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Colin Drury, Management and Cost Accounting – Boston Creamery Boston Creamery Professor John Shank, The Amos Tuck School of Business Administration Dartmouth College This case is reprinted from Cases in Cost Management, Shank, J. K. 1996, South Western Publishing Company. The case was prepared by Professor John Shank from an earlier version he wrote at Harvard Business School with the assistance of William J. Rauwerdink, Research Assistant. This case deals with the design and use of formal "profit planning and control" systems. It was originally set in an ice cream company in 1973, a few years before the advent of "designer ice cream". Frank Roberts, Vice-president for Sales and Marketing of the Ice Cream Division of Boston…show more content…
Actually, this forecast was the same as the latest estimate of 1999 actual litre sales. Since the 2000 budget was being done in October of 1999, final figures for 1999 were not yet available. The latest revised estimate of actual litre volume for 1999 was thus used. Rather than trying to get too sophisticated on the first attempt at budgeting, Mr. Peterson had decided just to go with 1999's estimated volume as 2000's goal or forecast. He felt that there was plenty of time in later years to refine the system by bringing in more formal sales forecasting techniques and concepts. This same general approach was also followed for variable product standard costs and for fixed costs. Budgeted costs for 2000 were just expected 1999 results, adjusted for a few items which were clearly out of line in 1999. Original Profit Plan for 2000 Standard Contribution Forecasted Standard Margin/litre Vanilla Forecasted litre Sales Contribution Margin $.4329 2,409,854 $1,043,200 Chocolate .4535 2,009,061 911,100 Walnut .5713 48,883 28,000 Buttercrunch .4771 262,185 125,000 Cherry Swirl .5153 204,774 105,500 Strawberry .4683 628,560 294,400 Pecan Chip .5359 157,012 84,100 Total $.4530 5,720,329 $2,591,300 Colin Drury, Management and Cost Accounting – Boston Creamery Breakdown of Budgeted Total Expenses Variable Costs Fixed

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