Case Study Cj Industries and Heavey Pumps

In using the ABC system, Valves and Pumps are matching the company’s target of 35% of gross margin apart from Flow Controllers. With the use of TAC, the gross margin on pump sales is 19.5% that well below the company's target gross margin of 35%. This indicates that the current overhead cost allocation practice did not reflect the real costs incurred on the products. The lower actual gross profit obtained was mainly due to wrong cost allocation on the pump product.

company’s finished goods inventory has shot up to a 60 days supply – twice the normal level. In addition,

Wilkerson’s competitors have cut prices on their pumps, in order to maintain market share, Wilkerson also cut the price of their pumps. This dropped Wilkerson’s GM by about 15%. At the same time, Wilkerson was able to increase the price of their flow controllers by 10% without a drop in demand.

g. On December 31, 2012, the company completed the work on a contract for an out-of-province company for $7,900 payable by the customer within 30 days. No cash has been collected and no journal entry has been made for this transaction.

As Motorking Corporation considers introducing its now “gas extender” product into the market, the management must consider various factors to determine if this is a good financial move. The production manager needs to determine if the product will generate a profit for the corporation, how much product is expected to sell to determine how much to produce and how much to outsource.

The immediate issue is to make a decision on the future of the family company.

The industry is an important customer of the supplier since it’s the only industry it sells to. (Assuming there is no other use of the injection modeled technology. Low.

Looking at the parties involved in the negotiation, it was clear that each party would have agendas that would be in conflict with each other. For instance, the other ports in the region would like the highest compensation possible while Harborco would like the lowest compensation. Additionally, each party would also have a minimum threshold score that they would need from each outcome before they would support the project. Therefore, it is clear that this is an integrative negotiation which requires joint problem solving to achieve

3.) The estimated product costs for valves, pumps, and flow controllers using ABC for overhead activities (primarily Ex. 1 & 4) and direct cost data from the Exhibits are:

3) Interaction with people who use the part – Mr. Watkins frequently visits the plant floor and talks with the workers to see if there are any concerns with materials. If a need exists, a requisition form is filled out and the purchase will be made. These requests are usually from members of the engineering team and each engineering manager is responsible for forecasting, quality, and controlling cost for his/her specific section.

The TexasAgs oil company case study gave us insights on different aspects of a negotiation that can happen in real world scenarios. It elegantly portrayed the importance of having a BATNA, setting target and restriction points, impact of the fluctuating markets on the ongoing negotiations, downside of the emotional behavior, importance of having a third party member or mediator in the negotiation. The case illustrates that the negotiations should be based assumptions as they may or may not be right. Having facts and understanding the other parties true objectives and goals are truly essential in negotiation. It is a typical example of how the current power on one side can dominate and take complete advantage of their position.

1. What is the competitive situation faced by Wilkerson? The critical product in term of market competition is the pumps of Wilkerson Company. The pumps are Wilkersons major product line with a production of about 12,500 units per month. Pumps currently have the lowest gross margin among all products, because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with Wilkersons cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is, that they should not adopt

1) Compare and contrast the new plant to the old in terms of work design. Identify and rank order the most challenging problems and describe possible solutions.

1. Describe the nature of the sourcing teams (those responsible for making purchase decisions of fracturing fluid) at BNG.

2. Should CJI continue to use Heavey to supply pumps, should they make them in-house, should they consider one of the other suppliers, or should they do some combination of these alternatives? Discuss the advantages, disadvantages, and risks of each of these alternatives.