...Superior Manufacturing Company Description Superior manufacturing company produces three kinds of industrial products (101,102 and 103) in its own dedicated factories. It uses a job costing system helping to evaluate and arrange the whole process of production, which is later replaced by a standard cost system in 2005. In the market of similar products, Superior faces seven competitors, one of which is the dominant company Samra, a price-‐maker to some extent. As shown in the figure, Superior suffered a loss during 2004. What is worse, a weakened industry and some other problems like price reduction are coming in the following years. Problems and issues In terms of management changes and other reasons, Superior suffered a big loss even during an optimistic business year. It is obvious situation didn’t change better in the next year. It...
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...Synthesis Malard Manufacturing produces a standard line of control valves that are price competitive in the industry. Currently they are faced with problems as to the delay in the production of their item CV305. Various departments in the company have conflicting views on how the product should be developed. Because of these differences the product cannot be completed and out for distribution on time and consumers have gone to the competition to purchase the similar item. Point of view Ms. Crandell’s point of view will be taken since she is the executive vice president of the company and she has been notified of the current problem. Statement of the Problem • What actions should Ms. Crandell take to resolve the internal problems of production and get the CV305 ready for distribution on time? Statement of Objectives • To come up with viable solutions for the current problem of slow product development and differences between departments • To set up a new sequence for the company’s product development Areas of Consideration • The cause for the delay in product development. • The differences in the departments views on product development. • There should be someone to lead all departments in developing a product. • Current market trends, technology. Discussion of Framework In this case it would be more appropriate to apply the inward structure of multistream form of organization design. Since there is no apparent order in the company in terms of the...
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...Shipper Manufacturing Company 1. What objectives should be adopted in manufacturing with respect to cost, delivery, quality and flexibility? Given the facts, it is critical for the Shipper Manufacturing Company to have a vision to become the leader in the market or niche that the company is focusing its market focus on. Additionally, it may adopt a strategic goal to attain the Malcolm Baldridge Award or compliance with applicable International Organization for Standardization requirements within a defined period of time. specifications into the product engineering process by doing a 'House of Quality' exercise. Also, the company has a vertical organization that may add additional cycle time and lead to miscommunication of customer desires and corporate initiatives. They need a horizontal organization that can adapt quickly to the ever-changing demands of the customer and react immediately to change. The Shipper Manufacturing Company should hold a 'Voice of the Customer' exercise where both internal and external customer requirements and expectations are brainstormed and communicated. Additionally, the company should ensure customer satisfaction and incorporate customer In order for the Advanced Products division (ADP) of Shipper to match its new business strategy, the company will need to adopt new objectives. Shipper will gradually shift from a low-volume, custom designed product to a high-volume, continuous product. The current products are 100% customer designed, therefore...
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...SHIPPER MANUFACTURING COMPANY Teaching Notes Synopsis and Purpose Shipper Manufacturing Company is a manufacturer of electrical products, laminated materials, and specialty products. The Advanced Products Division (APD), which manufactures the specialty products, has reformulated its corporate strategy. As a result, its manufacturing strategy should also be revised. In the past, APD has manufactured custom products in low volume for its customers. The division plans to gradually add higher volume products for multiple customers. As a result, changes will be needed in manufacturing to effectively compete in the new environment. The purpose of the case is to expose the students to the concept of a manufacturing strategy and the changes in manufacturing which are associated with a change in strategy. The case provides an effective vehicle for teaching this and also for the concept of integrating all aspects of operations. Discussion Questions 1. What objectives should be adopted in manufacturing with respect to cost, delivery, quality, and flexibility? 2. How should the objectives in manufacturing be achieved though process, organization, equipment, work force, capacity, scheduling, quality management and production and inventory control systems? Analysis The impending change in business strategy implies a change in manufactur¬ing toward higher volume and lower cost products. Presently the products are custom-designed and costs are passed...
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...Description: The Superior Manufacturing Company received a net loss income statement for a good business year (2004). SMC has only 3 products and lots of competitors with similar products. So, price cutting always need a reduction by all the competitors in this industry. The manufacturing strategy of SMC is based on the ‘dedicated factory’, which means each product has its own productive factory. And SMC has a simple cost system. This cost system has 2 categories of costs. First one refers to the costs can be tied directly to the manufacture of specific products. Second one refers to the indirect costs and other costs. Problem and issue: SMC uses a new standard cost system in 2005 which is used to value inventories, prepare budgets, and analyze performance. The manager thinks the product 103 should be dropped for its high cost which could not be cut down, and the product 102 has an increasing demand. Also, the managers want to make a price reduction. However, they find that the costs are too high to support the price reduction. Does the cost system of SMC work effectively? Firstly, we calculate the loss of drop of product 103. We use the data of 2004. If we drop 103, the operating loss would be 4933. Secondly, we calculate the reduction price of product 101. If price of product 101 = 24.5 Profit = 750000*[24.5*(1-1.08%)-10.48]-12.36*996859 = -2004450 If price of product 101 = 22.5 Profit = 1000000*[22.5*(1-1.08%)-10.48]-12.36*996859 = -544000 We can see when the...
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...accounting isn't just for manufacturers anymore. Service organizations, while no tangible products, can control costs and gauge internal performance by using service-specific adaptations of traditional manufacturing cost techniques. These practices provide a consistent framework for analyzing business decisions and examining issues that are more important for service companies. Part I Manufacturing, Merchandising and Service Companies. There are three different types of companies and each type of company will have a slightly different in term of financial statement presentation and cost management also. The main difference is with the cost of goods sold. A manufacturing company uses labor and other inputs to transforms raw materials into finished product and then sells the product, like a merchandising company. But in service company does not produce/sell products, instead it provides service. So service companies usually don’t have a cost of goods sold as they aren’t selling a product, they are selling an idea. As the other two company types; Manufacturing, Merchandising Company are selling a tangible product, they will have a cost of goods sold. 1.1 How are they different in term Cost accounting? Title | Manufacturing company | Merchandising company | Service Company | Inventory | * Raw materials * Work in process * Finish goods | * Merchandise inventory | No inventory | Cost of goods/services | * Cost of goods sold | * Net purchase price |...
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...Case: Acme Manufacturing Company Case & United Machine Workers Introduction to the case analysis The legal aspect of every contract in business requires critical analysis for every term in accordance to the specifics upon which both parties are involved. The reason for analyzing such terms carefully is because it can become a crucial part in determining the decision making when addressing any business problem. This is generally more important from the perspective of the company management because some situations can result in high intensity and significance for the company. Analyzing the terms of a contract will help avoid any inappropriate or insufficient conclusions when presenting a final resolution in times of a dispute. The case to be evaluated in this assignment is the result from an opposing perception of an issue in which both party’s are involved. The grievance is the result from the opposing views on a subordination matter; that of the management’s perspective and that of the employee. The case to be evaluated can very easily occur in an actual situation and I would like to write this analysis from the management’s perspective. Summary of the issue(s) The problem involves the contradicting views of a legal issue within the union contract reached between our firm, the Acme Manufacturing Company (the company) and the United Machine Workers Union (the union). The parties in question in the dispute are Mrs. Kyla Martin, a machine operator working in...
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...fit for the company, they will also decide the role that the leadership is going to take in planning, developing and implementing the quality process that BJB will need. BJB will have the stakeholders having the needs and wants which will expect BJB to respond to everything that is requested for. To be able to keep the stake holder interested in the product, they must make sure they are engaged and interested in the products, because the stakeholders have different needs and wants. We will compile some information from BJB stakeholders and three points that were needed that will have the stakeholders interested in BJB products are (1) the market advantage of being the first company that will offer high end compact disc charger, which is also include the technology that is used in creating the disc charger the will better off than any other organization within the industry. (2) The stakeholder will agree that the financial aspect of today global market is going to play a vital role, Professor Ulrich Stager, said that many stakeholders do express their concern over a perceived no playing field with most firms that are operating in different part of the world (Stager, 2006). (3) BJB stakeholder do feel that it is necessary to create a dependable and durable products, the time and energy spent in researching this product will help BJB in the market perspective in the long run which will help with the success of business. (2014, 10) BJB Manufacturing Company Quality Management...
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...Product Differentiation A differentiates itself from its competitors when it provides something unique that is valuable to buyers beyond simply offering a low price (Blackwell publishing, 2009). Big Drive Auto can differentiate by providing a superior protection package. The protection package vehicles will be given oil changes free of charge as long as the consumer owns the vehicle. Tire rotations and balancing of wheels will also be free of charge. Big Auto Drive should employ a service team that is consistently courteous and polite to customers and who provide excellent service to customers. Top notch certified mechanics are available to meet the needs of the customer. The maintenance package will allow consumers to receive car washes and rentals cars at no additional charge. With these sorts of incentives the likelihood of car sales will be increased. When consumers are satisfied they tend to put in a good word with friends and family members. This type of praise will increase the possibility that consumers will revisit Big Drive Auto to purchase a vehicle for them, trade in their vehicle, or purchase a vehicle for a family member. With the purchase of a new vehicle Big Drive Auto will offer the consumer free gas for a range of two to four months. Incentives and cash rebates will also be an appropriate recommendation for Big Drive Auto as well. According to All Business.com (1999 - 2009), Manufacturers often offer special incentives to both customers and...
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...million through sales of 986,974 units of product 103 during the year 2004. However, rest of the cost associated with product 103 is fixed cost and Super Manufacturing Company will have to bear this fixed cost regardless of its decision to produce product 103 or not. Currently, product 103 incurs net loss of $2.209 million, and if Super Manufacturing Company decides not to produce product 103, then it will incur additional loss of $2.671 million through net contribution lost by product 103. However, if product 103 is dropped then it will increase the net loss of Super Manufacturing Company to $3.359 million. Hence, Waters’ decision to keep the product 103 and use its contributions to cover the fixed cost is a good decision. Q2.) Should Superior Manufacturing Company lower as of January 1, 2006 its price of product 101? What will be the new price of product 101? The fixed and variable cost structure of product 101 shows that 54% of its standard cost is fixed and 46% is variable. However, a decrease in product 101 sales units will result in lost contribution because the larger part of cost is fixed and Superior Manufacturing Company will have to bear the fixed cost regardless the number of units sold. Hence, lower the number of sales units, lesser will be the recovery of fixed cost, therefore, Superior Manufacturing Company is suggested to lower its price in order to increase number of sales units of product...
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...Milton Manufacturing Company Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New York, with branch factories and warehouses in several surrounding cities. Milton Manufacturing is a closely-held company. Irv Milton is the president of the company. He started the business in 1999 and it grew in revenue from $500,000 to $5.0 million in ten years. However, the revenues declined to $4.5 million in 2010. Net cash flows from all activities also were declining. The company was concerned because it planned to borrow $20 million from the credit markets in the fourth quarter of 2011. Irv Milton met with Ann Plotkin, the chief accounting officer (CAO), on January 15, 2011, to discuss a proposal by Plotkin to control cash outflows. She was not overly concerned about the recent decline in net cash flows from operating activities because these amounts were expected to increase in 2011, as a result of projected higher levels of revenue and cash collections. Plotkin knew that if overall capital expenditures continued to increase at the rate of 26 percent per year, Milton Manufacturing probably would not be able to borrow the $20 million. Therefore, she suggested establishing a new policy to be instituted on a temporary basis. Each plant’s capital expenditures for 2011 would be limited to the level of capital expenditures in 2009. Irv Milton pointedly...
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...Shemrock Inc. is a brake pad manufacturing company. This company uses raw materials, such as carbon powder, iron, ash, and resin. It wants to develop an inventory management system that will have the following features: The system should store the current inventory levels for different raw materials in a file. If carbon powder is less than 500 lbs, then the system will check if orders are still pending on the shop floor. If pending orders are for more than 5,000 brake pads, then someone should order 2,000 lbs of carbon powder; otherwise, someone should order for 1,000 lbs of carbon powder. Similarly, perform the same check for other raw materials iron, ash, and resin. The list of all the raw-material vendors is available with Shemrock Inc. The system should read and store the vendor information and then, depending upon the raw material that is to be ordered, print out the purchase order for that raw material. The purchase order will contain the details of the raw material such as the name, quantity, total cost, and vendor address. Create a flowchart and pseudocode using control breaks that enable the user to print invoices for any raw material that is selected. submit a document containing the flowchart and the pseudocode Explain how you implemented the system and describe the logic steps of the system. follow the link given below to view Solution http://goo.gl/P1vAM Shemrock Inc. is a brake pad manufacturing company. This company uses raw materials, such...
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...SUMMARY Blackheath Manufacturing Company produces a single product called Great Heath. The company recently employed a new cost accountant, Lee High, who aims to make another cost analysis over a period of three production weeks. He needed to determine the variable, semi-variable and fixed costs connected with the Great Heath production. Once it been categorized, he determined the cost per unit to break-even. The case shows Lee High was considering variable and fixed costs in determining the cost of goods sold per unit. He able to develop decision rules for the company’s owner, Charlton Blackheath, for the management decision-making. Based on Lee High’s information, Mr. Blackheath stated that an order could not be less than $7.00 per unit and additional sales decision rules for sales agent with commission and direct sales has no commission. The case then shows a series of sales description that were accepted or declined followed on these decision rules. However, a young file clerk decided to take a special order which is under-bid at $5.50 for 100 units of Great Heath based on her own assumption that this would be profitable for that volume. A later sales cost report was developed by Lee High showing cost per unit based on his predetermined costs analysis and profit per unit. Data showed the special order contribute a subsequent loss because of too low sales price per unit. Therefore, Mr. Blackheath fired the clerk for her error and mistake and set a new commission plan based...
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...it important that Superior has an effective cost system? 17 What is your overall appraisal of the company’s cost system and its use in report to management 18 List the strengths and weaknesses of the system and its related reports for the purpose management uses the system’s output 18 What recommendations, if any, would you make to waters regarding the company’s cost accounting system and its related reports? 19 Initial Analysis of Superior Manufacturing Company Case :- 1) After death of Richard Harvey (2004), founder and president of Superior Manufacturing Company (SMC), Paul Harvey took over. Paul Harvey had only 4 years of experience. Soon followed serious management problems because of some bad decisions made by Paul Harvey. The income statement of 2004 reflected net loss of $0.68million in a good business year. To solve this problem Herbert Waters was brought over as General Manager of SMC. 2) SMC manufactured 3 different products namely 101, 102, 103 and was among the top 8 companies in the industry. Samra Company was market leader and announced price annually and other follow. Due to no product differentiation price cut was not an option. The June 2004 market share of SMC product wise is given below; Products 101 102 103 Market share 12% 8% 10% Price per 100lbs 24.5 25.8 27.5 3) SMC had a dedicated factory concept, where each factory produces only one product. Each product factory was fully horizontally integrated. SMC all plants operated below...
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... Master of Science in Management, Economics and Industrial Engineering [pic] Management Control Systems Prof. Paolo Maccarrone Second Assignment: Analysis Group Ferrario Andrea Rognoni Susanna Taiana Marco Trifonov Angel A.Y. 2007/2008 Q1.Based on the 2004 statement of profit and loss data (Exhibits 1 and 2), do you agree with Water’s decision to keep product 103? In order to support an opinion on the side we decided to analyze all the probable scenarios. If the company management decided that it is better to stop the production of product 103, they could do this in one of the following manners: 1. Stop production and any business related to product 103. 2. Stop production but outsource it to another company and continue the distribution. 3. Stop production and use the available production capacity in order to produce product 101 or 102. If the company management decided that it is better to continue the production of product 103, they could do this in one of the following manners: 1. Maintain the same volume of production. 2. Increase the volume of production. 3. Lower the volume of production. 4. Substitute 102 production capacity with 103 if the 103 facility has not sufficient capacity to exploit economies of scale Analysis of the P&L statement of 31 December 2004 If we have a look at the P&L statement for the 2004 it is obvious that product 103 is bringing...
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