THE HONG KONG UNIVERSITY OF SCIENCE & TECHNOLOGY

DEPARTMENT OF ACCOUNTING
ACCT 2200 Principles of Accounting II
Spring 2019

Instructor Dr. Gerry K.H. LI

Instructor’s Contact LSK 5054A, e-mail: acgerry@ust.hk, Tel. 2358 7564

Office Consultation Hours Wednesday & Friday 16:30 – 17:30

or by appointment

Lecture Time & Venue L13: Wednesday & Friday 15:00 – 16:20 Rm 6573
Teaching Assistant Ms. Sandy TAI
LSK 6066, email: acsandy@ust.hk, Tel. 2358 7582
Course Web Site Accessible via CANVAS

I. Course Description

Management accounting is concerned with the generation, communication, and interpretation

of internal information, both financial and non-financial, for operational and strategic decision-
making purposes. This course is intended to introduce you to management accounting by
developing your ability to prepare and interpret accounting information, bearing in mind the
limitations inherent in this information. We will study a mix of often-used accounting tools and
techniques and their fit with various business functions such as operations, information
technology, and human resources.

II. Course Objectives

Upon the completion of this course, you should be able to:

1. Explain the role of managerial accounting information in the decision-making process of
business and not-for-profit organizations.
2. Apply the analytical and technical skills developed in the accounting classes you have taken
to date to prepare accounting records and reports, interpret them, and explain their
limitations.
3. Discuss the fundamental principles underlying managerial accounting in the context of the
tools and techniques that are covered in the course.
4. Evaluate available accounting information and provide recommendations with respect to a
business decision.

The course will also provide you with opportunities to:

1. Master your communication skills and, in particular, produce professional-quality business
documents and deliver professional-quality presentations.
2. Develop effective team work and leadership skills.

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3. Explain the role played by accountants in providing and ensuring the integrity of financial
and related information.
4. Integrate knowledge of core business functions to solve business problems.

III. Required Textbook

Whitecotton, S., R. Libby and F. Phillips. Managerial Accounting, 3rd Edition (International
Student Edition), McGraw-Hill, 2017.
The textbook is available by:
1) buying a print copy at HKUST bookstore for your permanent retention, or
2) buying an e-book at “http://connect.mheducation.com/class/g-li-acct2200-spring-2019-
secton-l13” for a period valid for 180 days.
Note: You are required to purchase/get a copy of the textbook for your reading and practice of
the exercises/problems. Previous experience indicated that students who followed the reading
and practice in the teaching schedule were more likely to achieve a higher final grade.

IV. Course Assessment

Attendance & Participation 10%

Homework Assignments (2% each) 10% (5 submitted assignments) – see pages 3 & 6
Two Quizzes (MCQs) 20% (March 1 & April 12 in class) – closed book
Mid-term Examination (problems) 20% (March 22 at 7:00-9:30pm) – closed book
Final Examination (problems) 40% (Held in exam period) – open book
Total: 100%

V. Course Policies

1. ACCT 2200 will have two class sessions per week that will each blend lecture, tutorial,
problem solving, and discussion together. Each topic will start with a lecture followed by a
discussion of some selected exercises/problems in class to improve your understanding of
and familiarity with the topic lectured, subject to availability of class time. I expect that you
will come to each class adequately prepared by a brief and first-time reading of the
appropriate chapter of the text. This allows you to pay more attention during a lecture to
issues that you have had difficulties in understanding the concepts and theories on your own.

The course is practical in nature and case-oriented requiring a problem-solving approach in

your learning and you are strongly encouraged to participate in doing the assigned
exercises/problems both inside and outside the class, though they are not collected and
graded. The solutions to all assigned exercises/problems at the end of each chapter will be
posted on the course website after the chapter is done.

2. Attendance and Participation. You are expected to attend all class regularly and on time,
having prepared beforehand all readings. I also expect you to be actively involved in all
class discussions, including asking questions, sharing your knowledge and experiences
during the class. All of us, your fellow students and me, will be benefited from insightful
comments and thought-provoking questions. On the contrary, those who chat in class are
doing a disservice to everyone present.

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3. Quizzes, Mid-term and Final Examinations. All quizzes and the mid-term exam are closed
book, closed notes and the final exam will be open book, open notes. The scope of the
quizzes/exams will be announced during class. Two quizzes held in class are scheduled on
Fridays, March 1 and April 12. An evening 2.5-hour mid-term examination is scheduled
on Friday, March 22, 2019 (7:00-9:30pm). The 3-hour final examination is non-
cumulative which exclude topics under the scope of the mid-term examination.
Programmable calculators are not permitted.

It is expected that all students will take the quizzes and examinations at the scheduled time.
There will be no make-up examination for the quizzes and mid-term. If absence from the
examination is due to unexpected medical emergency, the marks earned from the final
examination may be adjusted to substitute for the missing quizzes/mid-term grade. A
student foreseeing unavoidable absence due to a strong justification may seek approval from
the instructor for similar arrangement. Any other absent students will get zero marks for the
quizzes and mid-term exam.

4. Homework Assignments. There are totally five (5) assignments to be collected during the
whole term and will be graded on efforts. Homework assignments are taken from the
exercises (E) and/or problems (P) at the end of each chapter. Homework is due at
Assignment Box; late homework will not be accepted. The answers need not be correct;
homework will be evaluated as complete if all parts of the assignment have been
attempted and all work is shown in a proper manner. See page 6 for the requirements
and due dates of the submission.

5. Academic Honesty. It is important that students follow university regulations on academic

integrity and honesty. Academic dishonesty will not be tolerated and will be dealt with in
accordance with university rules, which can be accessed at the university website:
http://www.ust.hk/vpaao/integrity.

VI. Getting Help and Staying in Touch

I will post course-related information at the course web site on CANVAS. There are pre-
scheduled office consultation hours for the course. I suggest that you either visit during these
office consultation hours or make an appointment by sending an email to me. You can ask
substantive (as opposed to procedural) questions by e-mail — but please keep in mind that the
questions pertaining to the course material should be preferably asked in class.

Apart from asking questions in class, you can also use the discussion board on CANVAS to
raise smart questions for the benefit of everyone – the questioner, the instructor and other
students. I will check the discussion board and post replies regularly. You are encouraged to
reply to other students’ questions on CANVAS as part of a supportive learning environment.

I strongly encourage you to raise your questions either in class or on the discussion board as
soon as your problems arise. Do not allow your puzzles or confusions to accumulate because it
will be more difficult to solve them at a later stage.

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VII. Tentative Teaching Schedule

Date Textbook Assigned

Topic
(2019) Chapter Exercises/Problems

Jan 30 Course Outline

Feb 1 Introduction to Managerial Accounting
 MCQ 1-10
 Role of managerial accounting in organizations
 Role of cost in managerial accounting 1  E1-5, 1-6, 1-11,
 Cost classifications: direct vs. indirect cost, 1-12, 1-14
variable vs. fixed cost, manufacturing vs.
nonmanufacturing costs, product vs. period  PA1-4
costs, relevant vs. irrelevant costs
Feb 6 Public Holiday
Feb 8 Job Order Costing
Feb 13  Differences between job order costing and  MCQ 1-10
process costing
 Recording cost flows in job order costing  E2-5, 2-7, 2-10,
2
 Predetermined overhead rate and application of 2-13, 2-16
overhead costs to jobs  PA2-1
 Disposition of overapplied or underapplied
manufacturing overhead

Feb 15 Activity-Based Costing (ABC) and Cost

Management
Feb 20
 MCQ 1-10
 Volume-based/activity-based cost drivers
 Classification of unit-, batch-, product-, and  E4-2, 4-6, 4-12,
4
facility-level activities 4-16, 4-19
 Steps in ABC implementation  PA4-3
 Activity-based management and other cost
management methods

Feb 22 Process Costing

 MCQ 1-10
Feb 27  Flow of costs in process costing
 Physical units and equivalent units  E3-5, 3-6,
3
 Preparing a process costing production report 3-9, 3-18, 3-20
using the weighted-average and first-in-first-out  PA3-1
(FIFO) method

Mar 1 Quiz 1 on Friday, March 1 in class (50 mins.)

 MCQ 1-10
Mar 6 Cost Behavior
 E5-2, 5-5,
 Identify variable, fixed, step, and mixed costs 5 5-10, 5-14,
 Estimating cost behavior by scattergraph, high- 5-20
low, and regression methods
 Contribution margin income statement  PA5-5
 Variable costing vs. absorption costing

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Mar 8 Cost-Volume-Profit (CVP) Analysis
 MCQ 1-10
Mar 13  Basic CVP analysis to find break-even point
 Achieving target profit and margin of safety  E6-3, 6-5,
 Changes in prices and cost structure 6 6-13, 6-18,
 Operating leverage and its effect of sales change 6-19
on profit  PA6-4, PA6-5
 Multiproduct CVP analysis: sales mix

Mar 15 Incremental Analysis for Short-Term Decision

Making  MCQ 1-10
Mar 20
 Steps in the decision making process  E7-3, 7-5,
 Identifying relevant costs and benefits 7 7-6, 7-7, 7-8,
 Analyzing and making business decisions: 7-11
special order, make or buy, keep or drop, sell or
process further, product prioritization under  PA7-5, 7-6
constrained resources

Mar 22 Mid-term Exam (2.5 hours)

on Friday, March 22 at 7:00 – 9:30 pm
Revision session in class for mid-term exam

Mar 27 Budgetary Planning and Control

Mar 29  Benefits of and behavioral effects of budgeting
 Components of master budget and their  MCQ 1-10
relationships
 Preparing operating budgets: sales, production,  E8-5, 8-6, 8-7,
raw materials purchase, direct labor, 8 8-8, 8-9, 8-10,
manufacturing overhead, cost of goods sold, 8-18
selling and administrative expenses, budgeted  PA8-1,8-2, 8-3
income statement
 Preparing financial budgets: cash budget and
budgeted balance sheet

Apr 3 Standard Costing and Variance Analysis

Apr 5*  Process of standard setting relating to budgets
and variances
Apr 10
 Flexible budgets highlighting costs change with  MCQ 1-10
sales volume
 Calculation of variable and fixed costs  E9-6, 9-7, 9-8,
*Public 9
variances: direct materials price and quantity, 9-9, 9-10, 9-17
Holiday
direct labor rate and efficiency, variable  PA9-1, 9-2
overhead rate and efficiency, and fixed
overhead spending and volume variances
Apr 12 Quiz 2 on Friday, April 12 in class (50 mins.)

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 Apr 17 Decentralized Performance Evaluation
Apr 19*  Decentralization and responsibility centers  MCQ 1-10
 Financial performance measures: return on
Apr 24  E10-4, 10-5,
investment (ROI) breaking down into
investment turnover and profit margin, residual 10-8, 10-10,
10
income (RI), economic value added (EVA) 10-11, 10-19,
*Public
Holiday  Non-financial measures and the use of balanced 10-20
scorecard to evaluate managerial performance  PA10-3, 10-4
 Transfer pricing in decentralized organizations:
market-based, cost-based, and negotiated prices

Apr 26 Capital Budgeting

May 1*  The process of capital budgeting and capital
investment decisions
May 3
 Net cash flows vs. net income  MCQ 1-10
 Accounting rate of return (ARR) & payback
 E11-1, 11-3,
*Public  Discounted cash flow analysis: net present value
11 11-5, 11-8,
Holiday (NPV), internal rate of return (IRR),
11-11, 11-12
profitability index (PI)
 Sensitivity analysis and mutually exclusive  PA11-2, 11-6
projects

May 8 Course Review and Exam Information

TBA Final Examination (3 hours)

VIII. Homework Assignment Submissions

Assignments Questions from the Textbook Due date/time

1 PB1-4, PB2-1 Feb 22, 2019 at 5:00pm
2 PB3-1, PB4-2 Mar 8, 2019 at 5:00pm
3 PB5-5, PB6-6 Mar 22, 2019 at 5:00pm
4 PB7-6, PB7-8, PB8-1 Apr 10, 2019 at 5:00pm
5 PB9-1, PB9-2, PB10-3 Apr 26, 2019 at 5:00pm

Submission requirements:
 All homework submissions must be HANDWRITTEN.
 On the cover page, you must provide your full name (plus preferred name if you like)
registered with HKUST, student ID number, and class section number.
 You must write all the question numbers clearly on starting each question, and all the page
numbers on each page of your submission.
 SCAN your handwritten assignment in PDF format in ONE file to the assignment box on
CANVAS on or before the due dates. Other scanned formats are not acceptable.

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