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Tony Mock takes a second look at the state of accountancy education, this time with specific reference to the level of mathematics expected and the background knowledge required to meet those expectations
What would you make of the following question that appeared in the final sitting of the Stage 4 Management AccountingDecision Making (MDM) paper in December 94? The salient points have been extracted about a project to produce a car capable of breaking the world land-speed record.
The afterburner will have to be specifically designed and built for our engine. Varying levels of design sophistication and hence performance are possible. Extra costs of L8,000 will be required to give the expectation of 1 extra km/hr. Extra costs of L456,480 will be required to give the expectation of an extra 20 km/hr.
You are required to determine the mathematical formula that links costs and extra km/hr generated.
The circumstances are clearly related to a potential practical problem that is faced by Richard Noble and his rivals at the moment. However, in view of the unreliability of estimates in these circumstances, one must question the sense of attempting such an exercise.
A look at the approach followed by CIMA's model answer is most informative.
Model answer
Three points arise:
* Should we really be expecting students of management accounting to be carrying out exercises like this?
* Is the initial training of students preparing them for the mathematical exercises subsequently expected of them?
* Is the model answer right?
Comment on the solution
Answering the third question gives us a clue to answering the other two. One line of the answer is not entirely correct-the first line. A function that goes through the three specified points is of the form y = ax^sup n^, but so do many other functions. These range from a simple quadratic, through a range of cubic functions to step functions determined using fourier analysis. To ask for a single definitive formula shows a lack of adequate mathematical knowledge and it suggests someone is playing with something that isn't quite understood.
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