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managerial accounting

12/31/2011 I have uploaded brief analyses for all case studies I had in my Human Resource Management course at my MBA program at GWSB:  Nordstrom: Dissension in the Ranks?  SG Cowen:New Recruits, Citibank: Performance Evaluation Case Analysis, Harrah’s Entertainment: Rewarding Our People Case Study.

Have not had enough time to post lately as I have been doing a lot or writing for my classes. I finished and submitted to the group my part of the research on the Nordstrom: Dissension in the Ranks case for Human Capital Management class. So far, my write up is the first for our group.

Most of the cases I have had in  my classes since the start of the MBA program have been from Harvard Business Publishing (HBP) cases. So I would assume that the names of the cases are familiar to many MBA students in all MBA programs accross the country. Interestingly, the same Nordstrom case was also a part of my Managerial Accounting course. From the case it’s obvious that at the end of the eighties Nordstrom screwed up big time in managment of their Sales Per Hours (SPH) performance evaluation system. Not only did they lose millions of dollars in settling labor disputes and suffered partial loss of business reputation at the time, but they also became the fodder for the MBA textbook case which is probably going to be studied in business schools for years to come.


Another interesting point is that our professor in Managerial Accounting gave quite different appraisal of the Nordstrom situation than what we are leaning to in Human Capital Management class. Whereas in Human Capital class we are mostly going to bash Nordstrom management for all the failings of the SPH performance evaluation system, the professor in Managerial Accounting offered an argument in defence of that system, because it allowed to weed out all low-performing, low-motivated sales clerks, and reward handsomely the driven high-performers. Admittedly, there were some shortcomings in the implementation of that system anyways.

I also had to do personal write up on another case: SG Cowen:New Recruits. There was another group that did formal presentation of the whole case in class. But everyone else in the class had to prepare a written answer to one of the four questions in the case. We had to identify two candidates from the pool of four to make a job offer on behalf of the company if we were on the recruiting committe. During the presentation the group conducted a mini-poll to see how many votes each candidate received from the students in class. The most striking result was that Martin, one of the candidates in the case, was dinged almost unanimously by our class of about 50. To me it was obvious that he was not a good fit for the company, even though he had some very strong background, and was the only Wharton student in the pool (the rest were from Cornell). But I was still surprized by such an overwhelming consensus on his candidacy in our class. The rest of the candidates received some overlapping support from the class, probably with some slight lead of Natalya – another candidate in the case.

From now to the end of the module it is going to be very tough. Many deadlines for write ups in Entrepreneurship are coming up, as well as a mid-term exam in Data Analysis next Monday, our group presentation of the Nordstrom case is due next week too, and finals being just half way of the module now. I have to prepare a lot of midnight oil to burn :)

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On Monday I finally got my grades for Global Perspectives. The Managerial Accounting grade came within a couple of days after the final exam. I waited to get both grades before posting on that. Both grades came as a surprise to me: a pleasant one and somewhat disappointing, even though I got straight B’s in both classes.

The Managerial Accounting was a pleasant one, because of the blunder I had on the exam. I am quite happy that I was able to pull it out for that grade. The Global Perspectives grade was a bit of a disappointment, as I was really confident that I did reasonably well on the final. Turned out I was over-confident – I missed a couple of questions. Besides, our group paper on FDI to Russia was also just a B. Probably, it was a significant contributing factor to the final cumulative grade too. Well, as the saying goes, they don’t call it a B-school for no reason :) I looked up the group paper, but professor’s notes were mostly illegible. I guess, I will never really know what were his thoughts on grading us lower than we expected :)


For the last week the MBA students were on a “forced” spring break. Since the MBA program is on on a seven weeks modular schedule, while the rest of the University is on a regular 14-weeks mode, the rest of the University had their legitimate spring break. Ours was after the first week of classes already started, not much of a relief. The spring break was the reason that I did not post in the meanwhile, as there was nothing really worthy of writing about.

Now we are back to school, and the “adrenaline rush” is kicking in again. Forward to more excitement! ;)

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Today we had our study group to review and discuss example exam for Managerial Accounting. We were in the meeting for almost 4 hours. First we went very briefly over all the cases we had prepared during the course. This review was very cursory, just to highlight the underlying concepts. We did not delve into actual numbers crunching analysis.

After that we moved to the actual example exam. The answers for the questions in the exam were already in the course pack, only one of us has actually attempted to solve some of the questions without looking into the answers first. I knew if I attempted to do that, four hours would not be enough. So eventually we slid to looking into the answers and discussing them, also correlating the numbers and calculations in the answers with the input information.

A few of the questions did not actually require any calculations. Instead we were asked to draw a diagram of the cost system in the organization or give our opinion/recommendation on making changes to the existing system to better reflect the actual cost allocation.


Our professor in Financial Accounting told us in the last class that Managerial Accounting “does not have any rules”, so in that regard it would be very different and may be somewhat “easier” than Financial Accounting with its quite specific and often stringent rules of presenting and analyzing the data. The example exam had a vivid illustration to that point of having “no rules”. Our favorite question, slightly paraphrased, went like this:

The CEO is considering the performance measure used to evaluate Managers of two company branches.

  1. Why should the performance measures be the same for both branch Managers?
    1. Answer: They conduct the same business, so should be pursuing the same goals. 
  2. Why should the performance measures not be the same for both branch Managers?
    1. Answer: The clienteles are very different in the two branches.

Of course I am not giving you the whole case, and intentionally simplify the situation, but still it is quite indicative of the Managerial Accounting methods and approaches. Either answer goes, as long as you can do proper explanation and justification.

Frankly, I did not feel that we used our time in the most productive manner. But it is still probably better than just wasting precious time for exam preparation on writing the blog posts :-) Actually, I am taking this little break from my at-home independent preparation.
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man in anxiety

Today I looked for the first time at the example final exam in the course pack. It really got me anxious. I got the same “numbers anxiety” I had before both of my Financial Accounting exams in the Fall term.

All the concepts that are covered in the exam are pretty much familiar and related to our course work during the module: standard cost system, activity based costing, transfer prices, management control systems, variance analysis, and all other sub-concepts entailed. However we were working on the cases in groups and had all materials available on hand. The actual exam is in closed book/notes format, and we will have to work individually.


The sample exam has total about 20 questions. Our actual one will probably have less, because the example one was designed as take home exam and had 24 hours allowed for completion, whereas our final is going to be in class, only two and a half hours. Still looking at the nature of questions I realize that I will have to review everything we have studied, because none of the questions I was able to answer off the top of my head.

On Saturday we have our study group meeting to discuss and work on the example and to prepare in any way we can for the Managerial Accounting exam. I hope it will help us to formalize and crystalize everything, OK -not everything, but most of what we have learned in the course (hopefully at least something). The time is very short, especially given that I will have to find time for preparation for Global Perspectives too. Admittedly, given its open book format I will spend less time on that preparation than on Accounting.

Professor told us that the exam content: narrative and all accompanying exhibits with numbers, and tables, and diagrams,  will be available to us online 24 hours before the exam. But the actual questions will be revealed only at the exam. We can anticipate the kind of questions based on the example exam, but still actual application of the accounting principles we have learned, and calculations will be done in class. I’d better go to sleep now, to be productive tomorrow for the study group and individual studies.

I already announced to the family, as I usually do before the finals week,  that I would be unavailable and irresponsive for the next few days until the end of exams. Even more coffee and chocolate – the upside of the stressful week in part-time MBA life, I guess :-)

Disclaimer: The pictue at the top of this post is not mine :-) . It is from End Anxiety Disorder website

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Moral Hazard in Managerial Accounting

February 4, 2010

Today in class when we were working the case, professor introduced the problem of ‘Moral Hazard’ in Managerial Accounting. To better explain the idea of moral hazard professor brought up an example of rental cars. First he mentioned quite common stuff: people often do not care much about rental cars and drive them rather negligently, if [...]

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Managerial Accounting Study Group Meeting

January 25, 2010

Our study group in Managerial Accounting had a meeting on campus tonight. There were four of us in the meeting in person, and one group member joined us for the part of the meeting over the phone, as he was out of town on business. In this group there were modest aspirations in terms of [...]

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Managerial Accounting and Grizzly Dessert

January 22, 2010

Grizzlies are known to like to eat marmots. In spring when grizzlies come out of hibernation they spend unproportionate amount of energy and time hunting those small squirrel-like animals from under the stones. The scientist were puzzled by this fact, because according to their estimated calculations the energy spent on hunting the marmots was much more than [...]

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Spring Term Part-time MBA at GWU – Week 2

January 21, 2010

Finished the second week of classes in my first module of Spring Term. The intensity is picking up just a little bit, but so far very manageable. It’s probably going to change this weekend when I will have work on two major projects: I am planning to work on my section for Risk Analysis Group Paper [...]

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Managerial Accounting Course Pack

January 16, 2010

One of the books required in Managerial Accounting is the Course Pack that has been compiled by the professor himself. This is the first time I have the course pack required in my MBA program classes. That’s why I had a little surprise with it. The course packs are apparently compiled/authored by a professor(s) in the university [...]

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Managerial Accounting Is Not Your Financial Accounting

January 14, 2010

On Thursday was my first class in Managerial Accounting. To say that it was OK would be underestimating it. I actually liked it a lot. There were a few factors that contributed to my favorable impression of the class: Professor was very sharp and knowledgable. He looks probably younger than he really is, but he [...]

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