Kanthal

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Kanthal Case Analysis Dr. Joseph Szendi Managerial Accounting 640 Yega Tita Company Background /History……………………………………............………2 Current System………………………………………………………………………..4 Dilemma ……………………………………………………………………………….4 Options/Solutions………………………………………………………………….….5 Analysis…………………………………………………………………………………6 Competitive Forces……………………………………………………………………6 Porters Five Forces …………………………………………………………………...7 SWOT Analysis………………………………………………………………………..8 Strengths ……………………………………………………………………………...8 Weaknesses…………………………………………………………………………..…8 Opportunities…………………………………………………………………………...8…show more content…
This cost system treated most, sales, marketing, and administrative costs as fixed costs or as a percentage of sales revenue. This simplistic approach was used to allocate overhead costs. Indirect costs were manufacturing costs that were allocated to products based on direct labor, or they were selling & administrative costs that were treated as period expenses and were unanalyzed. In this system if a customer sales price exceeded the full manufacturing cost plus the allocation of SM&A (sales, marketing, and administrative costs) then the customer appeared to be profitable when in fact the customer wasn’t profitable at all. DILEMMA: In 1985 Carl- Erik Ridderstrale became president he developed the Kanthal 90 needed a strategy for the profitable and very high volume customers. Under the current cost system it was assumed that all customers placed the same demand on the resources of Kanthal, when in fact customers differed by service and demand. This lead to orders representing hidden profits. An order that placed fewer demands on the company’s resources would be overcastted and appear to be profitable or less profitable than it was. Or an order would appear to be more profitable than it was; this was considered to be a

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