Bringing the Factory to the Classroom

Abstract

Using LEGO[R] to teach business students 21st century management accounting issues. In the 21st century, managers will continue to face global competition, sophisticated information technology and continuous process improvement initiatives. As cross-functional teams do their work, management accounting information will play an integral role in supporting the teams' decision-making processes. How can accounting educators prepare students for such a future? At New Mexico State University, we have our students use the latest techniques to understand emerging business issues and to actively learn. To accomplish these goals, we use LEGO[R] building materials to help teach management accounting concepts. The context is Extraterrestrial Transport, Inc. ([ET.sup.2]), a hypothetical business that manufactures and sells 21st century lunar transportation vehicles. This setting sparks students' imaginations about business in the future while they learn--in simulations--to integrate management accounting concepts with marketing, engineering, purchasing and production issues. To help do this, we create production line simulations with untrained workers, unbalanced workloads, end-of-shift inspections and unreliable suppliers. Students identify prevention and appraisal activities that could help avoid the high cost of failing to do a job right the first time. This lets the students see the value of measuring the cost of poor quality. HOW IT ALL WORKS [ET.sup.2] helps students realize that management accounting serves managers in a variety of situations within a single business context. Moving through this context, students learn cost terms and concepts, job order costing, activity-based costing, just-in-time manufacturing, target costing, budgeting, costs of quality, break-even analysis, capital budgeting and short-term decision making. Various case study assignments help to develop students' critical thinking, team interaction and communication skills. For example, students work in teams of two or three to complete master budget spreadsheets that assume [ET.sup.2] will close or expand one of its production plants or that the company will experience a dramatic decrease in sales for its most profitable product line. Management accounting topics are taught progressively in one semester. Assignments increase in difficulty as students become more familiar with [ET.sup.2]'s products, accounting information systems and operating environment. Exhibits 1 and 2, pages 58 and 60, list each activity and its purpose in management accounting courses taught to undergraduate business students and to MBA and graduate manufacturing engineering students. Undergraduates complete the basic core modules. Graduate students use more creativity and higher-level thinking processes in assignments that are less structured and extend beyond the basic core modules. For example, MBA students team up with engineering students to develop a computer-aided design of a vehicle based on their translation of customer needs to design specifications. Students learn product costing while building product prototypes with LEGO[R] construction materials. They simultaneously create job cost sheets and build work-in-process inventory. As students attach a part to the lunar vehicle chassis, they also add material, labor and overhead costs to the product. Throughout the semester, students work in roles such as assembly workers and managers to plan, control and make operating decisions that influence [ET.sup.2]. For instance, while part of the class participates in a production line simulation at the front of the classroom, others complete observation sheets to accumulate information about waste and inefficiency. During a debriefing session or in a formal memo, students offer ways to continuously improve operations and reduce non-value-added costs. Beyond management accounting. [ET.sup.2] assignments also have been used in other courses. …

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