Cases for Management Decision Making

Topics: Costs, Variable cost, Cost Pages: 37 (11463 words) Published: January 24, 2012
Cases for Management Decision Making

suggested uses of cases
Greetings Inc.: Job Order Costing
Greetings Inc.: Activity-Based Costing
Greetings Inc.: Transfer Pricing Issues
Greetings Inc.: Capital Budgeting
Auburn Circular Club Pro Rodeo Roundup
Sweats Galore
Armstrong Helmet Company
This case is the first in a series of four cases that presents a business situation in which a traditional retailer decides to employ Internet technology to expand its sales opportunities. It requires the student to employ traditional job order cost- ing techniques and then requests an evaluation of the resulting product costs. (Related to Chapter 2, Job Order Costing.) This case focuses on decision-making benefits of activity-based costing relative to the traditional approach. It also offers an opportunity to discuss the cost/ benefit trade-off between simple ABC systems versus refined systems, and the potential benefit of using capacity rather than expected sales when allocating fixed overhead costs. (Related to Chapter 4, Activity-Based Costing.) This case illustrates the importance of proper transfer pricing for decision making as well as performance evaluation. The student is required to evaluate profitability using two different transfer pricing approaches and comment on the terms of the proposed transfer pricing agreement. (Related to Chapter 8, Pricing.) This case is set in an environment in which the company is searching for new op- portunities for growth. It requires evaluation of a proposal based on initial esti- mates as well as sensitivity analysis. It also requires evaluation of the underlying assumptions used in the analysis. (Related to Chapter 12, Planning for Capital Investments.) This comprehensive case is designed to be used as a capstone activity at the end of the course. It deals with a not-for-profit service company. The case involves many managerial accounting issues that would be common for a start-up business. (Related to Chapter 5, Cost-Volume-Profit; Chapter 7, Incremental Analysis; and Chapter 9, Budgetary Planning.) This case focuses on setting up a new business. In planning for this new busi- ness, the preparation of budgets is emphasized. In addition, an understanding of cost-volume-profit relationships is required. (Related to Chapter 5, Cost-Volume- Profit, and Chapter 9, Budgetary Planning.) This comprehensive case involves finding the cost for a given product. In addi- tion, it explores cost-volume-profit relationships. It requires the preparation of a set of budgets. (Related to Chapter 1, Managerial Accounting; Chapter 5, Cost- Volume-Profit; Chapter 9, Budgetary Planning; Chapter 10, Budgetary Control and Responsibility Accounting; Chapter 11, Standard Costs and Balanced Scorecard; and Chapter 12, Planning for Capital Investments.) CA-2

case 1
Greet ings Inc. Greetings Inc.: Job Order Costing
Developed by Thomas L. Zeller, Loyola University Chicago, and Paul D. Kimmel, University of Wisconsin–Milwaukee THE BUSINESS SITUATION
Greetings Inc. has operated for many years as a nationally recognized retailer of greeting cards and small gift items. It has 1,500 stores throughout the United States located in high-traffic malls. As the stock price of many other companies soared, Greetings’ stock price re- mained flat. As a result of a heated 2010 shareholders’ meeting, the president of Greetings, Robert Burns, came under pressure from shareholders to grow Greetings’ stock value. As a consequence of this pressure, in 2011 Mr. Burns called for a formal analysis of the company’s options with regard to business op- portunities. Location was the first issue considered in the analysis. Greetings stores are located in high-traffic malls where rental costs are high. The additional rental cost was justified, however, by the revenue that resulted from these highly visi- ble locations. In recent years, though,...
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