Syllabus academic year 2010/2011
(Created 2010-07-25.)
MANAGERIAL ECONOMICS, ADVANCED COURSEMIO040
Credits: 6. Grading scale: TH. Cycle: G2 (First Cycle). Main field: Technology. Language of instruction: The course will be given in Swedish. MIO040 overlaps following cours/es: ??1835 and MIO201. Compulsory for: I2. Alternative for: M3. Optional for: B4, C4, D4, E4, E4pe, F4, K4, M4lp, MD4, Pi4, V4bf. Course coordinator: Ingela Elofsson, Ingela.Elofsson@iml.lth.se, Production Management. Prerequisites: MIO012/MIOA01 Managerial Economics, Basic Course. Assessment: Written exam comprising 80 points. A passing exam demands 40 points. For a passing grade it is required, in addition to passing written exam, that mandatory assignments are completed. Further information: This course may not be part of the end degree together with the course MIO120. Home page: http://www.pm.lth.se.

Aim
Inside companies there are control systems for planning and follow-up of goals on different levels and in different dimensions. The economic system, which is the central part of this course, consists of internal accounts, systems for product cost estimates, budgeting systems and investment planning. The basic course of Managerial Economics gives foremost a frame of references and certain basic principles how to handle economic problems. The advanced course shall, based on the basic course, be a problem orientated deepening leading to deeper knowledge about the economic system in complicated and real company situations especially aiming at the work field of the technician.

Knowledge and understanding
For a passing grade the student must

For the internal accounts section of the course this means:

For the systems for product cost estimates section of the course this means:

For the budgeting systems section of the course this means:

For the investment planning section of the course this means:

Skills and abilities
For a passing grade the student must

For the internal accounts section of the course this means:

For the systems for product cost estimates section of the course this means:

For the budgeting systems section of the course this means:

For the investment planning section of the course this means:

The student shall be able to orally and in writing analyse and evaluate different business problems and argue for her/his suggestions to solution. The supposed target group is the executive managers.

Contents
A company can have various overall goals. Some are quantitatively measurable like profitability and solidity goals. Then we use the external reports of the company (budget of profit and loss and budget of balance) to measure if the company has reached the overall economic goals and possible divergences can be analysed. Other goals are more qualitative and difficult to measure in a clear-cut way. Inside a company there are systems for planning and follow-up of goals on different levels and in different dimensions. The economic system, which is central in this course, consists of the accounts system, system for product cost estimates, budgeting system and system for investment planning.

By way of introduction we refer to the basic course. The basic principles are of course central. In the introduction we repeat the basic principles as well as the structure of the base-plane through exercises in accounting and annual accounts.

Then we go deeper into internal accounts. Internal accounts and financial accounts are normally integrated parts in the whole accounts system of the company. Cost estimates and budgets need data which to a greater extent rest on earlier outcomes. A well developed accounts system for registration of economic data about actual events are therefore important. Apart from this, an accounts system is needed to follow-up and control planned activities specified in the budget and calculus work.

What decisions are arrived at depends on how costs are managed from a strategic point of view as well as in product calculi. Calculi create a picture of the economic consequences coming from different kind of decisions. At the same time calculation means allocation which is more or less problematic. In focus are cost standards, cost control, cost drivers, and the cost structure inside the company. This is treated in three work cases (DCM 1-3).

The budget is a forecast and planning tool in the economic control. The planning of the flow of recourses and capacity the coming year is done in a budget. The date of the budget is transferred into the same structure as in the accounting system and become "forecast volumes" in the accounts or groups of accounts. The compiled economic consequences are expressed in budgets for liquidity, profit and balance. In the course not only the technique is treated but also the budget process and the procedure in budgeting.

Based on the company strategy, goals and forecasts about demand, the company must consider different changes in the resource structure. The section investment planning of the course treats the role of the investments in the company and the use of economic analyses for different types of investments. The traditional calculus methods are applied to more complex problems with among other things analysis of the changes the investment gives rise to in regard to taxes, price changes, uncertainty, and risk. The treatment of investments in companies and the business-like calculi work is also dealt with.

In order to reach the goals in a market oriented organisation it is demanded that the company can handle exchange processes and the reactions that cause economical transactions in different markets. A business case will illustrate this and integrate the different moments of the course and create a comprehensive view of the company.

Literature
Cooper, R. & Kaplan, R.S.: The Design of Cost Management Systems, Prentice Hall, 1998.
Persson, I. & Nilsson, S.Å.: Investeringsbedömning, Liber, 2001.
Prenkert, T.: Redovisning för intern styrning, Studentlitteratur, 1998.
Lektionskompendium i Internredovisning, 1999, (Compendium).
Kompendium i budgetering och investering med övningar, 2001/2002 (Compendium).