Ilmajoki-Lumber Oy has a Raw Lumber Division and Finished Lumber Division. The variable costs are: ● Raw Lumber Division: €100 per 100 board-meters of raw lumber. ● Finished Lumber Division: €125 per 100 board-meters of finished lumber. Assume that there is no waste incurred in processing raw lumber into finished lumber. Raw lumber can be sold at €200 per 100 board-meters. Finished lumber can be sold at €275 per 100 board-meters. Required 1. Should Ilmajoki-Lumber process raw lumber into its finished form? 2. Assume that internal transfers are made at 110% of variable costs. Will each division maximize its contribution to divisional operating profit by adopting the action that is in the best interests of Ilmajoki-Lumber? 3. Assume that internal transfers are made at market prices. Will each division maximize its contribution to divisional operating profit by adopting the action that is in the best interests of Ilmajoki-Lumber?
> In November 2020, a consultant was employed to review and document the planning and control systems of Integrated Technology Services (UK) Ltd (ITS-UK), to ensure that these were effectively meeting the needs of the business and to provide a basis for st
> Dave Barry, an engineer, is the general manager of the Beta Company, which manufactures a general range of animal food products. Since joining the company, the sales have been static in both volume and value terms. Now, at the start of the New Year, a po
> Alan Chadwick is the Chairman and Managing Director of Chadwick’s Department Store Ltd. This is the company that operates Chadwick’s, a large independent department store that has been family owned and run for over 100 years. It was started in 1906 by Si
> Amica Foods Ltd. produces a very wide range of food products in a highly competitive industry, almost all under the Primus brand name, which is widely recognized as representing high-quality food products with a loyal customer following. Almost all of t
> Anjo Ltd was established in 1986 by two brothers, Andrew and Jonathan Bright. They saw a market for providing accessories in the home to accommodate the new era of home entertainment, and more recently expanded their range to account for a resurgence i
> Airport Complex was founded in Northern Europe in the early 1960s, and at the time it primarily served as a domestic airport. During the 1980s, flights to foreign destinations became an ever more vital activity for the airport. Today, the airport funct
> Southern Paper Inc. is a global packaging company headquartered in the US. The company was founded in the 1880s and has three principal business sectors – forest products, packaging and papers. The forest products division supplies lumber to the constr
> Professor John Shank, The Amos Tuck School of Business Administration Dartmouth College This case was originally set in Western Europe in 1974, just after the Arab oil shocks of 1972 and 1973. National borders were still very important business barriers.
> Merrion Products Limited is a company owned by the Carroll family. The company manufactures hand-made chocolate biscuits from imported South American cocoa, which are sold to a small number of large retail outlets in the local area. When the company was
> The Managing Director of the Kiddy Toy Company (KTC) needs to decide whether a special export order should be accepted or rejected, with reasons provided, for the manufacture of Panda bears. The background Official statistics indicate that China manufact
> Hardhat Ltd.’s budget committee, which has members drawn from all the major functions in the business, is meeting to consider the projected income statement for 2020/2021, which is composed of the ten months’ actuals t
> Fosters Construction Ltd (FCL) is a privately owned company with revenue of £20 million per annum, and 200 employees. The company has been operating for 24 years and is well established in the marketplace. However, despite a national rate of 4 per cent p
> Mestral is a highly successful company manufacturing a range of quality bathroom fittings. For the past fifteen years production has been carried out at three locations: Northern town in the North East of England; at Western town on the Severn estuary;
> Fleet operates a chain of high street retail outlets selling clothing and household items. In 2019 this company was heading for a financial loss and was deemed to have lost strategic direction. The business formula that had proved successful in the 1980s
> The Board of Dumbellow Ltd are meeting on the 23rd January to discuss the draft budget for 2022/23, some two months before the start of that year. The company produces three industrial valves which are incorporated into equipment used in the Oil and Gas
> The case was prepared as the basis for discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Danfoss Drives A/S is a Danish producer of frequency converters located in Graasten in the southern part
> Company B is a manufacturer of large, complex electrical motors. It has been making them 'to order', in order quantities of, typically, one-four in a jobbing/batch production system for many years. A typical selling price may range from £3,000-£20,000
> Company A is in the chemical industry and a manufacturer of industrial paints. At one of its manufacturing sites (site 1) a new system of costing and management information is being considered to replace a traditional system, which was not meeting fully
> This is a general case relating to joint costs allocation. Although it may be difficult to determine a proper allocation basis for a common cost, the broad objectives for allocating common costs are the same as those for separate costs – cost control and
> At the beginning of September, Paul Owen, the new manager of a division of Bohemia Industries, received the August income statement. He was surprised that the profit had declined from that reported for the previous month. He was expecting an increase in
> Introduction Jack Watson, an electrical engineer, established Electronic Boards plc as a ‘one-man’ company in the late 1970s. From small beginnings, the company earned a reputation for the quality and reliability of i
> John Ford, updated by Denny Emslie, Senior Lecturer in Accounting, University of Fort Hare, 2020 Topics covered include: break-even analysis, marginal/contribution costing, gross margin, sunk costs and cost/overhead recovery Founded in 2000, the Gordon
> A Self-supporting Legacy or a Burdensome White Elephant? In the run-up to the 2010 World Cup, South Africa built new stadia according to a blueprint devised by world football’s organizing body, FIFA. The country was keen to present the event in iconic, p
> The word Kai translates to change, and the word Zen translates to better. Together they are taken as change for the better or continuous improvement. Kaizen is part of a methodology known as lean manufacturing which aims to remove waste through continu
> Freedom Products has just organized a new department in their organization to manufacture and sell specially designed tables made from indigenous South African wood. The division has imported new equipment and machinery. Due to the high level of automati
> Melanie-Jane Brown started manufacturing her own face creams some years ago, having worked for some time for one of the large international cosmetic companies. Initially, she made face creams for herself and a few friends and, in response to their encou
> Grass Cutter Mechanic (GCM) manufactures and sells four types of grass cutters, used mainly by farmers. The details of the four different products are given below and relate to June 2020. In the manufacturing of the four products, similar technology is a
> One of the fastest growing sectors in the South African economy is telecommunications and the current expansion is focused on the growth of the mobile telephone market. South Africa is the fourth fastest growing mobile communications market in the world.
> The International Ecotourism Society (TIES) defines Ecotourism as ‘responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and educationâ€&#
> First National Bank is a wholly owned division of FirstRand Bank Limited and is one of South Africa’s largest banks. The bank provides a broad range of financial services to individuals and businesses. FNB’s mission is ‘To move from good to Great by buil
> The SC Company manufactures and markets specialized products for use in the air purifying industry. The company is divisionalized and their operations are structured as follows. Department AC The main focus of Department AC is Research and Development. I
> The following information relates to Socks 'n' Stockings (Pty) Ltd, a wholly owned subsidiary of a major listed group. As investment bankers to the group you have been approached by the financial director who makes the following requests: • The company i
> Potty Plants produces large clay pots at their production plant on the Rose path Acre Woods. Peter, the newly appointed general manager of Potty Plants, has just received the income statement for February 2021, presented below: Peter was shocked to see t
> NuLife Limited is an investment holding company which operates through a number of subsidiaries and employs over 20,000 people. NuLife operates private hospital, primary healthcare, emergency medical services and renal care networks in South Africa. In a
> There are a number of large supermarket chains in South Africa which account for the majority of national retail food sales. They sell large quantities of groceries and other consumer goods, mostly on a self-service basis and increasingly via the online
> Air Gascogne operates daily round-trip flights on the Toulouse–Stockholm route using a fleet of three 747s, the Eclair des Cévennes, the Eclair des Vosges and the Eclair des Alpilles. The budgeted quantity of fuel for each
> Anna-Greta Lantto, the assistant controller of Kiruna AB had recently prepared the following quality report comparing 2018 and 2017 quality performances. Just two days after preparing the report, Lars Törnman, the controller, had called Lant
> Carmody Ltd sells 300 000 V262 valves to the car and truck industry. Carmody has a capacity of 110 000 machine-hours and can produce three valves per machine-hour. V262’s contribution margin per unit is €8. Carmody sel
> Braganza manufactures and sells 20 000 copiers each year. The variable and fixed costs of reworking and repairing copiers are as follows: Braganza’s engineers are currently working to solve the problem of copies being too light or too d
> MikkeliOy has three operating divisions. The managers of these divisions are evaluated on their divisional operating profit, a figure that includes an allocation of corporate overhead proportional to the revenues of each division. The operating profit st
> The Portimão Division of AmicaLda sells car batteries. Amica’s corporate management gives Portimão management considerable operating and investment autonomy in running the division. Amica is considering how it should compensate Manuel Belem, the general
> Thor-Equip AS specialises in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Knut Solbær, president of Thor-Equip, decided to revise the bonus plan (based, at the time, e
> Serra-Mica Srl is a maker of ceramic coffee cups. It imprints company logos and other sayings on the cups for both commercial and wholesale markets. The firm has the capacity to produce 3 000 000 cups per year, but the recession has cut production and sa
> Salvador SA assembles motorcycles and uses long-run (defined as 3–5 years) average demand to set the budgeted production level and costs for pricing. Prices are then adjusted only for large changes in assembly wage rates or direct mater
> Faulkenheim GmbH is a manufacturer of tool and die machinery. Faulkenheim is a vertically integrated company that is organized into two divisions. The Frankfurt Steel Division manufactures alloy steel plates. The Tool and Die Machinery Division uses the
> 1. Discuss the conditions under which the introduction of ABC is likely to be most eective, paying particular attention to: product mix; the significance of overheads and the ABC method of charging costs; the availability of information collection proced
> Récré-Gaules SARL produces and distributes a wide variety of recreational products. One of its divisions, the Idefix Division, manufactures and sells ‘menhirs’, which are very popular with cro
> Refer to the information in Exercise 18.17. Suppose that the Mining Division is not required to transfer its yearly output of 400 000 units of toldine to the Metals Division. Required 1. From the standpoint of Escuelas, SA, as a whole, what quantity of
> Escuelas SA has two divisions. The Mining Division makes toldine, which is then transferred to the Metals Division. The toldine is further processed by the Metals Division and is sold to customers at a price of €150 per unit. The Mining
> Refer to Exercise 18.13. Assume that Division A can sell the 1000 units to other customers at €155 per unit with variable marketing costs of €5 per unit. Required Determine whether Gustavsson will benefit if Division C purchases the 1000 components fr
> Gustavsson AB, manufacturer of tractors and other heavy farm equipment, is organized along decentralized lines, with each manufacturing division operating as a separate profit centre. Each divisional manager has been delegated full authority on all decis
> Montaigne-Chimie SA consists of seven operating divisions, each of which operates independently. The operating divisions are supported by a number of support divisions such as R&D, labor relations and environmental management. The environmental managemen
> SBA is a company that produces televisions and components for televisions. The company has two divisions, Division S and Division B.Division S manufactures components for televisions. Division S sells components to division B and to external customers. D
> AA and BB are two divisions of the ZZ Group. The AA division manufactures electrical components, which it sells to other divisions and external customers.The BB division has designed a new product, Product B, and has asked AA to supply the electrical com
> A company, which operates from a number of different locations, uses a system of centralized purchasing. The directors of the company are considering whether to change to a system of decentralized purchasing. Required Explain the benefits that may res
> Assume all the information in Exercise 12.15. Marcel has just received some bad news. A foreign competitor has introduced products very similar to P-41 and P-63. Given their announced selling prices, he estimates the P-41 clone to have a manufacturing co
> P Ltd has two divisions, Q and R that operate as profit centers. Division Q has recently been set up to provide a component (Comp1) which division R uses to produce its product (ProdX). Prior to division Q being established, division R purchased the comp
> The ZZ Group has two divisions, X and Y. Each division produces only one type of product: X produces a component, C and Y produces a finished product, FP. Each FP needs one C. It is the current policy of the group for C to be transferred to Division Y at
> ZP Plc operates two subsidiaries, X and Y. X is a component manufacturing subsidiary and Y is an assembly and final product subsidiary. Both subsidiaries produce one type of output only. Subsidiary Y needs one component from Subsidiary X for every unit o
> All personnel, including partners, of public accounting firms must usually turn in biweekly time reports, showing how many hours were devoted to their various duties. These firms have traditionally looked unfavorably on idle or unassigned staff time. The
> Calypso SA manufactures and sells fertilizers. Calypso uses the following standard direct materials costs to produce 1 tons of fertilizer Note that 1.2 tons of input quantities are required to produce 1 ton of fertilizer. No stocks of direct materials ar
> Tropical AB processes tropical fruit into fruit salad mix, which it sells to a food-service company. Tropical has in its budget the following standards for the direct materials inputs to produce 80 kg of tropical fruit salad: Note that 100 kg of input q
> Marko Antero Oy produces perfume. To make this perfume, Marko Antero uses three different types of fluid. Tartars, Erebus and Uranus are used in standard proportions of 4/10, 3/10 and 3/ 10, and their standard costs are €6.00, â
> X Ltd uses an automated manufacturing process to produce an industrial chemical, Product P. X Ltd operates a standard marginal costing system. The standard cost data for Product P is as follows: In order to arrive at the budgeted selling price for Produ
> Deadeye Ltd operates a standard costing system in which all stocks are valued at standard cost. The standard direct material cost of one unit of product MS is £36, made up of 4.8 kg of material Hat £7.50 per kg. Material H is u
> The Antwerp Lions play in the Flemish Football League. The Lions play in the Antwerp Stadium (owned and managed by the City of Antwerp), which has a capacity of 30 000 seats (10 000 lower- tier seats and 20 000 upper-tier seats). The Antwerp Stadium char
> Baden-Möbel GmbH manufactures a variety of prestige boardroom chairs. Its job-costing system was designed using an activity-based approach. There are two direct-cost categories (direct materials and direct manufacturing labour) and three ind
> Les Cliniques du Parc reports the following information for July 2018 regarding its nursing staff consisting of nurses, nursing assistants and orderlies. Required 1. Calculate the total direct nursing labor efficiency variance for July 2018. 2. Calculat
> A company sells three products: D, E and F. The market for the products dictates that the numbers of products sold are always in the ratio of 3D:4E:5F. Budgeted sales volumes and prices, and cost details for the previous period were as follows: The budge
> The Safe Soap Co. makes environmentally-friendly soap using three basic ingredients. The standard cost card for one batch of soap for the month of September was as follows: The budget for production and sales in September was 120 000 batches. Actual prod
> O’Connell & Associates, a firm of architects, has three levels of professional staff: principals (managers), who manage all aspects of the architectural job; senior architects, who are responsible for the main designs; and junior ar
> Mondragon SA assembles its CardioX product at its Toledo plant. Manufacturing overhead (both variable and fixed) is allocated to each CardioX unit using budgeted assembly-time hours. Budgeted assembly time per CardioX product is 2 hours. The budgeted var
> PP Ltd operates a standard absorption costing system. The following information has been extracted from the standard cost card for one of its products: Actual results for the period were as follows: It has subsequently been noted that due to a change in
> Braithwaite Ltd manufactures and sells a single product. The following data have been extracted from the current year’s budget: The company’s production capacity is not being fully utilised in the current year and thre
> Coaldale Ltd manufactures and sells product CC. The company operates a standard marginal costing system. The standard cost card for CC includes the following: The budgeted and actual activity levels for the last quarter were as follows: The actual costs
> Migratory Ltd, which manufactures a single product, uses standard absorption costing. A summary of the standard product cost is as follows: Budgeted and actual production for last month were 10 000 units and 9000 units respectively. The actual costs incu
> Willem Nijmegen manages the warehouse of Stinted NV, a mail-order firm. Nijmegen is concerned about controlling the fixed costs of the 20 workers who collect merchandise in the warehouse and bring it to the area where orders are assembled for shipment. E
> Henriksen AS manufactures and sells packaging machines. It recently used an activity-based approach to refine the job-costing system at its Vejle plant. The resulting job-costing system has one direct-cost category (direct materials) and four indirect ma
> L’Evénement du Demarche budgets to produce 300 000 copies of its monthly newspaper for August 2018. It is budgeted to run 15 000 000 print pages in August with 50 print pages per newspaper. Actual production in August 2018
> Lavertezzo allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2018 are budgeted, SFr 62 400, and actual, SFr 63 916. Required 1. C
> MadetojaOy’s job-costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing lab
> Nolton-Ragnvald AS uses a standard costing system. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Nolton develops its manufacturing overhead rate from the current
> 1. Prepare a comprehensive set of variances for each of the four categories of cost of L’Evénement du Dimanche. 2. Comment on the results in requirement 1. What extra insights are available with a flexible budget analysis over that of a static-budget ana
> The Olsson-Langkilde Air Force Base has an extensive repair facility for jet engines. It developed standard costing and flexible budgets to account for this activity. Budgeted variable overhead at a level of 8000 standard monthly direct labor-hours was S
> Dansk mat AS operates a home meal delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who phone or fax in orders. Dansk mat is currently examining its overhead costs for May 2018. Variable-overhead costs for
> Drogheda Chemical adopts a continuous improvement approach to setting monthly standards’ costs. Assume the direct materials standard quantity input of 10 kg per output unit and the direct manufacturing labor quantity input of 0.5 hours per output unit pe
> Drogheda Chemical Ltd has set-up the following standards per finished output unit for direct materials and direct manufacturing labor: The number of finished output units budgeted for March 2018 was 10 000; 9810 units were actually produced. Actual resu
> Norland-Norge AS produces corporate notebooks. Each notebook is designed for an individual customer. The company’s operating budget for September 2018 included these data: The actual results for September 2018 were: The managing directo
> CJD Ltd manufactures plastic components for the car industry. The following budgeted information is available for three of their key plastic components: The total number of activities for each of the three products for the period is as follows: Overhead
> Ched Ltd manufactures Cheddar cheese pies. For January 2018, it budgeted to purchase and use 15 000 kg of Cheddar cheese at £0.89 per kg; budgeted output was 60 000 pies. Actual purchase and use for January 2018 was 16 000 kg at £0.82 per kg; actual out
> The budgeted prices for direct materials, direct manufacturing labor and direct marketing (distribution) labor per attaché case are €40, €8 and €12, respectively. The chairman is pleased wit
> AKEI is an elite desk manufacturer. At the start of May 2018, the following budgeted unit amounts (based on a standard costing system) related to its manufacture of executive desks (made out of oak): Direct materials: 16 square meters of oak per desk at
> Sharmila Khan is manager of TaxExperts.co.uk, a firm that provides assistance in the preparation of individual tax returns via the internet. Because of the highly seasonal nature of her business, Sharmila employs staff on a monthly basis from two account
> A company manufactures and sells a single product. The company operates a standard marginal costing system that enables the reporting of planning and operational variances. The original standard contribution per unit of the product for October, which was
> Poitou-Chemises SARL manufactures shirts for retail chains. Armand Plessis, the accountant, is becoming increasingly disenchanted with Poitou-Chemises’ six-month-old standard costing system. The budgeted amounts for both its direct mate
> Sam Chase of Flowers.co.ke receives a brochure from the Hackett Group, a consulting firm specializing in benchmarking. He asks the Hackett Group to provide benchmark data from its recent study of the finance function at over 100 retail companies (both tr
> Sam Chase is the Finance Director of Flowers.co.ke, an internet company that enables customers to order home deliveries of flowers by accessing its website. Flowers.co.ke has a network of florists (‘strategic partners’
> AbulafiaSrl manufactures tyres for the Formula 1 motor racing circuit. For August 2018 Abulafia budgeted to manufacture and sell 3000 tyres at a variable cost of €74 per tyre and a total fixed cost of €54 000. The budgeted selling price was €110 per tyre
> ÁgústKarlsson is the purchasing agent for the Akureyri Manufacturing Company. Bjarni Jóhannesson is head of the Production Planning and Control Department. Every six months, Bjarni gives Ágúst a general purchasing programme. Ágúst gets specifications fr
> Wolfgang Iser, the accountant of Starkuchen, wants to further examine the relative profitability of raisin cake and layered carrot cake. He questions the accuracy of the activity-based normal costing numbers. He notes that the 2017 actual manufacturing i
