Ivey Publishing

Managerial Accounting

Braun, K.; Tietz, W.; Pyper, R.,2/e (Canada, Pearson Education, 2015)
Prepared By Athena Ngai, CaseMate Editor
Chapter and Title Chapter Matches: Case Information
Chapter 1:
Introduction to Managerial Accounting

GOATS: THE GREEN ALTERNATIVE (A)
David M. Currie, Kyle S. Meyer

Product Number: 9B11B018
Publication Date: 11/23/2011
Length: 5 pages

The owner of a goat herd in Tennessee must decide whether to rent out his herd for a land-clearing project at a nearby resort. Goats are better suited to clearing the land than humans and machines, but the owner has never rented out his goats for such a purpose. The owner must identify costs associated with the project, then determine a price to charge for the service. Since the owner has no prior experience renting out livestock, he must come up with estimates of the incremental costs associated with the rental operation and prepare a bid with little knowledge of rates charged by competitors for goat rentals. This case provides a realistic example of the thought processes that business owners go through when evaluating whether to expand into complementary lines of business, as well as the considerations of entrepreneurs contemplating starting new businesses. See also Goats: The Green Alternative (B) 9B11B025 and Goats: The Green Alternative (C) 9B15D001.

Teaching Note: 8B11B018 (12 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Managerial Accounting; Modeling; Economics; Spreadsheet Application; Fixed and Variable Costs; Environmental Sustainability; Farms; United States
Difficulty: 4 - Undergraduate/MBA



CANADA'S RESPONSE TO SARBANES-OXLEY
Vaughan S. Radcliffe, Brooke Harley

Product Number: 9B09M038
Publication Date: 6/10/2009
Revision Date: 7/29/2009
Length: 7 pages

The case reviews responses by governments, securities commissions and others to the U.S. Sarbanes-Oxley Act. It discusses the certification of financial statements and internal controls, the role of boards and board committees, including the audit committee, and issues of auditor independence. The Canadian Public Accountability Board is also discussed.

Teaching Note: 8B09M38 (3 pages)
Industry: Finance and Insurance
Issues: Auditing; Legal Requirement; Financial Regulation; Board and Management Duties
Difficulty: 4 - Undergraduate/MBA


Chapter 2:
Building Blocks of Managerial Accounting

AT&T WIRELESS: TEXT MESSAGING
Vaughan S. Radcliffe, Mitchell Stein, Michael Lickver

Product Number: 9B11B005
Publication Date: 4/8/2011
Revision Date: 1/18/2012
Length: 16 pages

This case examines AT&T’s wireless business with a focus on its text messaging services. The industry features a high proportion of fixed costs in relation to acquiring spectrum and building a network. Variable costs are relatively low, especially in the case of SMS text messages. Pricing and margins in text messaging have attracted regulatory scrutiny in the Unites States, Canada, and elsewhere. The case requires the use of key concepts in cost behaviour, cost volume profit analysis, and product costing to understand the nature of the business and the profit margins involved. Many service or high-tech businesses exhibit similar cost behaviours, and so the case gives students insight into the management of such enterprises.

Teaching Note: 8B11B005 (4 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Pricing; Cost Volume Profit Analysis; Variable and Fixed Costs; Telecommunications
Difficulty: 4 - Undergraduate/MBA



EASY BUSINESS COMPANY LIMITED: COST ANALYSIS ON A SMALL BUSINESS START-UP IN CHINA (A)
Claude P. Lanfranconi, Peter Yuan

Product Number: 9A99B033
Publication Date: 4/4/2000
Revision Date: 1/14/2010
Length: 7 pages

A 23-year-old sales executive for a multinational office furniture and supply company was thinking of leaving the company over a dispute regarding her compensation. A friend had suggested setting up her own business: a recruiting agency. The sales executive had known some human resources managers and office managers throughout the years, however, she also realized that it was a very competitive business and she had no experience. She did some cost analysis and had to decide whether it was worth doing. This case could be used as an introduction to management accounting or entrepreneurial finance.

Teaching Note: 8A99B33 (10 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: China; Cost Accounting; Entrepreneurial Finance; Management Accounting
Difficulty: 4 - Undergraduate/MBA



DE HAVILLAND INC.
Randy P. Kudar, Daniel Szpiro

Product Number: 9A95B037
Publication Date: 1/25/1996
Revision Date: 2/11/2010
Length: 21 pages

Kim Tomar has to evaluate bids from potential suppliers for aircraft parts for de Havilland's Dash 8 aircraft. As a financial analyst, Tomar has to make a recommendation to de Havilland's Source Selection Board on the selection of a new supplier. Tomar's recommendation must be based on the prices quoted by the bidders, and her assessment of the firms' ability to be a long-term supplier to de Havilland. This requires a financial analysis of the bidder firms.

Teaching Note: 8A95B37 (8 pages)
Industry: Transportation and Warehousing
Issues: Financial Reports/Disclosure; Financial Analysis; Cost Systems; Purchasing
Difficulty: 4 - Undergraduate/MBA


Chapter 3:
Job Costing

GOATS: THE GREEN ALTERNATIVE (B)
Kyle S. Meyer, David M. Currie

Product Number: 9B11B025
Publication Date: 12/15/2011
Length: 6 pages

This case is a supplement to Goats: The Green Alternative (A). The (B) case can be used independently of the (A) case if the professor wishes to focus exclusively on capital budgeting. See also Goats: The Green Alternative (C) 9B15D001.

Teaching Note: 8B11B025 (7 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Managerial Accounting; Capital Budgeting; Modeling; Spreadsheet Application; Capital Expenditure Analysis; Differential Analysis; United States
Difficulty: 4 - Undergraduate/MBA



OLD MULE FARMS
David M. Currie, Lorena Mosnja Skare

Product Number: 9B10B004
Publication Date: 5/25/2010
Revision Date: 5/3/2010
Length: 7 pages

The owner of a cow-calf operation must determine the appropriate weight for cows in the herd. The national trend for decades has been for cow weights to increase because they produce larger calves, but evidence indicates that cow weights may have reached the point where the cost of maintaining a larger cow has become greater than the return from producing a larger calf. Analyzing this issue introduces marginal principles from economics. The case can be extended to a discussion of drivers and allocation of expenses, which are managerial accounting principles. The case is appropriate for a managerial cost accounting course and for managerial or microeconomics courses. The case uses concepts such as direct costs, cost drivers, allocation and marginal analysis to examine the issue of appropriate cow weight.

Teaching Note: 8B10B04 (14 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Cost Allocations; Tradeoff Analysis; Economic Analysis; Cost Accounting
Difficulty: 5 - MBA/Postgraduate



STUART DAW
Randy P. Kudar

Product Number: 9A91B017
Publication Date: 1/1/1991
Revision Date: 1/23/2004
Length: 9 pages

The president and owner of a food service business, is concerned about the manner in which his industry prices goods and services. His firm has failed to meet his desired profit margin, and he wonders if there are different pricing options. This is an introductory case in the use of an activity based costing system in the marketing and distribution part of the business.

Teaching Note: 8A91B17 (5 pages)
Industry: Manufacturing
Issues: Distribution; Cost Accounting
Difficulty: 4 - Undergraduate/MBA


Chapter 4:
Activity-Based Costing

ACTIVITY-BASED COSTING AND MANAGEMENT
Owen P. Hall, Charles McPeak, Samuel Seaman

Product Number: 9B10B011
Publication Date: 10/15/2010
Length: 4 pages

This case summarizes some of the challenges - managerial and technical - associated with transitioning to an activity-based costing (ABC) model. The primary objective of this case is to introduce the student to the rationale and mechanics behind the ABC accounting approach and to explore the untoward consequences of using traditional accounting methods.

Teaching Note: 8B10B11 (5 pages)
Industry: Manufacturing
Issues: Activity-based Accounting; Pricing; Overhead Cost Drivers; Capital Resources
Difficulty: 4 - Undergraduate/MBA



HEADQUARTERS' OVERHEAD COST ALLOCATION AT KOREA AUTO INSURANCE CO. INC.
Ho-Young Lee, Sangil Kim, Won-Wook Choi

Product Number: 9B09B014
Publication Date: 11/20/2009
Revision Date: 8/24/2016
Length: 8 pages

Korea Auto Insurance Co. Inc. (Korea Auto Insurance) incurred both direct and indirect costs. Direct costs were incurred at branches as they performed sales and operating activities, while indirect costs were incurred at headquarters as it supported branches through the activities of the information technology, operating support, investment, marketing and general administrative teams. Indirect costs accounted for a significant part (41 per cent) of the total costs incurred. However, they could be neither directly traceable nor logically related to specific sales activities. Korea Auto Insurance currently allocated indirect costs incurred by headquarters to branches based on sales revenue. Using the amount of sales revenue as an allocation base for overhead was not regarded as a reasonable method by the Taejon City branch manager. Branch managers had complained that the current allocation base was not related to the level of actual benefits they received from the headquarters. They argued that the allocation process distorted the operating performances of branches as reflected in the books. The manager of the Taejon branch suggested that the ABC (activity-based cost) method be applied to solve the problems related to the current overhead allocation process.

Teaching Note: 8B09B14 (9 pages)
Industry: Finance and Insurance
Issues: Management Decisions; Cost Allocations; Cost Accounting; Management Accounting; Ivey/Yonsei
Difficulty: 4 - Undergraduate/MBA


Chapter 5:
Process Costing

CABINET CREATIONS LTD.
Elizabeth M.A. Grasby, Ian Dunn

Product Number: 9B10B006
Publication Date: 5/5/2010
Revision Date: 12/6/2017
Length: 9 pages

Cabinet Creations is a woodwork company specializing in the manufacture and distribution to retailers of kitchen cabinet doors. The owner wants to assess the company's second fiscal year of operations. Students are asked to (1) identify and record the cost of raw materials used, cost of work-in-process, cost of finished goods manufactured and cost of goods sold; (2) determine the cost of work in process, calculate partial factory overhead; (3) record the issuance of conversion of preferred shares; (4) record the declaration and payment of dividends; record the purchase and sale of marketable securities - stocks and bonds, and its subsequent interest revenue.

Teaching Note: 8B10B006 (16 pages)
Industry: Manufacturing
Issues: Manufacturing Accounting; Accounting - Transactions; Stock Issues; Bonds
Difficulty: 1 - Introductory


Chapter 6:
Cost Behaviour

CAFE XARAGUA
Mary Gillett, Robert Lehnert

Product Number: 9B12B015
Publication Date: 8/8/2012
Revision Date: 9/8/2015
Length: 8 pages

While on a visit to Haiti, a student entrepreneur realized the potential for economic development in a country that was rich in certain resources and virtually unexplored by the private sector. The entrepreneur decided on coffee as a business opportunity and he and his three partners imported their first burlap sack. By November 2011 the product was for sale - a premium coffee from Southeastern Haiti with a brand focused on assisting the redevelopment and sustainability of the Haitian coffee industry. After the product met success, the entrepreneur and his partners were ready to make an additional investment. They believed that a café focused on their own brand of Haitian coffee would be a great way to generate sales and further develop their product offering before pursuing a grocery-store strategy. However, they also knew that such an investment would be risky.

Teaching Note: 8B12B015 (5 pages)
Industry: Accommodation & Food Services
Issues: Contribution Analysis; New Venture; Branding; Sustainable Development; Canada; Haiti
Difficulty: 4 - Undergraduate/MBA



CARIBBEAN INTERNET CAFE
Murray J. Bryant, Michelle Theobalds

Product Number: 9A98B002
Publication Date: 3/19/1998
Revision Date: 9/9/2009
Length: 5 pages

An entrepreneur is hoping to open Caribbean Internet Cafe in Kingston, Jamaica. He has gathered data on all the relevant costs: equipment, rent, labor, etc. He has also found a partner in the local telephone company, Jamaica Telecommunications Limited (JTL). JTL has provided equity and a long-term loan at favourable interest rates. He is now faced with the task of analyzing fixed, variable and start-up costs, contribution margin, and the concept of break-even to guide his decision.

Teaching Note: 8A98B02 (7 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: Costs; Contribution Analysis; Break-Even Analysis
Difficulty: 4 - Undergraduate/MBA



PROTECT-A-PLATE VENTURE
Richard H. Mimick, T. Ross Archibald

Product Number: 9A80B008
Publication Date: 1/1/1980
Revision Date: 6/11/2003
Length: 4 pages

Based on a preliminary analysis, the inventor of a licence plate protector believes the product would be viable. He collects information on the investments and costs necessary for production, and develops a selling price. But has he correctly identified the fixed, variable and step costs in his analysis?

Teaching Note: 8A80B08 (10 pages)
Industry: Manufacturing
Issues: Relevant Costs; Management Accounting; Contribution Analysis
Difficulty: 4 - Undergraduate/MBA


Chapter 7:
Cost-Volume-Profit Analysis

FLY ASH BRICK PROJECT: FEASIBILITY STUDY USING CVP ANALYSIS
S.K. Mitra, Shubhra Hajela

Product Number: 9B13B022
Publication Date: 12/20/2013
Revision Date: 12/19/2013
Length: 6 pages

A budding entrepreneur in India is planning to set up a fly ash brick manufacturing plant near a thermal power plant. Not only does making bricks out of the residue of coal power generation reduce the amount of fly ash waste dumped on the ground, but the government is actively supporting the fly ash brick industry as a way to meet the increasing demands for construction materials that are environmentally sustainable. On the basis of preliminary analysis, the entrepreneur decides to set up a plant that will have the capacity to manufacture four million bricks. Though actual production will depend on market demand, he and his potential partner estimate that 2.4 million bricks can be sold per year at an average Rs 7,000 per 1,000 bricks. He wants to ascertain the feasibility of the project using a cost-volume-profit analysis.

Teaching Note: 8B13B022 (10 pages)
Industry: Construction
Issues: CVP Analysis; Feasibility analysis; breakeven point; cost analysis; India
Difficulty: 4 - Undergraduate/MBA



HONG KONG CONVENTION AND EXHIBITION CENTRE: PROJECT SEAT-RISER (A)
Claude P. Lanfranconi, Peter Yuan

Product Number: 9B00B021
Publication Date: 9/25/2000
Revision Date: 1/7/2010
Length: 7 pages

The Hong Kong Convention and Exhibition Centre (HKCEC), a trade infrastructure owned by the Hong Kong Development Council and operated by the New World Group, was the most prestigious convention and exhibition venue in Hong Kong. After hosting several musical events in Hall Three of HKCEC, the management of HKCEC decided to actively market Hall Three to concert organizers during the off-season. These events could bring in substantial rental income per day. Seat-risers had been leased and temporarily installed for these events, but the cost was prohibitively expensive for concerts booked for short durations, such as concerts by visiting international performing artists, a segment that HKCEC intended to target. The director of operations of HKCEC had been trying to find the most cost effective solution to provide a seat-riser for Hall Three. There were three options: to purchase a seat-riser, to rent a seat-riser for the duration of booked events, or to rent a seat-riser for the entire off-season period. He must analyse the options and find the solution that would be attractive to concert organizers, the most cost effective with the least risk to HKCEC, and consistent with HKCEC's current operations.

Teaching Note: 8B00B21 (8 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: China; Contribution Analysis; Management Accounting; Cost/Benefit Analysis; Cost Accounting
Difficulty: 4 - Undergraduate/MBA


Chapter 8:
Short-Term Business Decisions

ARVIND MILLS: RE-EVALUATING PROFITABILITY
Murray J. Bryant, Rajeev Khera

Product Number: 9B04B008
Publication Date: 8/10/2004
Revision Date: 10/8/2009
Length: 11 pages

Arvind Mills, a large Indian textile and garment manufacturer, has to assess the costs of a large order, as a basis for a price quotation. The company is in a significant loss position. The textile industry in India is constrained by government regulations and the industry is critical as both an export earner and a major employer in the economy. However, the industry is losing share to China and must change to meet that threat. The vice-president of operations must assess the costs associated with the order, including an assessment whether to use the traditional cost system or the customer and manufacturing based activity cost system. The decision is also strategic as this order is at the core of the company's new strategy to be both a designer and manufacturer.

Teaching Note: 8B04B08 (2 pages)
Industry: Manufacturing
Issues: Pricing; Internationalization; Government Regulation; Cost Systems
Difficulty: 4 - Undergraduate/MBA



NANJING CHUANGQI AUTO PARTS COMPANY
David J. Sharp, Alan (Wenchu) Yang

Product Number: 9B01B027
Publication Date: 2/15/2002
Revision Date: 12/7/2009
Length: 14 pages

Nanjing Chuangqi is a small auto parts manufacturing firm. The general manager of the company is deciding whether the company should integrate its product line from existing universal joint and steering shaft to steering column and whether the major processes involved should be outsourced or made internally. Using breakeven and net present value analysis, he must consider the impact on the company and the auto industry when China joins the World Trade Organization and import tariff barriers are removed.

Teaching Note: 8B01B27 (9 pages)
Industry: Manufacturing
Issues: China; Net Present Value Method; Corporate Strategy; Contracting; Break-Even Analysis
Difficulty: 4 - Undergraduate/MBA



CHAMPAGNE HOTEL
David J. Sharp

Product Number: 9A98B009
Publication Date: 5/27/1998
Revision Date: 1/25/2010
Length: 3 pages

The general manager of the Champagne Hotel in Hong Kong has to decide what action to take in the hotel laundry. June's operating expenses are significantly over budget. The manager has to investigate the causes of the cost overrun, and decide on further action, including whether to outsource the laundry service.

Teaching Note: 8A98B09 (5 pages)
Industry: Accommodation & Food Services
Issues: Outsourcing; Cost Control; Break-Even Analysis
Difficulty: 4 - Undergraduate/MBA


Chapter 9:
The Master Budget and Responsibility Accounting

CAPITAL BUDGETING MANAGEMENT OF BHARTI AIRTEL - THE PROFITABILITY IMPACT
Sandeep Goel

Product Number: 9B14N006
Publication Date: 4/11/2014
Revision Date: 4/7/2014
Length: 5 pages

Sound financial management is the most important element in the viability of any business undertaking, and capital investment decisions are the foundation stone of this process. A company can pursue either an internal, organic approach to its financing options or an external, inorganic approach that uses borrowed funds to make acquisitions it hopes will increase its business. This is the route taken by Bharti Airtel Limited, India’s leading telecommunications giant. Beginning in 2010, it has borrowed heavily on the international market to invest in acquisitions of a 3G licence in India, in Zain Africa and in the broadband wireless access branch of Qualcomm Inc. However, due to many causes — including the effects of the global recession on the industry; the highly competitive Indian telecommunications market; restructuring and disorganization in the firm’s top management; and lack of innovation in offering and delivering new services in India — the company has experienced not the growth it expected from its expansion strategy, but a steady decline in profits. How can the management turn this situation around and regain the company’s position as a leader in the telecommunications market in India and globally?

Teaching Note: 8B14N006 (9 pages)
Industry: Information, Media & Telecommunications
Issues: Capital budgeting; profitability; telecom; financial viability; India
Difficulty: 5 - MBA/Postgraduate



MODERN AGRICULTURAL FARM: BUDGETING FOR CONTROL
Muntazar Bashir Ahmed

Product Number: 9B13B025
Publication Date: 1/10/2014
Revision Date: 4/7/2014
Length: 8 pages

In May 2011, the managing partner of the Modern Agricultural Farm in rural Pakistan was reviewing the set of performance reports for the previous month sent by the farm accountant. These reports had been designed by a management analysis and research consultant to convert the farm system to that used by the head office of the Alamgir Group of businesses, of which the farm was a part. There were two concerns: how to handle the fluctuations in the farm’s monthly cash flow and how to plan the right combination of plantings and crops to ensure a profit. A computer-based accounting software program had been purchased to help expedite accounting and reporting, and an annual master budget plan had been established to control operations. Given the special risks faced in agriculture where the portfolio of crops was dependent on uncontrollable factors, such as the weather, the managing director wondered how he could develop a workable budget for the coming year.

Student spreadsheet 7B13B025 with data is available.


Teaching Note: 8B13B025 (6 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Budget; farm risks; portfolio of crops; control; Pakistan
Difficulty: 4 - Undergraduate/MBA



ST. CLEMENT'S SCHOOL
Mary Gillett, Jeana Poon, Kelly McKenna

Product Number: 9B07B012
Publication Date: 10/4/2007
Revision Date: 10/30/2007
Length: 9 pages

The principal of St. Clement's School was considering a potential expansion to the school's facilities. There were many issues for the principal to consider including how to fund the expansion, the impact on the school's programs, and the impact on the school of increased enrollments. Most importantly, she had to consider the impact of an expansion on the distinct culture of the school. This case is an introductory capital budgeting example set in a non-profit organization rich in context.

Teaching Note: 8B07B12 (7 pages)
Industry: Educational Services
Issues: Non-Profit Organization; Funding; Capital Budgeting; Capital Investment
Difficulty: 4 - Undergraduate/MBA


Chapter 10:
Flexible Budgets and Standard Costs

KOMANDOR SA (A)
David J. Sharp, Karen Bong

Product Number: 9B01B013
Publication Date: 10/18/2001
Revision Date: 12/7/2009
Length: 9 pages

Komandor SA is a subsidiary of a Polish holding company that manufactures sliding doors and closet organizer systems. The company president and his Canadian counterpart must decide on a transfer pricing policy for consulting services and associated components shipped between the two countries. Polish tax regulations seem unclear and arbitrary and the tax auditor has disallowed the consulting fees. The two presidents must decide whether allocating the consulting fee to product overhead will solve the problem.

Teaching Note: 8B01B13 (8 pages)
Industry: Manufacturing
Issues: International Accounting; International Trade; Transfer Pricing; Ethical Issues
Difficulty: 5 - MBA/Postgraduate



SHANGHAI EUROTEL CENTER
David J. Sharp, Jonathan Yang

Product Number: 9B01B033
Publication Date: 12/10/2001
Revision Date: 12/7/2009
Length: 5 pages

Shanghai Eurotel Center Co. Ltd. is a joint venture formed by four parties from China, France (2) and Singapore to construct and operate a group of buildings including one five-star hotel, a luxury shopping center, some apartments and office space. After the first seven months of operation, actual profit of the hotel was under budget. The chief accountant, in preparing for a report for the board of directors, must decide how to resolve the problems with ambiguous accountability for operations, lack of appropriate performance measures and must analyze performance using flexible budgets.

Teaching Note: 8B01B33 (4 pages)
Industry: Accommodation & Food Services
Issues: China; Operations Analysis; Joint Ventures; Employee Selection; Control Systems
Difficulty: 4 - Undergraduate/MBA


Chapter 11:
Performance Evaluation and the Balanced Scorecard

BALANCE SCORECARD AT 3L ELECTRONICS CORP.
Shih-Fen Chen, Anne Wu

Product Number: 9B13B002
Publication Date: 2/15/2013
Revision Date: 2/15/2013
Length: 20 pages

3L Electronic Corp. (3L), a leading manufacturer of high-end transformers in Taiwan, has implemented the balance scorecard to improve company-wide performance. After 3L had missed its targets for three successive quarters, the general manager realized that the reasons for the gap between the actual performance and the budgeted performance were internal rather than external. The managerial issues faced by the company before the introduction of the balanced scorecard had not been completely addressed because of shortcomings in its initial execution at both the department and personal level. Of most concern is how to link balanced scorecard to employee bonus in such a large organization with multiple layers of structure.

Teaching Note: 8B13B002 (7 pages)
Industry: Manufacturing
Issues: Balance Scorecard; Accounting Control; Performance Evaluation; Employee Bonus; Taiwan
Difficulty: 5 - MBA/Postgraduate



LONDON PUBLIC LIBRARY
Vaughan S. Radcliffe, Ian Nichol

Product Number: 9B07B005
Publication Date: 5/6/2008
Length: 14 pages

The chief executive officer (CEO) of the London Public Library (LPL) had developed and had begun to implement a strategic plan to improve the LPL. The strategic plan was based on a balanced scorecard. The four perspectives measured by the balanced scorecard were: the community perspective, the internal processes perspective, the organizational readiness perspective and the financial perspective. With two years before the deadline to achieve the plan, the CEO had to decide on what she would focus next.

Teaching Note: 8B07B05 (3 pages)
Industry: Public Administration, Social Advocacy Organizations
Issues: Development of Balanced Scorecard; Financial and Nonfinancial Performance Measures; Performance Assessment; Management Control; Performance Measurement; Accountability in the Public Service; Performance Evaluation; Management Accounting; Accounting Methods
Difficulty: 4 - Undergraduate/MBA



LONDON LIFE: GROUP RETIREMENT SERVICES AND THE BALANCED SCORECARD (A)
Claude P. Lanfranconi, Michelle Theobalds

Product Number: 9A98B007
Publication Date: 4/24/1998
Revision Date: 9/27/2002
Length: 14 pages

Group Retirement Services (GRS) is a division of London Life Insurance Company in London, Ontario. The vice president of GRS implemented the balanced scorecard in his division in 1994. Since that time, the industry and London Life have experienced significant change. Although the scorecard was not yet complete (after three years), the real issue here is whether the scorecard has been useful to GRS and whether the scorecard could be improved to assist the department in the future.

Teaching Note: 8A98B07 (9 pages)
Industry: Finance and Insurance
Issues: Insurance; Performance Measurement; Management Accounting; Planning
Difficulty: 4 - Undergraduate/MBA


Chapter 12:
Capital Investment Decisions and Time Value of Money

NEW DENMARK SAWMILL UPGRADE
Mary Gillett, Dan Marino

Product Number: 9B05B007
Publication Date: 3/7/2005
Revision Date: 9/24/2009
Length: 9 pages

The president of Jackson Limited's sawmill division was reviewing proposals to upgrade and modernize the sawmill at the New Denmark site in New Bruswick. He was faced with different alternatives ranging from a capital requirement of $6 million to as high as $14 million. The president must make a capital budget decision that will take into account several uncertainties.

Teaching Note: 8B05B07 (6 pages)
Industry: Manufacturing
Issues: Capital Investment; Uncertainty; Cost/Benefit Analysis; Capital Budgeting
Difficulty: 4 - Undergraduate/MBA



CLOVERDALE PAINT INC.
Murray J. Bryant, Kate Lemon

Product Number: 9B02B016
Publication Date: 11/29/2002
Revision Date: 10/29/2009
Length: 14 pages

Cloverdale Paint Inc. is a family-owned paint manufacturer. Company sales have been falling and the logistics manager was looking at several options that would meet the company's long-term growth objectives. Two opportunities - private label development or dealer network expansion - seemed promising. He must determine if one or both alternatives will resolve the company's declining sales, and if so, whether the company has enough capital to pursue one or both ventures.

Teaching Note: 8B02B16 (5 pages)
Industry: Manufacturing
Issues: Cash Flow Analysis; Capital Investment; Cost/Benefit Analysis
Difficulty: 5 - MBA/Postgraduate



MINNOVA INC. - LAC SHORTT MINE
Claude P. Lanfranconi, Rhonda L. English

Product Number: 9A90B002
Publication Date: 1/1/1990
Revision Date: 4/23/1999
Length: 11 pages

Minnova Lac Shortt mine faces an important capital budgeting decision. A discounted cashflow analysis of a $19 million investment to deepen the existing mine by 300 metres is required. Given the high levels of uncertainty and flux in the external environment (e.g., U.S. exchange rate, price of gold, head grade of ore, recovery percentage, etc), managers need to conduct a sensitivity analysis. Qualitatively, Minnova's mining strategy weighs heavily on the decision because the quantitative analysis results in a slightly negative net present value.

Teaching Note: 8A90B02 (9 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Capital Budgeting; Sensitivity Analysis; Investment Analysis
Difficulty: 4 - Undergraduate/MBA