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G.G. Toys
by Susan Kulp Dennis CampbellThis case highlights issues of management accounting and includes a review of product costing, excess capacity, variance analysis, and scrap costs.
Introduction to Responsibility Accounting Systems
by David F. Hawkins Jacob CohenIntroduces responsibility accounting systems.
Superior Manufacturing Co.
by David F. Hawkins James W Culliton Jacob CohenManagement must extract relevant cost data from the company's cost accounting system for product line decisions. A rewritten version of an earlier case.
Hala Madrid: Managing Real Madrid Club de Futbol, the Team of the Century
by Rosario M. De Albornoz F. Asis Martinez-JerezFlorentino Perez, the president of Real Madrid, a leading European soccer team, is preparing for a press conference in which he will be asked about his plans for the coming season. Economic success and some sports mishaps during the prior season represent the scenario in which planning decisions are made.
Land Securities Group (A): Choosing Cost or Fair Value on Adoption of IFRS
by Edward J. RiedlA U.K. real estate firm, required to adopt international accounting standards (IAS) by 2005, must change the reporting of its primary asset (investment property) from the revaluation model under U.K. GAAP to either the cost or fair-value model under IAS. This would have a number of effects on European investment property firms, including Land Securities.
Process of Going Public in the United States
by Gregory S. MillerSummarizes the process of going public: the steps for SEC approval, the role of the SEC, and the roles of major players such as underwriters and printers.
Henkel Iberica (A)
by F. Asis Martinez-Jerez V. G. Narayanan Lisa BremIn 2002, Esteban Garriga, customer service director at Henkel Iberica, questions whether Collaborative Planning, Forecasting, and Replenishment (CPFR) would help manage retail promotions and limit their impact on the stock-outs and obsolete inventory. Describes the situation facing Henkel Iberica, the Spanish subsidiary of the German consumer products company Henkel KgaA, with respect to the management of retail promotions. The increasing number of promotions and the complexity of the company portfolio seriously taxed Henkel Iberica's sales, production, and distribution systems. Many in the organization believed the company should abandon or cut back promotions and adopt an everyday low pricing strategy. Garriga believes the solution to be in CPFR. Describes Henkel Iberica's operations and provides the necessary background to discuss whether CPFR is the adequate solution for its problems.
Harley-Davidson, Inc.: Motorcycle Manufacturer or Financing Company?
by Gregory S. Miller Jacob CohenHarley-Davidson manufactures and sells motorcycles. It also provides financing for retail purchases and dealer stock. Although Harley's performance has been very strong, analysts and the press have questioned its use of a special-purpose entity to sell securities collateralized by its financing activities. Harley's management must decide how to balance the street's suspicion of this activity with its strategy of providing a "whole motorcycle experience" and the high level of profits created by the current arrangement.
Procurement at Betapharm Corp. (A)
by Susan Kulp Taylor RandallPresents a move by Betapharm to centralize procurement and e-sourcing and the many control and incentive issues that arose subsequently.
Costing Alternative Choices
by David F. Hawkins Jacob CohenDiscusses the role of differential cost and revenues in solving alternative choice problems.
Musimundo
by James R. Dillon F. Asis Martinez-JerezMario Quintana, managing partner of Pegasus Capital, was preparing for the upcoming Musimundo board of directors meeting. He was satisfied with the investment decisions of the entertainment retailer, as actual performance surpassed the initial budget. However, given a recent market rebound, Quintana worried that the firm might be falling short of its potential. Additionally, the board of directors would have to analyze a proposal to reset sales targets for the different stores.
Stamford International Inc.
by David F. HawkinsManagement is struggling to meet consensus quarterly earnings-per-share numbers. Discusses a number of accounting decisions. A report indicating internal control problems in one of the company's divisions raises a Sarbanes-Oxley certification issue. A rewritten version of an earlier case.
Introduction to the Management Control Process
by David F. HawkinsCovers the management control process.
Assessing Accounting Risk
by David F. HawkinsDescribes a framework that financial analysts can use to assess the likelihood of accounting misstatements in financial statements.
Activity-Based Costing and Capacity
by Robert S. KaplanDiscusses the use of budgeted rather than historical data in an activity-based costing (ABC) model and argues for calculating rates using practical capacity, not actual utilization. An ABC model need not be limited to analysis of historical data. When cost driver rates are calculated based on forecasted data, they can be used proactively for decisions such as pricing and order acceptance. Second, to avoid distortion of cost driver rates caused by unused capacity, the rates should be calculated using the practical capacity of the resources performing the activity. Discusses how to estimate practical capacity in various situations, including lumpy capacity acquisition, ramp-up of capacity utilization, seasonal and peak-load capacity, and differing service quality levels from supplied capacity.
Executive Compensation at General Electric (A)
by Michele Jurgens V. G. NarayananFaced with falling share prices and the critical eye of the media focused on Jack Welch's retirement plan, newly appointed CEO Jeff Immelt had the challenge of reassessing GE as a leader of corporate integrity and good governance. Presents the changes Immelt initiated in the board of directors, in Immelt's own compensation scheme, and in the compensation scheme for all GE executives, designed to address GE's corporate governance issues. Examines the use of stock options and alternative stock-based incentive schemes, along with the importance of each tool in a total compensation plan. A rewritten version of an earlier case.
Accounting for Asset-Backed Securitization
by Gregory S. Miller Jacob CohenIntroduces the basic concept of asset securitization and the accounting for these transactions.
Domestic Auto Parts
by Robert S. KaplanDescribes a meeting of an executive team to discuss strategy for a company turnaround. The exercise is to construct a strategy map and Balanced Scorecard to capture the new strategy.
Accounting at MacCloud Winery
by Robert S. Kaplan David F. Hawkins Gregory S. MillerUses a fictional new winery to introduce accounting concepts and practices such as assets, liabilities, expenses, the matching principle, and contingent activities. Designed to approach the subject at a conceptual level, allowing class discussion to focus on the underlying thought process regarding accounting, rather than on "proper" numerical calculations.
Financial Reporting Problems at Molex, Inc. (A)
by Paul M. HealyFollowing an accounting problem at Molex, the firm's auditors request changes in management. The board of directors has to decide whether the auditors' concerns have merit or whether, as management argues, the accounting issue is immaterial.
Kemps LLC: Introducing Time-Driven ABC
by Robert S. KaplanKemps is making a strategy shift: from being focused on fulfilling customer requests to becoming the best cost dairy producer in the industry. Its existing manufacturing cost system, however, fails to capture the costs associated with handling special flavors, small production orders, and complex delivery and order processing options. The company introduces a new system--time-driven, activity-based costing--that captures the full complexity of its operations and gives managers new insights into the profitability of orders, products, and customers. The time equations feature simply and accurately represents the cost impact of all possible options from a particular production order. Managers use the information to enhance process efficiencies, negotiate new terms with customers, and attempt to win new business. The company now faces some crucial decisions about how to forge new relationships with key customers.
Understanding Customer Profitability at Charles Schwab
by F. Asis Martinez-JerezCharles Schwab is transforming into a customer-centric organization. Central to this cultural and organizational change is the utilization of customer profitability at different decision-making levels. Examines several technical aspects of the ABC cost system, as well as the change in budgeting and performance measurement introduced by the new profitability system. The system also shows how ABC informs segment and individual customer decisions (such as pricing or process improvement). Also examines Charles Schwab's necessary organizational changes (incentives, decision rights, etc.), as customer centricity is implemented throughout the firm.