Accounting Perspectives 

Issues in Accounting Education

The Accounting Educators Journal

Recommended Cases

Activity-based costing

C-V-P analysis

Balanced scorecard

Compensation

Budgeting and Forecasting

Costing 

Activity Based Costing

Alrishani, S. (2020), Activity‐Based Costing in a Challenging Business Environment: An Instructional Case. Account Perspectives, 19: 17-26. doi:10.1111/1911-3838.12217

This cross‐disciplinary case study uses the concept of the Production Sharing Agreement (PSA) in the upstream petroleum industry to demonstrate the application of activity‐based costing in a challenging international business environment. The case is designed and implemented to encourage students to critically address and solve legal, operational, and accounting challenges from a global perspective. This case is intended to be an appropriate hands‐on, experiential tool for undergraduate degree‐level managerial accounting classes. The learning objectives of this case include (i) to develop an understanding of the PSAs and identify their potential related challenges; (ii) to apply activity‐based costing using a multiple‐step approach in a unique, international, realistic, and challenging environment; and (iii) to identify the gaps between the current case activity‐based costing application and IFRS.

Key Words: Accounting, Activity‐based costing, Production sharing agreement (PSA), Challenging business environment

Bukovinsky, D. (2020), Activity-Based Costing and the Evaluation of Customer Profitability: A Case Study, IMA Educational Case Journal, Volume 13, Issue 1 

This case examines the use of activity-based costing (ABC) and other accounting tools to assess the profitability of individual customers of Carolina Creations, a small furniture-manufacturing business. The company was expanding, new customers were attracted, and sales were increasing. Yet profitability was declining. The company’s founder, Richard Bachon, was concerned that the company was acquiring too many customers too fast, without regard to whether the customers were profitable. Richard ordered his directors of accounting and marketing to devise methods for evaluating the profitability of individual customers. He hoped that greater insight could lead to improved pricing methods and practices for managing customers. Students are provided basic information about the activities related to serving customers and are required to develop tools to help management better understand the costs of serving customers.

Keywords: Activity-based costing, customer analysis, cost allocation, common-size statements, ratio analysis.

CVP Analysis

Schultz, W.L. (2018), Sweet Celebrations: A Managerial Accounting Case Study. Account Perspectives, 17: 623-632. doi:10.1111/1911-3838.12184

The purpose of this teaching case is to demonstrate the application of contribution margin analysis in a custom bakery setting. This case is based on an actual company and illustrates the need for managerial accounting information for internal decision making, including sales mix and pricing decisions. In analyzing the case, students calculate contribution margin and contribution margin per unit of a constrained resource. Students are also required to consider the challenges faced by a growing small business, including the need to delegate responsibilities.

Key Words: Constrained resources, Contribution margin, Cost–volume–profit analysis, Sales mix

Chu, L., Libby, T., Mathieu, R. and Zhang, P. (2017), Bach Music Inc.: Impact of Price Pressure, Capacity Constraints, and a Special Order on Management Decision Making. Account Perspectives, 16: 435-443. doi:10.1111/1911-3838.12152

This case has been developed for an introductory management accounting course at the undergraduate and MBA levels. Although the setting is relatively simple, it illustrates several management accounting issues that are relevant to firms of every size that produce a product or service under competitive pressures and capacity constraints. The case also integrates several topics that are often viewed as abstract by the students. Specifically, it deals with the concepts around cost‐volume profit analysis in a realistic environment, the tension between short‐term and long‐term decisions, discounted cash flow analysis, the impact of managerial incentives and compensation on decision making and the impact of operating leverage on profitability. The case was used successfully several times in an introductory course at the MBA level. Surveys of the students reveal that the case has contributed significantly to their learning and has clarified the concepts introduced in the case.

Key words: Cost‐volume‐profit, Capacity constraints, Special order, Incentives, Operating leverage

Lightstone, K. and Rixon, D. (2019), Halifax Henna: The Art of Manageable Growth. Account Perspectives, 18: 95-103. doi:10.1111/1911-3838.12198

This case explores the dilemma many young women face when they begin a family: juggling a full‐time job as a young Chartered Professional Accountant (CPA) with a government job, continuing to grow a small business as a henna artist, and caring for a new baby. Even before the arrival of the first child, the combination of continuing to do both jobs was not sustainable. The case provides information to enable students to assess the financial health of a small business and provides a recommendation to the owner. In addition, information regarding paying childcare costs while continuing with a government job provides a realistic comparison for students. Often students jump to the money, which is currently in her accounting job, and forget that passion, dreams, and objectives for work–life balance, although earning less at the moment due to the part‐time nature, may be the best way forward.

Key Words: Contribution margin, Constrained resources, Small business, Forecasting

Steeves, H., Laplante, J. and MacDonald, R.A. (2019), Hop‐portunity Lost? Spetz Brewery Considers a Pale Future. Account Perspectives, 18: 105-115. doi:10.1111/1911-3838.12199

This case seeks to have students operationalize the managerial accounting concepts of relevance and cost allocation within a retail context. Spetz Brewery is a division of an on‐premises wine and beer‐making business in Moncton, NB. Manager Nancy Wheeler is examining company financial performance to determine the veracity of her belief that the on‐premises brewing segment of the business is unprofitable. Product information is provided to allow contribution margin calculations. In addition, students must determine whether the deteriorating results detailed in the company's financial statements are the result of the problem identified by the manager or whether there are in fact additional issues that need to be addressed.

Key Words: Break‐even, Contribution margin, Cost behavior, Drop‐a‐product decision, Relevance

Nanni, A. J, (2019), FND: The Hill Channel Partner Decision, IMA Educational Case Journal Volume 12, Issue 4 

This advanced relevant-cost case requires students to analyze potential incremental profit in a complex real-world application and to make recommendations for future actions given a broader view of the relevant contextual factors. The case involves a potential relationship between two multibillion-dollar firms in the information technology (IT) industry. FND Corporation has built its sales and marketing around a direct-sales approach focused on very large customers with professional IT departments. This business model seems to be a poor fit for smaller customers. Hill Computers has a proven record of selling to those smaller customers. Should FND make Hill its channel partner in that market? The primary teaching objectives for this case are to structure a relevant cost differential analysis in a noisy context, to explore the appropriate role of activity-based costing (ABC) data in such an analysis, and to illustrate the importance of strategic context in utilizing the results of the quantitative analysis.

Keywords: FP&A, relevant costs, differential analysis, cost-volume-profit, channel margin, activity cost rates, economic business models, decision under uncertainty

Stone, F.M., S. L. Erickson (2017) Hometown Community Church: Opportunities and Challenges of Continued Growth, Issues in Accounting Education, Vol 32 Issue 3, pg. 129-136

Hometown Community Church is a not-for-profit (NFP) organization that is faced with substantial attendee growth and the corresponding challenges that come with increasing demand. Located in the Midwest, Hometown Community Church has grown over the past several decades from a few dozen parishioners to a church with two building sites and increasing attendance. As growth continues, three alternatives are presented to help alleviate the space crunch. The business and accounting topics that this case addresses include: The necessity and usefulness of accounting information in NFP enterprise decisions. The need to make well informed and well-analyzed choices when “business” is good, not just when “business” is bad. The analysis, in a NFP, of management decision-making scenarios, such as make or buy, adding a second branch “store,” and capacity constraints. The discussion of both quantitative and qualitative data in the decision-making process.

Kip R. Krumwiede, Gyung H. (Daniel) Paik, W. Darrell Walden; Can Management Accounting Help Aid Associations Make Tough Choices in Haiti?. Issues in Accounting Education 1 February 2018; 33 (1): 17–28. doi: https://doi.org/10.2308/iace-51854

Based on an actual situation, this case explores the use of management accounting analysis in a difficult make-or-buy decision in the real world of humanitarian aid. An aid organization produces a specially designed, highly nutritious peanut butter medicine to save the lives of Haiti's malnourished children. The challenge is deciding whether to source the peanuts from Haitian farmers and pay more or from foreign suppliers and pay less. Students perform both quantitative and qualitative cost-benefit, break-even, operating leverage, and product costing analysis. Performance measurement, incentive issues, short-term versus long-term thinking, micro- and macroeconomics, and ethical issues are also considered. The case is best suited for cost accounting and managerial (particularly M.B.A. managerial) accounting courses.

Zahller, K.A., M. Beranek (2019) BabyFreedom: Stakeholders and Strategy IMA Educational Case Journal Volume 12, Issue 1

In this case, students are given the chance to move beyond traditional cost-benefit analysis in analyzing and integrating ethical and qualitative factors in a small business’ decision whether or not to accept a new partner¬ship opportunity with a large retailer. The opportunity requires significant changes in the company’s mission and values in addition to the adoption of new technology with implications for consumer privacy. Students in manage¬rial accounting, cost accounting, and information systems classes reported that the case was thought-provoking and enhanced their understanding of ethical issues involved in collecting and managing corporate data. Students also found the intersection of accounting and information systems courses and the application to a realistic situa¬tion interesting.

Keywords: Qualitative analysis, technology adoption, strategic fit, corporate social responsibility, stakeholders, consumer privacy

Balanced Scorecard

Brooks, A., G. Vesty, Kilgors Wine Division: A Balanced Scorecard Simulation, IMA Educational Case Journal, Volume 13, Issue 1

The wine division of Kilgors is beginning development of a new performance management framework using balanced scorecard (BSC) technologies. To date, they have developed a portfolio of measures for possible inclusion in the division scorecard. Industry experts have provided Kilgors’ management with insight regarding industry developments, and the CEO, CFO, and Wine Division manager are motivated to ensure the firm’s and division’s strategies are captured in improved performance evaluation and management control. The Wine Division operates in a dynamic environment and has recently been challenged by uncertain market conditions that have raised questions about internal operations and practices. The CEO is intent on proactive, rather than reactive, management responses. At this stage, Lee recognizes that she needs guidance from someone with management accounting expertise in further developing and refining the BSC. She also recognizes that planning for disruptions and market threats will be an integral part of this strategic planning process.

Keywords: Balanced scorecard (BSC), simulation, wine industry, performance measurement.

Kohlmeyer, J. M.,  J. A. Samuels (2017) Rebecca's Coffee and Tea House: A Strategic Mapping and Balanced Scorecard Case Study Issues in Accounting Education Vol. 32 Issue 2 (2017) pg. 73-81

This case is designed to be used in an undergraduate or M.B.A. managerial/cost accounting course. The case asks students to act as advisors to the owner of a relatively new coffee and tea house. Students' familiarity with coffee houses enhances the real-life application of cost/managerial concepts in the case. The primary learning objectives include understanding quality costs, developing a strategy map, designing a balanced scorecard (BSC), analyzing how some of the BSC measures would be captured and monitored, and articulating the advantages/disadvantages of linking a BSC to employee evaluation. The small business is easily understood by students and, therefore, the case allows for rich class discussion.

Keywords: Balanced scorecard, strategy maps, quality costs

Venkatesh, R., A Fedin, J. Riley (2019) Evaluating New Initiatives via Strategy Mapping and the Balanced Scorecard  IMA Educational Case Journal Volume 12, Issue 1

This case study is an extension of “Pikesville lightening: evaluating strategic business expansion opportunities.” Greg storm, owner of the Pikesville Lightning minor league baseball team, plans to roll out a new product offering to appeal to the team fans, but he is not sure whether the idea fits within the organization’s strategy. If he does go ahead with it, he needs to move quickly, but he also needs a way to measure the success of the initiative. With limited time, Storm starts sketching out a possible strategy map for this initiative, but he has not received any feedback from his leadership group regarding this effort. This case takes a less commonly used perspective in balanced scorecard cases by providing students with a partially completed strategy map, the key objectives of the organization, and requires students to complete a strategy map and subsequently translate the components into a balanced scorecard.

Keywords: strategy, strategy map, balanced scorecard, performance evaluation

Compensation

Sheehan, N.T. (2019), Paper and Hill: An In‐Class Corporate Governance Case. Accounting Perspectives, 18: 225-237. doi:10.1111/1911-3838.12211

Corporate governance is a set of rules and processes that help ensure that firms are effectively run for the benefit of their stakeholders. Good corporate governance is predicated on having directors fulfill their fiduciary duties while acting as stewards of the corporation. The fact that good corporate governance is essential to a well‐functioning and prosperous society is reflected in CPA Canada's Strategy and Governance competency. Unfortunately, there are few in‐class Canadian corporate governance cases that instructors can use to help accounting students improve their understanding of these three fundamental governance concepts: director duty of care, director duty of loyalty, and the business judgment rule. This Canadian corporate governance case is based on the actual events regarding the approval of Steven Hill's employment contract as the Chair of Paper Enterprises Inc. The case is presented using PowerPoint slides, rather than in a traditional narrative format, as it intended to be used as an in‐class case that does not require advance student preparation.

Key Words: Boards, Duty of care, Duty of Loyalty, Business Judgment Rule, Executive compensation

Budgeting and Forecasting

Shepherd, J.D. and Amlani, A.A. (2019), Leaning Tower of Pizza: A Business Start‐up. Accounting Perspectives, 18: 23-31. doi:10.1111/1911-3838.12192

The following take‐out pizzeria restaurant simulation highlights the information sources that an entrepreneur can use to prepare a cash budget and financial forecast for a new business venture. Based on the information contained in this simulation, students make a capital budgeting decision and prepare pro forma financial statements.

Capital budgeting, Financial forecasting, Financial modeling, Relevant costs, Small business

Boldt, M. N., (2020) Sea Pines Villa: Are They Ready For The Big One?  IMA Educational Case Journal Volume 13, Issue 1 

Sea Pines Villa (SPV) introduces students (undergraduates and graduates) to cash budgeting and its importance in disaster-recovery plans. The setting is based on a real company and operating environment, and provides students with an opportunity to explore how uneven cash receipts affect the cash budget. The case describes how this coastal vacation property rental and management company earns revenues and receives cash, as well as the timing and behavior of costs and payments. Students prepare a cash budget for three months and determine whether the company has sufficient cash to survive a disaster. Students also create a disaster-recovery plan that includes preventive and action steps for the hours immediately preceding (if possible) and following a disaster.

Keywords: Cash, budgeting, disaster-recovery plan, business continuity.

Best, W. E., W. J. Walker  (2019) Seeing Both Sides: Role Reversal in Budgetary Decision-Making  IMA Educational Case Journal Volume 12, Issue 4   

In this case study, the authors present an experiential case that gives students the opportunity to create and review partial budgets, while incorporating the complexities of situational constraints and ethical decision-making. Across several class sessions, students can take on the role of both a departmental budget preparer and an independent reviewer. Students build a budgeted income statement from uncertain accounting information in Round 1. In Round 2, students review the work of their classmates, identify and discuss the factors potentially leading to their classmates’ decisions, and make recommendations to improve the budgeting process. In Round 3, the class discusses the implications of expectations, culture, pressure, and rewards on their initial accounting decisions. Classes also discuss how these forces can impact ethical decision-making. The results of the case, as well as student feedback, are discussed.

Keywords: Budgeting, accounting education, management education, ethical decision-making

Stephenson, T, J. Porter (2019) Denim Products Incorporated: Creating and Using a Master Budget IMA Educational Case Journal Volume 12, Issue 1

This case helps students in upper division or graduate accounting and business courses gain an in-depth knowledge of budgeting by developing and analyzing a multiproduct, multiperiod master budget. The case consists of three segments that can be used in conjunction or separately. In the first segment, students create a master budget using a standardized template. In the second segment, students analyze their budgets to determine optimal sales-mix and ways to improve profitability. In the third segment, students consider an ambiguous ethical dilemma and develop business-related arguments to support their position. Working on this type of case provides students with a greater understanding of a master budget and the information such a budget can provide to decision makers.

Keywords: master budget, subsidiary budgets, budget analysis, ethics, sales-mix, Excel

Costing

Wouters, M. W, (2020), Target Costing Decisions at BMA AG, IMA Educational Case Journal Volume 13, Issue 1

This case addresses target costing at a German premium car company, BMA AG. It is based on many examples that have been anonymized and blended, making the extended description of target costing in practice a valuable part of this case. The case focuses on target costing in a context with complex supply chains, huge product-development expenses, long lead times of product-development projects, complex tradeoffs between different targets, and large product portfolios. The assignments do not require conducting detailed calculations but focus on qualitatively discussing decision-making based on target costing and developing extensions of target costing to adapt it to this context.

Keywords: Target costing, car industry, product development, R&D costs, parts commonality.

Venkatesh, R., A. Fredin, J. Riley (2019), À Votre Santé (B): Process Costing and Decision Analysis in the Wine Industry IMA Educational Case Journal Volume 12, Issue 2

A votre santé (B): process costing and decision analysis in the wine industry is an extension of A votre santé: product costing and decision analysis in the wine industry. This case uses the same context of the original case, the wine-making industry, which lends itself well to explain the concepts of process costing. This case requires students to prepare process costing production reports using the weighted average and the first-in, first-out (FIFO) methods to follow the wine making process from start to finish, capturing the costs of each key activity (pro¬cess) along the way. Furthermore, the case allows students to understand the consequence of ignoring the costs of normal spoilage and consider the costs of normal spoilage when calculating the cost of a bottle of wine.

Keywords: Process costing, decision analysis, ethics

Jonick, C., J. Schneider (2019), Tracking Manufacturing Costs on a Continuous Flow of Identical Products IMA Educational Case Journal Volume 12, Issue 2

The purpose of this short case is to provide a hands-on activity where students experience systematic allocation of a whole among various parts, a concept that is prevalent in many areas of accounting. It illustrates the flow of the accounting cycle from one period to the next and provides opportunities for students to practice decision-making and critical thinking skills. The subject of the case is the managerial topic of process costing. The scenario extends over a three-month cycle to illustrate continuity from period to period and track changes in performance over time. The context involves the continuous manufacture of identical products and the costs that accrue in production. The foundational concept of allocation can then transfer to a better understanding of service entity costing, revenue recognition, partnerships, depreciation, budgeting, and other financial analyses.

Keywords: Process costing, product costs, continuous manufacturing, allocation, manufacturing accounting

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The Management Accounting Section (MAS) is a diverse community of academics and practitioners from all over the world dedicated to advancing the practice, research, and teaching of management accounting. We have strong partnerships with several organizations, including the Institute of Management Accountants (IMA), the Association of International Certified Professional Accountants (AICPA), CPA Canada, and Wiley. Through these partnerships, MAS offers a wide range of resources to support its members, and I encourage you to click on the tabs at the top of the webpage to learn more.

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Dear MAS members, As the incoming Senior Editor of the Journal of Management Accounting Research (JMAR) for the 2022–2024 term, I am excited to announce the editorial team that will serve during my term. We will have a group of 13 Editors who are distinguished scholars ready to work with you, current and future authors and referees, on publishing high-quality and relevant management accounting research. We will also have a great new Editorial Advisory and Review Board with 44 accomplished members.

Continuing JMAR’s mission to promote diverse topics and methodological perspectives, the new editorial team covers all methods of management accounting research. Close to 50% of the team is based outside of the US, which also continues the tradition of a wide geographical representation.

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