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Lipman Bottle Case

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Sistemi di controllo - Analisi economiche per le decisioni aziendali 2/ed Robert N. Anthony, David F. Hawkins, Diego M. Macrì, Kenneth A. Merchant Copyright © 2004 – The McGraw-Hill Companies srl

Teaching notes Lipman Bottle Companv*
This case, unchanged tram the Ninth Edition, was prepared by Michael J. Sandretto. Copyright @ 1982 by the President and Fellows ofHarvard College. Harvard Business School Teaching Note 5-182-20 I.

Lipman Bottle Company is designed to illustrate cost accounting in a firm with a simple manufacturing process and with a relatively small product line. The cost accounting information, together with an industry leader 's price list, can be used to revise the price list of the firm. The primary objectives of …show more content…

Pricing I ask for variable costs for the remaining three bottles for sale in Albany (one pass). That is used as the basis for establishing Lipman 's published price list. Students soon establish a price list that is higher than the market for large orders of small bottles and lower than the market for smaller orders of large bottles. Discussion can then shift to two-separation bottles and to sales in the New York /New Jersey area. In the Albany area, ovals tend to be the most profitable product. In New York/New Jersey, Lipman 's most profitable products would be ovals and two-pass rounds. The main problem with selling to New York/New Jersey is that the firm ships by air, and freight cost per bottle increases rapidly with bottle size. Although the price list for the major competitors looks unreasonable, it is not an uncommon occurrence. Most firms in the industry used equipment similar to Lipman 's old equipment. Prices

Sistemi di controllo - Analisi economiche per le decisioni aziendali 2/ed Robert N. Anthony, David F. Hawkins, Diego M. Macrì, Kenneth A. Merchant Copyright © 2004 – The McGraw-Hill Companies srl

were probably set far in the past and updated only for inflation. In fact, the firm did change its price list and its bidding strategy to obtain the more profitable orders (smaller volume, large size, and most ovals) and to reduce orders that were unprofitable. Since the case was written, many competitors have obtained automatic equipment for ovals, so

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