Stewart Box Company - Case Study
I. Executive Summary
The group provided recommendations on how to improve the control systems and planning processes of Stewart Box. Stewart Box is a profitable medium-sized manufacturing company that has several areas for improvement in its accounting, planning, budgeting and pricing methods. The group highlighted these weaknesses and gave proposals as to how the company can significantly improve its operations.
II. Case Context
Stewart Box is a packaging company that manufactures paperboard and cartons. Its paperboard division sells to external customers and supplies raw materials to the carton division. Outlined in the case are the planning and control systems that Stewart Box has in place.
III. Problem Definition
There is a need to review the control systems of Stewart Box to determine if these are configured to properly evaluate the performance the company and its departments. Its management procedures also need to be assessed to establish if the correct people are being involved.
IV. Framework for Analysis and Areas of Consideration
The group examined each system and evaluated them to see if they are aligned with Stewart Box's organizational structure and nature of business and if the correct people are involved. The group also scrutinized the control system to see if this effectively measures each department's performance and if it can pinpoint the sources of any variance.
V. Analysis
Below are the various systems that the company has in place, with the corresponding analyses.
Accounting
The company utilizes a job-cost accounting system using standard costs. These standard costs are based on the annual estimates of labor and factory overhead costs. If these estimates were inaccurate then the standard costs would be incorrect as well. The system must be more dynamic and must examine on a more regular basis (e.g. monthly or quarterly) the allocation of the overhead costs and make the necessary adjustments.
Additionally, job-costing requires the
The group provided recommendations on how to improve the control systems and planning processes of Stewart Box. Stewart Box is a profitable medium-sized manufacturing company that has several areas for improvement in its accounting, planning, budgeting and pricing methods. The group highlighted these weaknesses and gave proposals as to how the company can significantly improve its operations.
II. Case Context
Stewart Box is a packaging company that manufactures paperboard and cartons. Its paperboard division sells to external customers and supplies raw materials to the carton division. Outlined in the case are the planning and control systems that Stewart Box has in place.
III. Problem Definition
There is a need to review the control systems of Stewart Box to determine if these are configured to properly evaluate the performance the company and its departments. Its management procedures also need to be assessed to establish if the correct people are being involved.
IV. Framework for Analysis and Areas of Consideration
The group examined each system and evaluated them to see if they are aligned with Stewart Box's organizational structure and nature of business and if the correct people are involved. The group also scrutinized the control system to see if this effectively measures each department's performance and if it can pinpoint the sources of any variance.
V. Analysis
Below are the various systems that the company has in place, with the corresponding analyses.
Accounting
The company utilizes a job-cost accounting system using standard costs. These standard costs are based on the annual estimates of labor and factory overhead costs. If these estimates were inaccurate then the standard costs would be incorrect as well. The system must be more dynamic and must examine on a more regular basis (e.g. monthly or quarterly) the allocation of the overhead costs and make the necessary adjustments.
Additionally, job-costing requires the