G. Russell Barber, Jr.
The case method of instruction offers a unique opportunity
to develop sound business judgment, but certain cases are
conceptually difficult, particularly time-consuming and tedious for students to prepare. As a result, effective and efficient classroom discussion is impeded. I teach an MBA managerial accounting course using the case method. Some cases are adaptable to the use of spreadsheet models. The learning objectives of the use of these models are to: (1) enhance the effectiveness and reduce the amount of student preparation time; (2) enhance the effectiveness of classroom learning time by clarifying conceptually difficult points during preparation; (3) reduce tedious and repetitive calculation time; (4) provide supplemental information; and (5) increase interest levels by using the spreadsheet as a learning tool during classroom discussion. I will describe the computer assisted approaches I use with two example cases. The complete Lotus or Excel computer models can be downloaded by the reader from the web at
Lipman Bottle Company
The Lipman Bottle Company case (Harvard Business School
181-076) illustrates the use of full cost information to set printing prices. The company is a distributor which also prints labels on bottles.
The case provides a 10-month income statement, showing
variable cost per machine hour and per 1,000 passes (or separations), and fixed cost. A schedule showing shipping and scrap costs is given. Difficult to understand information is provided about printing operating time and how setup time and cost might be figured.
Students are instructed to calculate variable cost per 1,000 bottles, and a suggested price list, with a 30% margin on sales, for printing of 24 alternatives of bottle sizes, order sizes, and one- and two-separation combinations for Albany and for New York-New
Jersey. Students are told to calculate the costs and suggested prices for a specified alternative by hand. Next, they are to bring up the Lotus or Excel model which contains the solution. A highly
condensed version of the model is shown below.
1. Input data in column D of the Variables section of the
Constants that do not change:
Variable cost (VC) per machine hour, etc.
Variables that can change:
Bottle size in oz (1 or 32)
Shipping, in $ ($1.06 or $26.19), etc.
Output (per thousand bottles)
Total VC for Albany (details omitted)
Total VC for NY/NJ
Suggested price (details omitted)
Albany, $41.77 NY/NJ,
To calculate the other 23 alternatives (both before and in
class) students must make careful decisions about the values and proper variables (bottle size, order size, shipping, etc.) to change, but the spreadsheet model clarifies and provides feedback on their analytical process, and is a significant time saver for discussion and analysis.
Birch Paper Company
Birch Paper Company (Harvard Business School, 158-001) is
a vertically integrated manufacturer of paper and boxes. The case focuses on negotiations of a transfer price per gross for a retail display box that can be produced by the Thompson Division and sold to the Northern Division, which produces paper.
complicating factor is that Thompson can purchase materials
internally, from the Southern Division. Northern=s manager
received two, lower outside bids. Erie offered to purchase some materials and printing services from Birch. The case gives just enough information so a student can dig out Birch=s out-of-pocket (variable) costs, which suggest that from Birch=s perspective, Thompson is the low bidder.
Neither the text nor the case provide sufficient information to explore complex issues of a lower limit for a transfer price, and the influence of full or excess capacity. I have developed a handout...