I.    Administrative announcements (see embanet)

II.   How to study for Financial Reporting?

II.   Barriers to learning Managerial Accounting

III.   Why use the case method?

IV.   'Where are we & where are we going (posted later)

V.    Case 'Takeaways' (provided in class)

VI.    How to prepare for Managerial Accounting?

VII.   Managerial vs. Financial vs. Tax Accounting

VIII.  Using accounting data for 'special' decisions

 

I.  Administrative announcements (handed out in class or posted on embanet)

 

II. Barriers to learning? -- dialog with Bob

1. "There is no unifying theme like in Financial Accounting (A=L+OE). Therefore it’s difficult to get the big picture."

Bob’s response: This is true and it’s natural to feel this way. Because relevant data for one purpose may not be relevant for another, good analysis varies with the "situation." And because "situations" are infinite, your task is to learn to how to put structure on these complicated settings. Hopefully, by the end of the course, you will have increased confidence in your decision-making skills.

 

2. "I learn better when the subject is lectured on first and then we do a representative problem."

Bob’s response: For most students, substitute "feel better" or "worry less" for "learn better." As discussed above, in my experience only a few "learn better" -- if we define learning more broadly than rote recall of the facts, procedures, etc. [These ‘recall items’ are the things that typically slip away all too fast after a course is over!]

 

3. "We could cover more material if Bob would just tell us how to solve these cases. We wouldn’t have to waste time listening to the wrong answers my fellow students suggest! (and I really hate it when Bob writes one of these wrong answers on the board!)"

Bob’s response: A important task of a manager is sorting between alternative suggestions (answers) and providing positive feedback. Imagine you are a participant at a meeting where a couple of work colleagues are presenting their analysis of a major issue. Would there be a single ‘right’ answer? What would you want your role to be? Your boss? Your colleagues?

 

4. "I feel frustrated when I leave class and I’m not sure what is the right answer to the case."

Bob’s response: This feeling can be caused by several factors including:

• It is the nature of the material that multiple approaches could be acceptable ( even in financial reporting, there are often multiple acceptable approaches even within the "rules"). In managerial accounting, there are no rules and thus a single "correct" answer is often not apparent.

• It is the nature of the case method that you are left with an uncomfortable feeling about what you need to know (for the exam). This is probably the same feeling you get ‘on the job’ when asked to do something new.

• We may sometimes get pressed for time at the end of class, and the big picture summary can get rushed or even eliminated.

 

III. Why use the case method approach to learning?

A.    Why use Cases?

• Emulates the environment faced by managers.

• Supports the use of real-world materials (because it is real-world decisions need to be made).

• Provides opportunities to observe and react to the (sometimes faulty) reasoning of real-world managers.

• Helps improve judgment & presentation skills:

> conduct personal research on a somewhat unstructured problem.

> sort out data that are relevant to the decision/task from those that aren't.

> learn from others (especially your team or study group).

> build confidence in making judgments from incomplete information.

> build confidence in articulating support for your judgments.

 

B.    Symptoms of potential negative side effects of using cases?

• Feel frustrated when you approach a new case (and the readings, homework & text don't seem to help that much!).

• Feel like learning is inefficient relative to the more common lecture approach.

 

C.    Is the Case Method always appropriate?

• Perhaps not for learning structured, repetitive tasks.

• Perhaps not when trying to learn many technical tools and concepts in a short amount of time, e.g., Statistics.

• If frustration overwhelms, then can be counterproductive.

 

D.    What have I done to mitigate potential negative side effects of the Case Method?

• Provide more structure via clarification, hints & examples before many cases.

• Attempt to warn you when some cases will need extra time.

• Encourage you to draw examples from your own experience.

• Encourage you to ask questions in class and via embanet.

• Try to summarize key points at the end of each major case.

 

IV.   'Where are we & where are we going (posted as we proceed)

 

V.  Case TakeAways (handed out in class)

 

VI.  How to prepare a case for managerial accounting  (Especially for those with a liberal arts background)

A. Theme: Learning by doing works better than learning by reading.

B. Suggested Steps:

1. Read the assigned case(s).
2. Read the assigned textbook readings. Don’t skip the examples, exhibits and review problems that have all those calculations! These provide self-tests of your progress and solutions are imbedded. Use some device (e.g., "post it" notes) so you can locate questions you have about the reading, examples, etc.
3. Work suggested textbook problems but do NOT look at the solutions until you have made a legitimate attempt to complete the problem. If you’ve worked the Self-Study problems, you shouldn’t have much difficulty with the textbook problems.
4. Compare your answers to the solution. Attempt to reconcile (i.e., understand) the differences and write down any questions that come up.
5. Prepare your "solution" to the assigned case(s).
6. Work with your study group after being prepared with your solutions and your questions. Discuss the cases and ask each other questions.
7. If you had trouble with the case, rework it on your own and write down any remaining questions you might have.
8. In class we will discuss the case. Answer my questions (to yourself if not out loud) and ask your own (if possible). Questions that remain should be addressed  as soon as possible (after class, in help sessions, with study group members, on embanet, etc.).
9. Follow-up by seeking help to clear up confusion and to get remaining questions answered.
10. Don’t fall behind!

C. Things to avoid when studying?

• Procrastination
• Reading everything except all of the numbers, tables, and examples
• The "I knew that syndrome"
• Getting stuck (make an assumption and move on)
• Running out of time before getting to the problem, case or exercise
• Dividing the work between members of your study group
• The path of least resistance

D.  What is a productive positive attitude? (in my opinion):

• Take the path of most resistance
• Get involved
• Invest in yourself

E. Concerns I’ve heard in the past and some thoughts on how you might respond

"My study group is going faster through the material than I can absorb it."

"I feel like I would be wasting my study group’s time if they had to adopt my pace."

Consider identifying a study partner that you can call on to help you in the early stage preparation of the cases. (Of course, it would be great if the person is from your study group but it is not necessary). It may not be necessary to meet in person; rather, try using the phone or embanet to get through those frustrating places. There are at least three models for selecting a study partner:

>Your partner is stronger than you in Accounting, e.g.,

They help you get started or restarted if you get stuck

They provide hints but don’t do the work for you

>Your partner is about at your level, e.g.,

You help each other get started or restarted if either of you get stuck

You get together before or after study group meetings to go over difficult areas, and

You mutually agree to bring up points you don’t understand for discussion at study group

>Your partner is weaker than you in Accounting, e.g.,

You assume the role of teacher and learn by helping your partner

You mutually agree to bring up points you don’t understand for discussion at study group or in class

VII.  Financial vs. Managerial vs. Tax accounting

 

VIII. Using Accounting Data for "Special" Decisions

A.    Background discussion

B.    Steps to approaching a "special" decision problem

1. Identify the type of decision you are facing (e.g., accept or reject a special order; pricing; make or buy; add a product; drop a product; select among alternative projects, etc.). The data you should use will vary with the decision context.

2. Specify the decision horizon (e.g., "short-run" or "long-run").  Even selecting one, you should consider the impact on the other.

3. Specify the quantitative decision rule (e.g., maximize the CM per unit of constrained resource; maximize NPV of future cash flows; minimize costs).

4. Identify alternatives (e.g., repair machine, replace, or outsource the activity).

5. Identify and collect relevant data (not all of which will be available). Relevant data are expected future cash flows that differ between the alternatives.

6. Making all assumptions explicit, analyze the relevant available data and apply the quantitative decision criterion. This can be thought of as your "tentative decision."

7. List and evaluate qualitative factors. This step is crucial and often overlooked.

8. Weigh quantitative and qualitative factors and make the final decision.

9. "Hope" for a good outcome.  [Recall the "information game" and how one can have a bad outcome even after making a series of good decisions!]

Notes:

Short run decisions are generally those where capacity is fixed. Of course, short run decisions can have long run implications.

A micro-level rule such as "select among alternative projects to maximize NPV" should ultimately support a more macro-level criterion such as "maximize the pre-tax profitability of the division."

Being careful to avoid obvious pitfalls, e.g., see Hilton, chapter 14, pp. 588-589.