...How would you classify Forest Hill Paper Company in terms of size and ownership? What is the nature of the industry in which Forest Hill competes? A cyclical economic environment Identify and discuss the strategy used by Forest Hill to compete in a commodity market. Forest Hill’s strategy is to create a niche based on service and rapid response to customer needs. What are some examples of complexity that drive overhead costs for Forest Hill? Paperboard differs by basis weight for a specified length of product. Additionally, paperboard may be uncoated or coated with an opaque, white clay-based material that masks cosmetic flaws and smooths surface variability How does the current system capture manufacturing costs and assign them to products? (Prove the overhead rate is 105% of material cost.) Product costs at Forest Hill were calculated by multiplying the overhead rate by material costs. Calculate the volume-based (traditional) cost per reel for grades A-D identified in Exhibit 1. MOH DM Total per reel A=4800*1.05=5040 4800 9840 B=5200*1.05=5460 5200 10660 C=5600*1.05=5880 5600 11480 D=7400*1.05=7770 7400 15170 What is the cost for Forest Hill to conduct a grade change? 47000/(50+2+35+175)=$150.64 What is the cost for Forest Hill to slit a reel of paperboard? As shown in Exhibit 1, only products A and C are routinely slit. For purposes of your analysis, assume the slitting equipment must be set up and...
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...Forest Hill Case 1. How would you classify Forest Hill Paper Company in terms of size and ownership? Forest Hill Paper Company is a small, closely hold paperboard manufacturer that produces a board line of paperboard in large reels. 2. What is the nature of the industry in which Forest Hill competes? FHPC competes in a cyclical economic environment, with upswings every three to four years. The current market is mature and declining with a recent trend towards plastic and a more environmentally friendly grade of recycled paperboard. 3. Identify and discuss the strategy used by Forest Hill to compete in a commodity market. The strategy used by Forest Hill to compete is to use a differentiation strategy. They have been offering a full range of both products and services, trying to create a niche based on service and rapid response to customer needs. 4. What are some examples of complexity that drive overhead costs for Forest Hill? Examples of complexity that are driving overhead costs are: * Large variability of output; the demand is greater than the production capacity during a boom and decreases during down times * FHPC produces a huge variety of products that increase costs due to the processing required * Several steps with the machine causing costs to increase * Some costs are related to direct materials, while others depend on the batches 5. How does the current system capture manufacturing costs and assign them to products...
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...To: From: Date: September 23, 2013 Subject: Forest Hill Analysis Forest Hill Paper Company is currently using a cost system that has proven its lack in accuracy. Their product line ranges in a number of ways from width and thickness to coating. The biggest problem facing Forest Hill and their costing system is the allocation of indirect material costs to each type of paper that they produce. Forest Hill produces 20 different types of paper with production cycles ranging from a few hours to several days. Their costing system needs to be re-evaluated in order to match specific costs with specific types of paper. Forest Hill combines labor and machine costs for all of the different varieties of paper, which includes the costs of slitting the paper; most types of paper are not slit. There are numerous errors with their current costing system that can be discovered in full after our in depth analysis of their production cycle and allocation process. I believe that our team of analysts needs to take a further look into how Forest Hill is actually allocating their manufacturing costs. We will first need to get specific details about the production process of each of the 20 types of paper that they currently produce. Some of the details we will need to acquire include width, thickness, length, whether its split or not, and also the coating. They are currently allocating these costs across the entire product line, which doesn’t account for the paper types...
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...Forest Hill Paper Company Table 1 Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill, Forest Hill...
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...INSTRUCTIONS Forest Hill Paper Company Assigned: Wednesday, February 20, 2013 Due: Dr. O’Connor/Writing Lab by Friday, March 8 The Forest Hill Paper case represents an exercise in activity based costing to help you understand in greater depth how activity based costing is performed within organizations. The case suggests that developing the product cost is not the end point for the accountant – the proper evaluation and analysis of the “calculated” information is integral in making recommendations contributing to organization success. Assume that your group is a consulting group that has been hired by Forest Hill’s management team. Your group has listened to the discussions contained in the case and obtained the information contained in the exhibits. Your recommendations should be contained in a business memorandum addressed to Forest Hill’s management team. The memo should be no longer than three single spaced typed pages, excluding any relevant exhibits you may have prepared and referenced in the text of your memo. The exhibits may be attached at the end of your memo. The memo should, at a minimum, respond to the questions contained at the end of the case. This assignment will be graded in part on the “correctness” of the calculations and quantitative analysis. However, “getting the numbers right” is only the first step. A significant portion of the points will be earned by the appropriateness of your recommendations, your ability to identify...
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...1. Forest Hill Paper Company Ladarrius Cook Lawrence Comardelle Sydney Stover 2. Classification of Forest Hill According to a recent IBIS World Report, U.S. revenue for businesses in the paper manufacturing industry is $49 billion. As of August 2013, average growth within this sector is -2.7%, employment is 67,325, and total number of businesses equal 152. On average, that equals 442 employees per firm, and $322 million dollars per firm (+/-). According to the case and information obtained on the U.S. industry size, Forest Hill can be classified as a “small paperboard manufacturer that produces a broad line of paperboard in large reels.” 3. Nature of the Industry Forest Hill competes in an industry that is being stagnated by the rise in electronic communications (e.g. email) and imports. According to the case, Forest Hill operates in a cyclical environment due to customer buying habits. An advantage for Forest Hill is that there are high barriers to entry within this market due to equipment costs and governmental regulation. 4. Forest Hill Strategy According to the case, “ as a small company competing against a commodity market, management believes Forest Hill must offer a full range of both products and services. Thus, Forest Hill’s strategy is to create a niche based on service and rapid response to customer needs. (Not much innovation in the product, but top tier service, which can be quantified by value estimators.) 5. Complexities Some examples of the...
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...Date: February 11, 2013 Subject: Forest Hill Paper Company From the case, we can figure out the Forest Hill Paper Company is a small, closely hold paperboard manufacturer that produces a board line of paperboard in large reels. FHPC competes in a cyclical economic environment, with upswings every three to four years. The current market is mature and declining with a recent trend towards plastic and a more environmentally friendly grade of recycled paperboard. FHPC produced 20 kinds of paperboard and follow the lean manufacturing principle, and maintains minimal inventories. Market demand and the theoretically optimal production schedule are the factors to make production schedules. The strategy used by Forest Hill Paper Company to compete is to use a differentiation strategy. They have been offering a full range of both products and services, trying to create a niche based on service and rapid response to customer needs. I think the most important challenge for Forest Hill Paper Company is cost allocation, there is a gap between allocated cost and actual cost, and the methods company used was not correct. There are four overhead costs drivers for Forest Hill Paper Company: Large variability of output, the demand is bigger than the production capacity during a boom and decreases during down times; FHPC produces a huge variety of product that increase costs due to the processing required; Several steps with the machine causing costs to increase; Some costs are related...
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...History Of Forest Hill Community Prepared by George Cottle, Sr. Location Forest Hill Community is situated on the waters of Bradshaw and Spruce Run. Starting at A. L. Campbell's, on Greenbrier River, three miles from Forest Hill and running to J. T. Campbell's, on a line from there including P. M. Garrison's; thence South West to and including W. L. Redmond's; thence North to and including C. G. Ramsey's; and thence Northeast by J. S. Canterberry's and including him to the starting point; it includes twenty-five square miles. It is inhabited by sixty-six families with a population of four hundred. Points of Interest One of the natural wonders of this community is situated on the farm of P. M. Foster, and is known as the "Seven Wonders". This is an immense rock in the shape of an inverted pyramid. It is about thirty feet tall, four by six feet at the base, and about twenty by thirty feet at the top. Tradition tells how it received its name. It is said that a man upon viewing this Wonder, wondered six times how it stood up and one time if it was supported by an oak which grew by the side of the rock. He said, "You are surely a "Seven Wonders". This rock is covered with names and dates. Some of them are more than a hundred years old. Another natural wonder of Forest Hill Community, is known as the "Devil's Den". This is situated on the line between J. H. Rogers and J. T. Canterberry's, and consists of a huge wash basin, writing desk, and a seat. This wonder is of sand stone...
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...TO: Consultants FROM: Alyssa Pavlik DATE: September 19th 2013 SUBJECT: Forest Hill Cost Systems Forest Hill is a small company that manufactures paperboard in large reels. Since FHPC is a small company, they are forced to offer an array of products to remain competitive in today’s markets. They can produce 20 different grades of paperboard in both bulk and small-customized orders. In the past, FHPC has recorded many of their costs as conveniently as possible, which has resulted in incorrect allocation of costs. Our team has been hired by Forest Hill because they would like to have a better understanding of their own cost structure especially with the unstable market for their products. Key Issues As stated above, FHPC produces 20 different grades of paperboard at any volume requested. This is potentially costing the company far too much money than necessary. For instance, one-half is lost to scrap every single time a grade change is made. Some of the scrap can be recycled but other times it is simply thrown out. If FHPC continuous to make all twenty grades in one month, they are producing far more scrap paper than necessary. Additionally, certain paper cuts cause a substantial amount of depreciation on the knives used in the slitting process resulting in the purchase of more knives than potentially necessary. These certain grades require much more labor time than other grades because the knives causing more need for inspection often damage the paperboard...
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...Introduction The Forest Hill Paper Company (FHPC) is a small, closely held paperboard manufacturer that produces “parent rolls” which are then distributed to converters for further processing. Due to their small size in comparison to many of their competitors in the industry, FHPC would be classified as a niche company as stated in the case. Part of FHPCs strategy, which will be looked at further below, is to create a niche based on service and rapid customer response that the larger manufacturing companies are too large to be able to do successfully. Competitive Environment The environment in which Forest Hill Paper Company operates in is a cyclical environment with upswings every three to four years. Due to the cyclical nature of the industry, customers try to anticipate times when they would not be able to get paper by ordering large quantities of paper at certain times and none at others. Because of this, FHPC has times when they are flushed with orders and cannot meet them with their production capabilities, and times when they are not running at optimal levels due to lack of demand. Along with this issue, the market share for domestic paperboard has been steadily declining. The most significant reason there is a decline in market share is the moving trend toward plastic and more environmentally friendly forms of paperboard. In general throughout the industry, companies have made little effort to expand capacities of the production facilities. At times the demand...
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...costing strategy, you can accurately assign costs to each product based on activity levels and additional costs that are unique to each product. With your current costing system, you are assigning slitting costs to products that aren’t slit, and you are averaging the grade changes equally, which is ineffective in determining the correct prices and costs assigned to each product. After analyzing your books, per unit we found that Product A is currently making a profit of $898, Product B has a loss of $2,300, Product C has a profit of $868, and Product D has a profit of $5,291. As you can see above, there is a remarkable difference between the four products’ profitability once costs are correctly allocated, which causes problems for Forest Hill Paper Company. Some of those problems include pricing, production, warehouse capacity, and profitability. Incorrectly allocating costs to each product affects every aspect of your business and ultimately hurts the bottom line. Volume Based Costing Explained: Your current application of overhead prices is to take 105% multiplied by the direct materials cost of each product, which is not the most accurate way to assign costs. This overhead rate takes in to account both grade changes and slitting costs; you cannot spread these costs across...
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...Self-managed work team - a type of work team that operates without a manager and is responsible for a complete work process or segment. Forming stage-people join the group and group defines purpose, structure, and leadership. Storming –intragroup conflict, who will control the group and what needs to be doing. Norming-close relationship develops and the group becomes cohesive. Human/R-conflict is a natural and inevitable outcome in any group and need not be negative, but has potential to be positive force. Char. Of effective teams, mutual trust, unified commitment, good communication, negotiating skills, appropriate leadership and internal and external support. Organizational citizenship behavior(ocb)-is discretionary behavior that’s not part of an employee’s formal job requirement, but which promotes the effective functioning of the organization. Cog.component of an attitude –the beliefs, opinions, knowledge held by a person. Aff. Component-the emotional or feeling part of an attitude. Behavioral comp-refers to an intention to behave in a certain way toward someone or something. Cognitive dissonance is any incompatibility or inconsistency between attitudes or between behavior and attitudes. Resilience-an individual’s ability to overcome challenges and turn them into opportunities. Overcoming com. Barriers-use feedbacks, simplify language, listen actively, constrain emotions, and watch nonverbal cues. Maslow’s-physiological needs-food, drink, shelter, sex, and other physical requirements...
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...Case Analysis of Forest Hill Paper Company Background Forest Hill Paper Company (FHPC) is a small company manufacturing a line of paperboard products in answer to a cyclical economic environment. FHPC is trying to provide greater customer service and satisfaction by providing a full product line. Paperboard products are sold in large reels/rolls which are offered with 20 different grades of thickness, with an option for surface smoothing coating and one for the option of having slits/cuts. Managers know that in a cyclical economy supply and demand can be at polar ends. During high demand times finding suitable substitutes is an issue as it can cause customer dissatisfaction. As they are in a high demand economic time currently they are looking for ways to be more cost management effective before the downturn occurs. We will analyze FHPC issues to determine which costing system would serve to improve both profitability and provide a strategy for a cyclical economy. 1. How would you classify FHPC in terms of size and ownership? As the article states, FHPC is a small, privately owned and seems to held tightly by family members. 2. What is the nature of the industry in which FHPC competes? The paperboard industry is one which has to operate under fluctuating conditions that has wide economic swings every three to four years. As well as being a fluctuating one it is also highly competitive. In recent years FHPC has experienced some loss due...
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...Chapter 1 1.0 Project Title: Assessment of forest disturbance caused by logging impacts in 2014 at Besul Tambahan Forest by using High Resolution satellite data 1.1 Background of Study Forest can be defined as a place which having a high density of trees, any area which is packed with tall and big vegetation are also considered as a forest. The trees in the forest are divided into two which are overstory or canopy, and the other one is the understory such as moss layer, moss layer and shrub layer. Generally, there are many types of forests such as Tropical Rainforests, Sub-tropical forest, Mediterranean Forests, Temperate Forests, Coniferous Forest, Montane Forests, and Plantation Forest. These type of forests are classified based on the...
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...Current Trends in Forest and Environmental Policies in Sri Lanka The article attempts to discuss the trends of forest policy in terms of the historical perspective, implementation strategies, and institutional development. In the introduction, the authors begin by stating about the current state rapid degradation of the environment in Sri Lanka. Since importance was given to high economic growth rates and employment creation for poverty alleviation, there wasn’t enough attention given to manage the forests. Then the authors follows by the consequences of these natures degradation and the importance of environmental management. They then discuss about conditions required to achieve sustainable development in environment management, Governments...
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