Management Control

Course Director: Jonny Lind

Why this course?

The course Management Control - how to use numbers internally is included in the Retail Management BSc program because it provides key knowledge relevant in controller and management positions in the retail sector. The management control toolbox is of great importance when managing a retail business. For example, you need to be able to evaluate investments in things like new stores or distribution centres. You may also need to make, for example, cost calculations for private label products and to develop useful internal key ratios that capture important performance dimensions that go beyond what is captured by financial accounting. Knowledge in management control is necessary when making such decisions and evaluations.

Course description

Management control refers to internal company systems for managing things like product costing, corporate investments, budgeting and performance measurement. The course is designed to meet three objectives: (i) learn about theory and practical application of methods of management accounting; (ii) learn how to use the numbers produced by management accounting methods for decision making in an organizational context (e.g. budget decisions, investment decisions, price/volume decisions, cost decisions); (iii) learn about theory and practical application when following up on decisions made in the past (performance measurement), including the use of non-financial measures. The course focuses both on technical knowledge of how to calculate the numbers, but also on knowledge about the human and organizational behavioral consequences of using different management accounting techniques.

Information produced as a part of company’s management accounting system is not subject to legislation, but the company can choose whatever calculation and accounting principles they prefer (there are exception for, for example, regulated monopolies). In practice, however, the financial accounting often tends to have a quite strong impact also on numbers produced only for internal purposes.

Connection with other courses

The course in management control is the second out of three courses covering the area of accounting and financial management. The first course was ‘Financial Accounting’ and the third one is ‘Retail Accounting and Financial Management’. The courses are tied together in different ways. A company can be viewed as a set of projects. Before cash is invested in a project, its expected profitability is evaluated. Methods in management control emphasizing cash flows are used for this purpose. During the follow-up phase, the ‘accounting period’ perspective tends to dominate, emphasizing profit/loss measurement and balance sheet accruals. This requires knowledge in financial accounting. As we will see in the current course, there are other options than using the financial accounting numbers when following up on performance. However, the basic challenge of managing the trade-off between investing in profitable projects and reporting ‘good enough’ profits remains.

Modules

The course consists of five modules:

1. Product costing and cost accounting
2. Basic concepts and methods when evaluating the profitability of projects
3. Budgeting
4. Performance measurement
5. Use of non-financial performance measures including sustainability

Course activities and pedagogical approach

The course is organized around a number of theory sessions, applied sessions and workshops. The purpose of the theory sessions is to introduce the topics. We do this by talking through the key concepts/techniques as well as illustrating these with some basic numerical examples.

The purpose of the applied sessions and workshops is to: (a) get more hands-on experience of working with the techniques; (b) provide an opportunity for more in-depth discussions; (c) illustrate how these techniques work in real-life situations. Before each applied session or workshop, students are asked to solve an assignment and prepare a short presentation of their tentative solution at an ‘applied session’. At this session students will present tentative solutions. Further exercises are provided during the applied sessions, letting students discuss analytical and practical issues in smaller groups. In some cases, extended applied sessions (workshops) are used in order to have sufficient time to deal with more comprehensive topics.

Theory sessions and applied sessions emphasize interaction between teachers and students, and among students. Students are required to prepare and present tentative solutions to assignments as a way of promoting applied learning of the topics dealt with. Company/industry cases are used to learn about the interpretation of accounting numbers in particular situations and contexts.

Course administrator: Karl.Strelis@hhs.se, alexandra.svahn.alberts@hhs.se

After completing the course, the student shall be able to demonstrate her/his ability to

1. Describe, explain and make calculations related to basic concepts and methods of product costing and cost accounting.
2. Describe, explain and make calculations related to basic concepts and methods of project evaluation.
3. Prepare budgets according to different approaches.
4. Describe, explain and make calculations related to different methods of performance measurement.
5. Describe and explain the use of non-financial performance measures including sustainability.
6. Compare different methods of project evaluation, product costing, budgeting, performance measurement, nonfinancial performance measures, and sustainability accounting when applied in organizational contexts.

General entry requirements.

Bergstrand, J. (2009) Accounting for Management Control, Studentlitteratur.

Non-mandatory literature:

Bergstrand, J. (2011) Management Control – A Cases Approach, Pearson Eduction. Chapters 1-5, 7-8

The book can be ordered as a physical book or as an e-book at:

https://www.bokus.com/bok/9780273757054/management-accounting-a-cases-approach/

The book is not mandatory literature in the course but offers a number of case exercises, including solutions, which are useful for practice. The book contains over 40 case exercises and some of them we have already used in the course (with minor modifications). There is one chapter in the book (Chapter 6) concerning inventory management which is not covered in the course. Therefore, disregard the case exercises in chapter 6. The rest of the cases you can use. If you come across something that has not been covered in class or in the book, you can disregard this. One such case is Case 7.2 which includes a discussion on corporate valuation which is not part of the current course. The case is still useful, but please disregard the valuation discussion. You will find that some of the cases on ABC-costing and capital costs go a bit beyond what we have done in class. With regard to the capital cost cases, they are closely linked the project evaluation part of the course, for example, with regard to the application of the annuity method and the distinction between the real and the nominal approaches.

The examination consists of two parts:

• **Individual written solutions to the seminar assignments and seminar participation (10%) **

The course includes 5 applied sessions and 2 workshops. Before each such session you are asked to hand in an attempt to solve a preparation assignment (all included sub-questions). Each handed-in assignment in combination with participation at the associated session is awarded with 1 point. Since there are 7 applied sessions and workshops in total, this corresponds to 7 points. In addition, students that receive a pass on at least 5 out of 7 sessions will get an additional 3 points. In total, you can thus get 10 points in total for participation in the applied sessions and workshops.

• **Written exam (90%) **

A written exam at the end of the course comprises the remaining 90 points. The written exam includes a number of exam questions that aim to provide an overall evaluation of whether the student has achieved the ILOs. The written exam covers theory sessions, applied sessions, workshops, assignments and exercises, and the course literature according to the reading instructions provided during the course.

For practical purposes a numerical scale (max 100 points) is used when assessing the course results. SSE’s grading rules apply, including the numerical intervals for different grades. In order to receive a pass grade on the course, students must have a minimum of 50 points in total (sum of exam result and points from completion of assignments and active participation with regard to applied session and workshops).

Find the course schedule in TimeEdit

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