Ivey Publishing

Management Accounting in a Dynamic Environment

McWatters, C.S., Zimmerman, J.L. (Canada, Routlege, 2016)
Prepared By Ashley Woytaz,
Chapter and Title Chapter Matches: Case Information
Chapter 1:
Why Accounting is Important in Organizations

STARBUCKS: VENTI LEASES
Vaughan S. Radcliffe, Mitchell Stein, Caleb Yong

Product Number: 9B11B014
Publication Date: 8/19/2011
Length: 19 pages

This case depicts a financial analyst trying to make sense of Starbucks’ finances and drawing from recent projects of the IASB and FASB to identify lease accounting as a key issue for the firm. The case underscores the importance of having a full picture of a company’s obligations in order to understand its overall performance.

In reviewing the case, students examine Starbucks’ extensive use of leases and use spreadsheet tools to understand the full extent of the corporation’s indebtedness. Although heavy users of leases such as Starbucks have argued that lease accounting is complex, an estimation of lease indebtedness can be made using relatively simple tools that are easy for students to understand. The case allows issues of high-level accounting standards to be elucidated, using a well-known company with which students identify. The case illustrates the real-world consequences of accounting policy choices.


Teaching Note: 8B11B014 (3 pages)
Industry: Accommodation & Food Services
Issues: Accounting; Financial Management; Accounting Standards; Leases; Debt; Coffee
Difficulty: 4 - Undergraduate/MBA



FOXY ORIGINALS: THE ONLINE EXPANSION
Elizabeth M.A. Grasby, Jessica Bond

Product Number: 9B16B003
Publication Date: 3/18/2016
Revision Date: 3/20/2017
Length: 5 pages

The founders of a jewelry company, Foxy Originals, needed to decide how best to increase sales. The company sold its jewelry both online and through retailers across the United States and Canada. The founding partners had to decide whether they should focus more of their time and money on developing online sales or continue attending trade shows that attracted additional retail locations for Foxy Originals' products. Both partners wanted to ensure that they achieved a healthy work-life balance.

Teaching Note: 8B16B003 (12 pages)
Industry: Manufacturing
Issues: Contribution analysis, distribution, profitability analysis, management accounting
Difficulty: 1 - Introductory



EADS/AIRBUS: VISION 2020
Rosi Ji, Thorsten Knauer, Momo Schäfer, Friedrich Sommer, Jil Wehlmann

Product Number: 9B14M028
Publication Date: 5/6/2014
Revision Date: 5/2/2014
Length: 19 pages

EADS N.V. (EADS), Europe’s leading aerospace and defence company, is reviewing its strategic positioning. EADS had planned to merge with a British company to form the world’s largest aerospace company, but the merger failed mainly due to resistance from government shareholders. As a result, the firm cannot achieve its major strategic goals that were tied to the merger. In the highly competitive aerospace industry and despite also facing production issues and a corruption investigation, the firm’s management must revise both its short-term goals and future action plan.

Teaching Note: 8B14M028 (14 pages)
Industry: Manufacturing
Issues: Aerospace; defence; portfolio decisions; product-market decisions; corruption; Europe
Difficulty: 4 - Undergraduate/MBA


Chapter 2:
Cost Behaviour and Activity Costs

LONDON WATER (A)
Vaughan S. Radcliffe, John G. Wilson, Denise Brunsdon

Product Number: 9B15B009
Publication Date: 9/15/2015
Revision Date: 3/23/2016
Length: 9 pages

London Water, the water system of the City of London, Ontario, has run deficits for eight of the past nine years, leading to significant pressure to pull the organization out of the red. The Water Engineering Division manager knows that something needs to change. Overhauling the rate structure is an attractive option; however, myriad political, economic and environmental issues are at play. Moreover, as steward of one of the city’s most important utilities, the manager needs to determine the best course of action, ideally a solution that will work in both the short run and the long run. See supplement case 9B15B010.

Teaching Note: 8B15B009 (5 pages)
Industry: Public Administration
Issues: Data analytics, cost behaviour, public sector
Difficulty: 4 - Undergraduate/MBA



LONDON WATER (B)
Vaughan S. Radcliffe, John G. Wilson, Denise Brunsdon

Product Number: 9B15B010
Publication Date: 9/15/2015
Revision Date: 9/14/2015
Length: 8 pages

Supplement to 9B15B009.

Teaching Note: 8B15B009 (5 pages)
Industry: Public Administration
Issues: Data analytics, cost behaviour, public sector
Difficulty: 4 - Undergraduate/MBA



CITY OF SARNIA — CONTRACT POLICING PROPOSAL
Elizabeth M.A. Grasby, Ian Dunn

Product Number: 9B11B026
Publication Date: 1/13/2012
Length: 9 pages

In March 2010, a city in Southwestern Ontario received a costing proposal from the Ontario Provincial Police (OPP). The mayor and the other city councillors needed to decide whether to disband the city’s current municipally based Sarnia Police Services (SPS) and replace it with contract policing from the OPP. The city’s request for the proposal had created much discomfort for the SPS employees, and had polarized the entire community. After analyzing the OPP contract proposal, the city planned to make several adjustments to the OPP financial estimate so that it would more closely reflect the current level of service provided by the SPS.

Teaching Note: 8B11B026 (9 pages)
Industry: Other Services
Issues: Contracting; Cost/Benefit Analysis; Differential Analysis; Government & Business; Public Relations; Canada
Difficulty: 1 - Introductory



THE GOOD NIGHT MOTEL
Richard H. Mimick, David C. Shaw, Elizabeth M.A. Grasby, Raymond W. Leduc

Product Number: 9B12B014
Publication Date: 7/25/2012
Revision Date: 4/12/2013
Length: 5 pages

The Good Night Motel is considering offering special pricing for a two-day church convention event involving 20 rooms. This requires the owner to perform contribution analysis, sensitivity analysis, and some qualitative analysis.

Teaching Note: 8B12B014 (4 pages)
Industry: Accommodation & Food Services
Issues: Cost Behaviour; Break-even; Qualitative Analysis; Canada
Difficulty: 1 - Introductory


Chapter 3:
Measuring and Analyzing Product Costs

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



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


Chapter 4:
Managing Activities

BERENDSEN ISLAND
Rick Bisselink, Filip Roodhooft, Kristof Stouthuysen, Ineke Teunis

Product Number: 9B15B012
Publication Date: 9/17/2015
Revision Date: 9/10/2015
Length: 6 pages

Berendsen Island, an outsourced workwear service, uses the standard costing model to determine its profitability. Because the company recently reported a loss, the plant manager and the business controller investigate time-driven activity-based costing in an effort to gain insights into its cost structures. The company also needs to provide a quote to two potential new customers.

Teaching Note: 8B15B012 (15 pages)
Industry: Other Services
Issues: Cost accounting, TDABC application, activity based budgeting, pricing
Difficulty: 5 - MBA/Postgraduate



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


Chapter 5:
Managing Organizations

RAWHIDE BREWERY
Michele Stewart

Product Number: 9B12B030
Publication Date: 10/25/2012
Revision Date: 10/25/2012
Length: 6 pages

Rawhide Brewery (Rawhide), a small Canadian brewery, is considering an opportunity to share its excess production capacity with another brewery, Tabby Cat Beer (Tabby). Three proposals are under consideration, each requiring a different accounting treatment by Rawhide. The first option is an arrangement under which Tabby would outsource its production to Rawhide. The second is a more complex arrangement under which both parties would invest in the common shares of a newly formed entity into which Rawhide would transfer its existing brewery operations and related debt. Because Rawhide would guarantee the debt of the new entity, it would make all key decisions. Under the third alternative, Rawhide would own 60 per cent of the common shares and Tabby would own the remaining 40 per cent, and all key decisions would be made jointly by both parties. The CFO of Rawhide has been asked to assess the accounting implications, advantages and disadvantages of the various options, taking into account the impact on Rawhide’s debt-to-equity ratio.

Teaching Note: 8B12B030 (4 pages)
Industry: Manufacturing
Issues: Joint Ventures; Consolidation; Variable Interest Entity; Accounting Methods; Canada
Difficulty: 3 - Undergraduate



GEMINI ELECTRONICS
Dan Thompson

Product Number: 9B11N022
Publication Date: 2/21/2012
Revision Date: 3/15/2016
Length: 7 pages

Accountant Sarah McIvor, a junior partner with PricewaterhouseCoopers, has been selected to conduct a financial review of Gemini Electronics Ltd. Gemini is an up-start American electronics company that recently went public and now wants to expand its business to rival the major Korean and Japanese producers. Before the company finalizes any expansion plans, Dr. Wang, the founder, feels it is prudent to conduct an independent evaluation of Gemini’s financial condition.

Teaching Note: 8B11N022 (12 pages)
Industry: Manufacturing
Issues: Financial Ratio Analysis; Strategic Planning; Accountant; Electronics; United States
Difficulty: 2 - Intro/Undergraduate



PART KING, INC.
Mary Gillett, Lindsay Brock

Product Number: 9B08B001
Publication Date: 4/1/2008
Length: 10 pages

A newly appointed operations manager was expected to provide his expertise in the planning, launch and ongoing operations for three corporately-owned Part King stores, the first of which was scheduled to open in December 2005. The operations manager wondered if moving to a corporate model made sense at all or whether it was better to retain the franchise structure that was already in place. He was particularly concerned about how best to motivate the managers of a corporate-owned store given that they did not share in its ownership. Were there some components of the control system that was currently in place in the franchise store model that would also be appropriate for the corporate-owned store model that was in the works? Were there some components of the existing control system that needed improvements as well?

Teaching Note: 8B08B01 (8 pages)
Industry: Retail Trade
Issues: Transfer Pricing; Incentives; Control Systems; Budgeting
Difficulty: 4 - Undergraduate/MBA


Chapter 6:
Decentralized Organizations

TRANSFER PRICING AT CAMECO CORPORATION
Walid Busaba, Nourhene Ben Youssef, Saqib A. Khan

Product Number: 9B14B011
Publication Date: 8/14/2014
Revision Date: 8/14/2014
Length: 8 pages

Transfer pricing used by multinational corporations to lower its tax burden, thereby increasing its consolidated income, can have far-reaching implications for the stakeholders, as a fund manager for Saskhedge fund found out the hard way. A stock investment the manager had made in Cameco Corporation has dropped its value by 20 per cent. In addition, Canada Revenue Agency has initiated a law suit against the firm for alleged tax avoidance in relation to the company's transfer pricing practices with its Swiss subsidiary. The suit could result in an additional tax liability of $800 million to $850 million. The manager needs to explain to the investment board the implications of the lawsuit on the stock price and advise the board on whether the projected $800 to $850 million is a fair estimate.

Teaching Note: 8B14B011 (4 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Transfer pricing; differential tax regimes; consolidated statements; financial reporting; Canada
Difficulty: 4 - Undergraduate/MBA



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



RED SPRUCE RESORT
Elizabeth M.A. Grasby, Shannon Wright

Product Number: 9B15B013
Publication Date: 12/15/2015
Revision Date: 12/14/2015
Length: 7 pages

The general manager of a resort was considering completely renovating the resort’s suites for the upcoming season. He would need to submit a proposal to the resort owners for funding approval. Although he knew the renovation would increase customer satisfaction, he would need to justify the significant upfront investment from a financial perspective.

Teaching Note: 8B15B013 (7 pages)
Industry: Accommodation & Food Services
Issues: Financing, hotel management, competiveness, return on investment
Difficulty: 1 - Introductory


Chapter 7:
Budgeting

THEATRE CALGARY: CONTROL SYSTEMS IN AN ORGANIZATION IN CRISIS
Mary Gillett, Tom Ewart

Product Number: 9B06B005
Publication Date: 3/17/2006
Revision Date: 11/27/2014
Length: 12 pages

Theatre Calgary was a non-profit performing arts organization in Calgary, Canada. In its 2002/03 season, it faced a financial crisis that nearly ended in bankruptcy. It survived the crisis and made many changes to its budgeting and control systems to solve some of the deficiencies that had led to the financial difficulties. As the president prepares for a board meeting, the board of directors want to know if the current budgeting and control systems will ensure long-term stability. This case details Theatre Calgary's budgeting system and paints an accurate picture of the organization, and provides students the opportunity to recommend changes to control systems.

Teaching Note: 8B06B05 (13 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: Control Systems; Budgeting; Arts Administration
Difficulty: 4 - Undergraduate/MBA



ST. THOMAS GOLF AND COUNTRY CLUB
Darroch A. Robertson

Product Number: 9B11B006
Publication Date: 3/7/2011
Length: 13 pages

The superintendent of the St. Thomas Golf Course had to develop the 2010 operating budget for the maintenance of the golf course and recommend the extent of infrastructure expenditures for the upcoming year. The course was facing increased labour costs due to recent government-mandated increases in the minimum wage. The recommendations had to be made in terms of a weak economy in the area and a recent decline in membership. The student must first assess the financial position of the course prior to determining the extent to which discretionary expenditures should be recommended. The case requires the development of an operating budget and permits a discussion of follow-up procedures for monitoring the budget.

Industry: Arts, Entertainment, Sports and Recreation
Issues: Budgeting; Labour Costs; Minimum Wage; Sports; Golf Clubs; Canada
Difficulty: 4 - Undergraduate/MBA


Chapter 8:
Cost Allocations

WESTMOUNT RETIREMENT RESIDENCE
Mary Gillett, Nicole Shomair

Product Number: 9B08B002
Publication Date: 6/30/2008
Revision Date: 6/16/2009
Length: 10 pages

The administrator of the Westmount Retirement Residence is concerned about the current cost accounting system. The administrator is not clear on how much each service offered was truly costing, and therefore charged each resident the same price per month regardless of their needs. In the past, the majority of patients demanded similar services, and therefore this pricing and costing system was appropriate. However, with demographic changes to the population, some residents required intense medical care, while others were healthy and fit and required less care. A new pricing model had to be developed that reflected both the size of suite inhabited and the level of medical care and service required by each individual patient.

Teaching Note: 8B08B02 (8 pages)
Industry: Other Services
Issues: Cost Systems; Pricing; Cost Allocations
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


Chapter 9:
Absorption Costing Systems

TREASURE TROPHY COMPANY
Elizabeth M.A. Grasby, J.D. ffolliott, Omar Bolli

Product Number: 9B14B012
Publication Date: 8/15/2014
Revision Date: 3/20/2017
Length: 5 pages

The Treasure Trophy (Treasure) company manufactures trophies for all kinds of sporting, business and celebratory events. The trophy manufacturing industry is highly competitive and, as a result, pricing decisions with respect to formulating bids are very important. Treasure has traditionally used a job order system of cost accumulation (i.e., job cost). Treasure has to bid on two new jobs, and the new general manager must decide which method of costing should be used for these orders and subsequently set a price for each order.

Teaching Note: 8B14B012 (9 pages)
Industry: Manufacturing
Issues: Cost accounting; pricing strategy; manufacturing capacity; contribution analysis; Canada
Difficulty: 1 - Introductory



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



ASANTE TEACHING HOSPITAL: ACTIVITY-BASED COSTING
Melissa Jean, Courtney Young

Product Number: 9B16B012
Publication Date: 9/14/2016
Revision Date: 9/14/2016
Length: 6 pages

In August 2015, an intern at Asante Teaching Hospital, a prestigious not-for-profit hospital in Johannesburg, South Africa, wanted to organize the cost data she had gathered from staff interviews into clear recommendations for the hospital's chief executive officer. Asante Teaching Hospital's maternity ward competitors had begun offering bundled pricing for natural births, and the intern wondered if Asante Teaching Hospital should do the same. In order to calculate the costs of the service, she planned to employ both activity-based and time-driven activity-based costing techniques. With this information, she could present the results of her analysis and recommendations for a pricing strategy.

Teaching Note: 8B16B012 (7 pages)
Industry: Health Care Services
Issues: activity-based costing, cost control, pricing, health administration, data analysis, health informatics, medical, obstetrics
Difficulty: 4 - Undergraduate/MBA


Chapter 10:
Variable Costing and Capacity Costs

CRP PRODUCTS
David Wood, Robert Klassen

Product Number: 9B11D015
Publication Date: 11/10/2011
Revision Date: 6/29/2012
Length: 7 pages

Bruce Ballantyne had recently joined C.R.P. Products (CRP), a furniture manufacturer in Stratford, Ontario, to help review the company’s operations and assess what changes were necessary to keep up with demand. Although it was early 2011 and the peak season was still four months away, Ballantyne knew that he would have to determine what equipment was needed over the next three weeks to ensure it was delivered and installed before the peak season. Jamie Bailey, the owner of CRP, had also concluded that CRP did not have the financing available for both the new equipment needed to make its unique design of outdoor furniture and the seasonal working capital required to support inventory and accounts receivable. He had turned to Ballantyne to develop a solution that would keep up with demand, keep inventory low, and work within the available financing.

Teaching Note: 8B11D015 (13 pages)
Industry: Manufacturing
Issues: Capacity Management; Inventory, Batch Size and Free Capacity; Economic Order Quantity; Process Design; Plant Layout; Furniture; Ontario, Canada
Difficulty: 4 - Undergraduate/MBA



HOSPITALITY SERVICES –– EATERY CHALLENGES
Elizabeth M.A. Grasby, Richard Bloomfield

Product Number: 9B16B002
Publication Date: 3/7/2016
Revision Date: 3/20/2017
Length: 11 pages

The associate director of hospitality services at a large university had to address overcapacity at an on-campus eatery. The eatery was experiencing long lineups and severe bottlenecks, especially at its full-service coffee outlet. Seating capacity was also short of demand, and no additional space was available. The associate director also faced pressure from university administration to consider closing a nearby eatery as a result of its poor profitability, but doing so would put additional strain on the already overcapacity eatery. After examining profitability and completing a corporate assessment, the associate director expected to have a better idea of how to tackle the current capacity and profitability issues.

Teaching Note: 8B16B002 (8 pages)
Industry: Accommodation & Food Services
Issues: Contribution analysis, segment reporting, cost allocation, sub-unit evaluation
Difficulty: 1 - Introductory


Chapter 11:
Standard Costs and Variance Analysis

TRICON LOGISTICS CHINA
Claude P. Lanfranconi, Michael Wang

Product Number: 9B01B037
Publication Date: 1/8/2002
Revision Date: 12/7/2009
Length: 10 pages

Tricon Logistics China is the logistics department of Tricon Restaurants International (China) and is responsible for supervising the operations and cost management of supplies to Kentucky Fried Chicken and Pizza Hut restaurants from 12 distribution centres in China. The market manager of one of the regional companies is concerned about the performance of his company's affiliated distribution centre in Suzhou. The director of Tricon Logistics China must determine why the actual cost of the distribution centre have exceeded the targets by analysing performance, cost variance and internal price negotiation.

Teaching Note: 8B01B37 (8 pages)
Industry: Retail Trade
Issues: China; Cost Systems; Cost Control; Control Systems
Difficulty: 4 - Undergraduate/MBA


Chapter 12:
Short-Term Decisions and Constraints

SAILING VOYAGES INC.: COST/VOLUME/PROFIT ANALYSIS
Claude P. Lanfranconi, Darroch A. Robertson

Product Number: 9B00B024
Publication Date: 7/11/2001
Revision Date: 1/7/2010
Length: 1 pages

Sailing Voyages, Inc. is a tour boat company offering day cruises on a sailing schooner. In this exercise, the owner of the company needs to determine the amount and nature of costs and revenues with varying number of sailing voyages and a limited season of operation.

Teaching Note: 8B00B24 (2 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: Costs; Profitability Analysis
Difficulty: 3 - Undergraduate



BAKE ME A CAKE
Elizabeth M.A. Grasby, Ian Dunn

Product Number: 9B13B001
Publication Date: 2/11/2013
Revision Date: 2/6/2013
Length: 16 pages

The sole proprietor of a small cake-baking and cake-decorating business needs to make some decisions regarding the company’s future. The company’s growth has brought new challenges including possible space constraints. The desire to improve profitability and to take the business to the next level leads the owner to consider increasing prices and the development of a new advertising strategy.

Teaching Note: 8B13B001 (14 pages)
Industry: Accommodation & Food Services
Issues: Cost/Benefit Analysis; Contribution Analysis; Advertising; Pricing; Canada
Difficulty: 2 - Intro/Undergraduate



ANWAR ALUMINUM WORKS
Elizabeth M.A. Grasby, Amy Shuh

Product Number: 9B14B001
Publication Date: 12/17/2014
Revision Date: 2/18/2014
Length: 6 pages

The plant manager of an aluminum alloy production plant is faced with capacity constraints and must determine which of two new speciality orders to take on. Both orders cannot be filled simultaneously.

Students are asked to: (1) perform an industry size-up of the global metals industry and its subset, the aluminum industry; (2) perform a business size-up of the company's current operations; (3) determine the pros and cons of accepting each customer order; (4) calculate the projected contribution margin rates for each product order; (5) analyze, using differential analysis, each customer order and (5) make a decision as to which order to accept.


Teaching Note: 8B14B001 (7 pages)
Industry: Manufacturing
Issues: Capacity constraints; order fulfilment; differential analysis; Canada
Difficulty: 1 - Introductory


Chapter 13:
Investment Decisions

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



FORTUNE MINERALS — THE NICO PROJECT
Chris Sturby, Melissa Jean

Product Number: 9B11B012
Publication Date: 8/19/2011
Length: 15 pages

A publicly traded mining company has an opportunity to develop a mine containing gold, cobalt, and bismuth in Canada’s Northwest Territories and must determine the financial viability of doing so. In order to gauge the attractiveness of the project, the company needs to evaluate the net present value of the opportunity, given volatile and uncertain variables, such as commodity prices and foreign exchange rates. The company must also consider a number of qualitative considerations that may affect the project, such as relations with First Nations communities.

Teaching Note: 8B11B012 (10 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Capital Budgeting; Net Present Value; Valuation; Mining; First Nations Communities; Aboriginal; Canada
Difficulty: 4 - Undergraduate/MBA


Chapter 14:
Management Accounting in Agile Organizations

NEAL & MASSY: EVALUATING SHAREHOLDER VALUE ADDED
Murray J. Bryant, Ken Mark

Product Number: 9B06B028
Publication Date: 11/6/2006
Revision Date: 9/15/2009
Length: 23 pages

In April 2006, Bernard Dulal-Whiteway, CEO of Neal & Massy Holdings Ltd., was thinking about the company's strategy going forward. When he became CEO in 2000, Dulal-Whiteway had instilled operating discipline through the implementation of Shareholder Value Added (SVA) as the key financial metric. Although this had contributed positively to Neal & Massy's success, there were several recent examples of poor decision-making. Dulal-Whiteway is considering adding other metrics in order to ensure the company's continued success.

Teaching Note: 8B06B28 (5 pages)
Industry: Manufacturing
Issues: Management Accounting; Control Systems; Economic Value Added; Valuation; Performance Evaluation
Difficulty: 4 - Undergraduate/MBA



DR. M. L. DHAWALE TRUST HOSPITAL - TOWARDS SUSTAINABILITY
Gayathri Sivaraman, Vasant Sivaraman

Product Number: 9B10B010
Publication Date: 9/9/2010
Length: 14 pages

This case deals with a rural charitable homeopathic hospital in the state of Maharashtra, India, set in the year 2008. The hospital, Dr. M. L. Dhawale Memorial Trust's Rural Homeopathic Hospital, is one among many clinics and hospitals run by the Dr. M. L. Dhawale Memorial Trust (MLDT). Dr. Navin Pawaskar, the head of the hospital, has to make recommendations to the management team to improve the profitability of the hospital and be financially sustainable. He has findings and data from a field study done by management students of S. P. Jain Institute of Management and Research, Mumbai, India. The study involved a preliminary costing exercise of the various services offered in the hospital. The data from the costing exercise must now be analyzed to arrive at actionable conclusions.

Teaching Note: 8B10B10 (12 pages)
Industry: Health Care Services, Social Advocacy Organizations
Issues: Contribution Analysis; Break-Even Analysis; Sustainability; Management Accounting; Financial Strategy
Difficulty: 4 - Undergraduate/MBA



EADS/AIRBUS: VISION 2020
Rosi Ji, Thorsten Knauer, Momo Schäfer, Friedrich Sommer, Jil Wehlmann

Product Number: 9B14M028
Publication Date: 5/6/2014
Revision Date: 5/2/2014
Length: 19 pages

EADS N.V. (EADS), Europe’s leading aerospace and defence company, is reviewing its strategic positioning. EADS had planned to merge with a British company to form the world’s largest aerospace company, but the merger failed mainly due to resistance from government shareholders. As a result, the firm cannot achieve its major strategic goals that were tied to the merger. In the highly competitive aerospace industry and despite also facing production issues and a corruption investigation, the firm’s management must revise both its short-term goals and future action plan.

Teaching Note: 8B14M028 (14 pages)
Industry: Manufacturing
Issues: Aerospace; defence; portfolio decisions; product-market decisions; corruption; Europe
Difficulty: 4 - Undergraduate/MBA



TESU SZZ D.O.O.
David J. Sharp

Product Number: 9B13B017
Publication Date: 7/31/2013
Revision Date: 7/31/2013
Length: 7 pages

The chief executive officer of Tesu, a small manufacturing company in Croatia, and a consultant hired to solve Tesu's production problems both realize that the company has several problems, the most pressing of which is a shortage of cash. Together, they need to come up with a plan to restore cash flow and improve production efficiencies.

Teaching Note: 8B13B017 (9 pages)
Industry: Manufacturing
Issues: Cash flow; lean manufacturing; turnaround; Croatia
Difficulty: 4 - Undergraduate/MBA