Catawba Case

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|2.3 Explain the purpose of identifying timescales, priorities and financial resources needed |Question 4 Page 4 |

Consulting Group to reduce inventory levels in its main plant. After six weeks, however, work-inprocess inventory had actually increased by 13%.

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Develop and diagram an activity based cost model using the information in the case. Provide your best estimates about the cost and profitability of Wilkerson’s three product lines. What difference does your cost assignment have on reported product costs and profitability? What causes any shifts in cost and profitability?

warehouse was starting to form and her help was able to grow. With the medical supplies

proportion of expected under filled cases decreased, the amount of re-work labor to handle them also decreased.

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However, as a new member with a new product, electronic product in North American market, the reputation is also an important attribute. Especially, quick delivery time is a key attribute for this company, due to the demand of quick delivery in all markets. Moreover, the manufacturing process of the new product, electronic product, on which our company will definitely focus, has a lot demands. Such as, technology, innovation and quick delivery time even the ability to make the product be the first one appearing in the market (other company, which is developing the same product, may become our competitive opponents). Especially, technology is predicted to play the most important role in the manufacturing process. On the other hand, the traditional cost system has a lot of limitations. Traditional costing system focuses on the cost reduction and the efficiency, particular the products with relatively few standardized components; Clifton, however, produces a wide range of airplane components. In addition, nonfinancial aspects of

When Tim Morrissey saw the operating result for 1985 he walked into the office of his chief accountant Caroline Cooper and asked her how much confidence he should place in the split of operations between stoves and ovens. The loss on stoves was not really surprising to him given the tough market for that product, but he wan’t sure how Cooper had assigned costs and revenues.

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used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,

John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.

with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was