Contribution analysis with a limiting factor

The following resources are on contribution analysis with a limiting factor; the topic is common in contribution analysis. The consideration of limiting factor is also addressed in linear programming and  throughput accounting:

1. acca article (pdf): http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_jan10_coulthurst.pdf
2. Basic information, plus cvp analysis description: http://chandrasekharank.hubpages.com/hub/Decision-Making-Cost-Volume-Profit-Analysis

The topic is taught in Management Accounting; it often comes up in examination questions of Strategic Management Accounting.

High-low method in Management Accounting

The following note is on high-low method in Management Accounting:

Reference



Bhimani, A., Horngren, C.T., Datar, S.M. and Rajan, M.V. (2012) Management and Cost Accounting, Prentice Hall

Pricing strategies -some resources

The following resources are on Pricing strategies:

1. Basic information on pricing strategies: http://en.wikipedia.org/wiki/Pricing_strategies
2. A comparision on various pricing strategies: http://www.learnmarketing.net/Price.htm
3. On setting ecommerce pricing strategy: http://www.shopify.com/blog/6532021-6-tips-to-develop-an-ecommerce-pricing-strategy

Control systems & performance measurement - a discussion agenda

the following discussion agenda is on Control systems and performance measurement in the subject of Strategic Management Accounting:

1. Financial & non-financial performance measures
2. How to design an accounting-based performance measure
3. Specific performance measures
• Return on investment
• Residual income
• Economic value added
• Return on sales
4. Different definitions of investment
5. Different performance measures
• Current cost
• Long-term assets: gross or net book value
6. Targeted levels of performance and feedback timing
7. Distinction between managers and organizational units
• Trade-off between incentive creation vs risk imposition
• Intensity of incentives
• Benchmarking for performance evaluation
8. Performance measures at the individual activity level
• On multiple tasks performance
9. Environmental and ethical responsibilities consdierations
10. Strategy and control levers

Lecture notes

References

1. Bhimani, A., Horngren, C.T., Datar, S.M. and Rajan, M.V. (2012) "Chapter 19: Control systems and performance measurement" Management and Cost Accounting, Prentice Hall
2. On management control system: http://josephho33.blogspot.hk/2011/10/management-control-systems-brief-note.html
3. On responsibility accounting: http://hafeezrm.hubpages.com/hub/Management-Accounting-Responsibility-Accounting

Control Systems and Transfer Pricing - a discussion agenda

The following discussion agenda is on Control Systems and Transfer Pricing in the subject of Strategic Management Accounting (SMA):

1. A basic description of Management Control Systems (MCS)
2. How to evaluate management control systems
3. The consideration of organizational structure on MCS
• Costs and benefits of decentralization
4. The consideration of responsibility centres
5. The consideration of transfer pricing
• Alternative transfer-pricing methods:
• market-based transfer pricing
• cost-based transfer pricing
• negotiated transfer pricing
• A general guideline for transfer-pricing situations
• Minimum transfer price = additional incremental cost per unit up to the point of transfer + opportunity cost per unit to the supply division
• Related tax considerations

References

1. Bhimani, A., Horngre, C.T., Datar, S.M. and Rajan, M.V. (2012) "Chapter 18: Control systems and transfer pricing" Management and Cost Accounting, Prentice Hall.
2. On management control system: http://josephho33.blogspot.hk/2011/10/management-control-systems-brief-note.html
3. On transfer pricing: http://josephho33.blogspot.hk/2011/10/transfer-pricing-brief-note.html

Management accounting technique for short-run decision making

There are queries from Strategic Management Accounting  students on how to perform Management Accounting analysis for decision-making with a short-run perspective. I suggest students to consider:

1. Contribution analysis (and related CVP analysis): http://en.wikipedia.org/wiki/Contribution_margin
2. Relevant cost analysis: http://hafeezrm.hubpages.com/hub/Managerial-Accounting-Decision-Making-Relevant-Costs-Benefits

Basically, in the short-run, some of the items of cost in a decision-situation are fixed and they can be unavoidable whatever decision options you are to adopt. In this case, such items of cost are irrelevant for decision-making with a short-run perspective.

I also need to point out that short-run decisions, e.g. in pricing, can have long-run impacts. Thus, best decision option from a short-run perspective (e.g. ability to gain maximum total contribution), can be suboptimal from a long-run perspective (e.g. optimal pricing from a short-run perspective can harm the a company's product positioning with negative consequence to the business in the long run).

Students are encouraged to pay attention to this line of reasoning when studying the subject of Strategic Management Accounting. Students should also note that linear programming and throughput accounting also adopt a short-run perspective in decision making.



References

• On relevant cost: http://en.wikipedia.org/wiki/Relevant_cost
• On avoidable cost: http://www.investopedia.com/terms/a/avoidable-cost.asp#axzz29vOQoQJy

Short-run and long-run perspectives in business studies

Some of my Strategic Management Accounting students have difficulties to comprehend the differences between short-run perspective and long-run perspective in business analysis, e.g. in pricing decision-making based on short-run and long-run perspectives. I do not offer to explain the differences between the two perspectives in a brief note but I propose an overall framework for students to do further study to gain a deeper understanding of these two perspectives. This is done in the form of the following diagram:

Reference

Short run vs long run in Economics: http://en.wikipedia.org/wiki/Long_run_and_short_run

Motivation, budgets & responsibility accounting - agenda for discussion

The following discussion agenda is on the topic of Motivation, Budgets, and Responsibility Accounting in the subject of Strategic Management Accounting :

1. Role of budgets
2. Budgeting for strategic planning and performance judgment
3. Motivation and organizational issues with budgeting
4. Types of budget
5. Kaizen budgeting
6. Activity-based budgeting
7. Budgeting and responsibility accounting
• Responsibility and controllability
8. Budgeting as a discipline in transition

References

1. Bhimani, A. et al. (2012) "Chapter 14: Motivation, budgets and responsibility accounting" Management and Cost Accounting, Prentice Hall.
2. A related blog article: http://josephho33.blogspot.hk/2011/10/budgeting-brief-note.html

Yield Management - some resources

The following resources are related to Yield Management

1. Basic description: http://en.wikipedia.org/wiki/Yield_management
2. On process yield: http://www.sixsigmatraining.org/six-sigma-projects/how-to-calculate-process-yields.html
3. Yield Management Strategies for Hotel Sector: http://www.apalmer.com/ymtarg.htm

On non-positivist philosophical paradigms

The two main non-positivist philosophical paradigms in Research Methods study are:

1. Interpretivist Research - characteristics: (a) multiple subjective realities; (b) dynamic, socially constructed meaning; (c) researcher reflexivity; (d) study of people in their natural social settings; (e) qualitative data analysis; and (f) multiple interpretations

2. Critical Research - characteristics : (a) emancipation; (b) critique of tradition; (c) non-performative intent; (d) critique of technological determinism; (e) reflexivity


Reference
Oates, B.J. (2008) "Chapter 20: Alternative Philosophical Paradigms" Researching  Information Systems and Computing, SAGE Publications

Semiotic analysis of still image in research work

From time to time, students doing dissertation works need to deal with still images, e.g. interpreting photos. In this case, they will find it useful to apply semiotic analysis. The major steps involved are as follows

Step 1: Choose the images to be analyzed
Step 2: Compile a denotational inventory
Step 3: Examine higher levels of signification
Step 4: Decide when to stop analysis process
Step 5: Select reporting/ presentation forma.



Reference
Penn. G. (2000) "Chapter 13: Semiotic Analysis of Still Image" in Bauer, M.W. and Gaskell, G. (editors) Qualitative Researching with Text, Image and Sound: A Practical Handbook, Sage Publications

Quality & throughput concepts in MA - a discussion agenda

The following discussion agenda is on Quality and throughput concepts in Stratetgic Management Accounting:

1. Two main types of quality: quality of design and conformance quality
2. Cost of quality
• Prevention costs
• Appraisal costs
• Internal failure costs and external failure costs
3. Techniques used to address quality problems
• Control charts
• Pareto diagrams
• Cause-and-effect diagrams
4. Relevant cost analysis for quality improvements
5. Non-financial measures on quality
6. Quality performance evaluation
7. Theory of constraints and throughput accounting

Related notes
Note 1

Note 2

Reference
Bhimani, A., Horngren, C.T., Datar, S.M. and Rajan, M.V. (2012) "Chapter 20: Quality and throughput concerns in managing costs" Management and Cost Accounting, Prentice Hall.

Pricing, target costing & customer profitability analysis

The following discussion agenda is on Pricing, Target Costing, and Customer Profitability Analysis in the subject of Strategic Management Accounting (SMA):

1. Major influences on pricing
• Customers
• Competitors
• Costs
2. Time horizon consideration in product-costing
• Short-run
• Long-run
3. Long-run prcing approaches
• Market-based
• Cost-based
4. Target pricing based on Target costing
• Cost incurrance and locked-in costs
• Cost-plus target rate of return on investment
5. Life-cycle product budgeting & costing
• Benefits of using life-cycle costing
• The full set of product revenues and costs is visible
• % of total costs incurred at early stage of a product life cycle is highlighted
• Interrelationship among various business function cost categories are highlighted. This promotes more effective value chain linkage analysis.
6. Customer-profitability analysis
• Customer revenue
• Customer costs
• Customer-profitability profile
• Customer value assessment

Study notes
Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

References

• Bhimani, A., Horngren, C.T., Datar, S.M. and Rajan, M.V. (2012) "Chapter 12: Pricing, target costing, and customer profitability analysis" Management and Cost Accounting, Prentice Hall
• On value engineering: http://en.wikipedia.org/wiki/Value_engineering

Risk Management - some resources

The following resources are on Risk Management:

1. On risk management: http://en.wikipedia.org/wiki/Risk_management
2. On Enterprise Risk Management: http://en.wikipedia.org/wiki/Enterprise_risk_management
3. On Financial Risk Management: http://en.wikipedia.org/wiki/Financial_risk_management
4. On Project Risk Management: http://en.wikipedia.org/wiki/Project_risk_management
5. Strategic and Operational Risk (acca doc - in pdf): http://www2.accaglobal.com/documents/risk.pdf

Related academic journals

1. Risk Analysis, from Wiley
2. Journal of Risk and Uncertainty, from Springer

Learning and Experience Curves - some notes

The concepts of Learning and Experience Curves are studied in Strategic Management and Management Accounting. Some online resources are as follows:

1.  Experience curve effect: basic info: http://en.wikipedia.org/wiki/Experience_curve_effects
2. Experience curve as a strategy concept: http://dinarstandard.com/leadership/strategy-concepts-the-experience-curve/

Study note
Note 1

Note 2

Note 3

Note 4

Factors that drive the Experiene Curve  (Fleisher and Bensoussan, 2003):

• Learning
• Specialization
• Product Design & Production Process Improvements
• Scale Economies
• Organizational Structure
• Innovation
• Reduced cost of funds
• Reduced cost of inputs

Strategic implication:

• High market share -> Experience Curve effect -> Lowered unit costs -> Higher profits

References
Fleisher, C.S. and Bensoussan, B.E. (2003) "Chapter 20: Experience Curve Analysis" Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition, Prentice Hall.
Wilks, C. and Burke, L. (2005) "Chapter 11: Learning and Experience Curves" Managerial Level: Management Accounting - Decision Management, Elsevier

Strategic Cost Management - some notes

The following notes are on Strategic Cost Management, which is a topic in Strategic Management Accounting:

Discussion item 1: Underlying theories of Strategic Cost Management



Note

Discussion item 2: Conventional Cost Analysis based on Relevant Cost Analysis vs Strategic Cost Management



Reference
Shank, J.K. and Govindarajan, V. (1993) Strategic Cost Management: The New Tool for Competitive Advantage, The Free Press

Backflush accounting - some resources

The following online resources are on Backflush Accounting (a JIT accounting approach):

1. Basic description: http://en.wikipedia.org/wiki/Backflush_accounting
2. Limitations of backflush accounting (pdf): http://www.cimaglobal.com/Documents/ImportedDocuments/fm_may06_p43-44.pdf
3. JIT operations and backflush accounting (ACCA article): http://www2.accaglobal.com/students/accax/exams/p5/technical_articles/2950555

Reference
Impacts of JIT on Management Accounting (an article): http://maaw.info/ArticleSummaries/ArtSumSwensonCassidy93.htm

A discussion on "balance" in balance scorecard

In  my lecture, I explained that "a balanced scorecard  (BSC) is a scorecard which is balanced". Below is a study note on the notion of balance in balaneced scorecard, based on Soderberg et al. (2011):

1. The three structural elements of BSC
• its measures are derived from strategy
• there is a balance among measures
• the measures are causally linked
2. Two "use" elements of BSC:
• double-loop learning
• tie-in to compensation
3. BSC classification scheme based on point 1 and 2:

    4.  Expected benefits of using BSC

• improve alignment of strategic objectives with strategy
• foster stronger consideration of non-financial drivers of performance
• develop a consistent system of objectives in the company
• support shareholder value-based management system
• improve company's long-term results

Reference
Soderberg, M., Kalagnanam, S., Sheehan, N.T. and Vaidyanathan, G. (2011) "When is a balanced scorecard a balanced scorecard? International Journal of Productivity and Performance Management Vol. 60(7), pp. 688-708.

Autopoiesis - a discussion agenda

The following discussion agenda covers the topic of Autopoiesis in Systems Thinking:

1. Definition of Autopoiesis
2. Key critieria to identify an autopoietic system
3. The implications of Autopoiesis
• Structure-Determined Systems & Organizational Closure
• Inputs/outputs & perturbations/compensations
• Structural coupling
• Epistemological implications
4. Mathematics and Models for Autopoiesis
5. Autopoietic Organizations and Social Systems
• The view of organizations and societies as autopoietic

Referenece
Mingers, J. (1995) Self-Producing Systems: Implications and Applications of Autopoiesis, Plenum

Soft Systems Thinking - a discussion agenda

The following discussion agenda is on Soft Systems Thinking (SST):

1. Basic ideas underlying Soft Systems Thinking (SST)
• there are multiple perceptionsof reality
• A subjectivist approach
• Weltanschauung: an individual's worldview
• Vicker's notion of an "appreciative system".
2. Representative works
• Churchman's Social Systems Design
• Mason and Mitroff's Strategic Assumptions Surfacing and Testing (SAST) methodology
• Ackoff's Social Systems Sciences
• Checkland's Soft Systems Methodology (SSM)
3. An assessment of SST and SSM
• An underdeveloped form of critical modernism

Reference
Jackson, M.C. (1991) "Chapter 6: Soft Systems Thinking" Systems Methodology for the Management Sciences, Plenum

JIT vs JIC - some resources

The discussion on the Just in time (JIT) approach in operations management very often starts with an explanation between the following pairs of concepts:

1. Just in time (JIT) vs Just in case (JIC): ref 1: http://www.leanmanufacturingconcepts.com/JustInCaseVsJustInTimeProcessing.htm; ref 2: on JIC: http://www.investopedia.com/terms/j/jic.asp#axzz2832YFQR1
2. Push supply chain vs Pull supply chain : ref 1: http://www.advantageinternational.com/www/content/default.aspx?cid=921&fid=726; ref 2: http://en.wikipedia.org/wiki/Push%E2%80%93pull_strategy [In this case: Push supply chain is related to the JIC approach while Pull supply chain is associated with the JIT approach]

JIT in Management Accounting - a discussion agenda

The following discussion agenda is on the topic of Just in time in Management Accounting study:

1. The 7 aspects of JIT implementation
• Employee involvement, quality, uniform factory load, set-up time reduction, machine cells, JIT purchasing, Pull system (Kanban)
2. Implications for Management Accounting Systems
• On process costing
• On JIT purchasing
• On material movement & recording
• ON labour recording
• On overheads
• On employee payment schemes
• On managers' information needs
• product costs
• performance monitoring
3. Reasons for adoption JIT and JIT in practice

Study note

References

1. Cobb, I. (1993) JIT and the Management Accountant: A study of current UK practice, The Chartered Insitute of Management Accountants, UK.
2. A blog article on JIT manufacturing: http://josephho33.blogspot.hk/2011/09/just-in-time-manufacturing-brief-note.html
3. On backflush accounting: http://josephho33.blogspot.hk/2012/10/backflush-accounting-some-resources.html

Soft Systems Thinking for IT/IS dissertation projects - readings

The following readings are relevant for Information Technology/ Information Systems students who are interested in using Soft Systems Thinking (SST) in their dissertation project works. They are also explained in SST workshops for this purpose:

1. Checkland, P. and Holwell, S. (1998) Information, Systems, and Information Systems: making sense of the field, Wiley
2. Stowell, F.A. (editor) (1995) Information Systems Provision: The contribution of soft systems methodology, McGraw-Hill

References

• Related fb folder: https://www.facebook.com/groups/277360354171/#!/groups/272833847547/
• A blog article on Soft Systems Thinking: http://josephho33.blogspot.hk/2012/10/soft-systems-thinking-discussion-agenda.html
• Bennetts, P.D.C., Wood-Harper, A.T. and Mills, S. (2000) "An Holistic Approach to the Management of Information Systems Development - A View Using a Soft Systems Approach and Multiple Viewpoints" Systems Practice and Action Research 13(2), pp. 189-205.