EastvacoCase2011 (3) - Eastvaco, Inc. A Comprehensive...

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Unformatted text preview: Eastvaco, Inc. A Comprehensive Managerial Case – 3 rd Edition Supporting Files 1. Eastvaco, Inc., 10K Report 2. Ratio Worksheet Ratio Calculations Page 1 Page 2 Page 3 Page 4 Assignment Files 1. Initial Analysis of Eastvaco and the Charlotte Facility 2. Financial vs. Managerial Accounting 3. Discussion Overhead in the Breakroom 4. Activity Based Costing and Management 5. Controlling Cost and Performance Measures 6. Manufacturing Alternatives and Relevant Costs 7. Variance Analysis 8. Costing, Budgeting and Internal Reporting 9. Company Comparison and Evaluation 10. Organization Structure and Inter-Company Transfers 11. Global Commerce 12. Revised Analysis of Eastvaco and the Charlotte Facility s u p p o r t @ c a p s t o n e p u b l i s h i n g . n e t Name Activity Based Costing and Management Sue, the corporate controller, has thus far been impressed with your performance at the Charlotte plant. She thinks it is time for the Company to move forward with a more precise costing system. She meets with you to discuss if you are able to implement Activity Based Costing at Charlotte. Being on the fast-track, you are eager to demonstrate that you should be the successor to Sue and agreed to pilot ABC at Charlotte. You have gathered the following interim data for envelopes and cups. Total production overhead $5,017,500 Envelopes Cups Direct costs $8,250,000 $8,750,000 Units produced 1,500,000 350,000 Machine hours 200,000 50,000 Direct labor hours 34,500 153,625 Number of quality inspections 1,000 6,500 Revenue generated by the two products $15,000,000 $16,800,000 You have determined, using ABC, that overhead can be assigned to separate cost pools specifically: Pool 1 = $1,260,000 using machine hours as the cost driver Pool 2 = $2,257,500 using direct labor hours as the cost driver Pool 3 = $1,500,000 using the number of quality inspections as the cost driver Historically, Charlotte has used a single plant-wide rate, machine hours for the allocation of overhead. Required: 1. What are the steps in ABC implementation? 2. Provide 3 possible non-value added activities that the Charlotte facility may be experiencing? 3. Using the old plant-wide rate calculate gross profit and the rate of return on the two products. 4. Using the new cost pools and cost drivers calculate gross profit and the rate of return of the two products. s u p p o r t @ c a p s t o n e p u b l i s h i n g . n e t Name Company Comparison and Evaluation 1. Using the ratios provided in the file “RatioCalculations” calculate the ratios for Eastvaco. If you are unable to find sufficient data for any given area you must state so. 2. Go to the following URL: http://moneycentral.msn.com/investor/sec/filing.asp?Symbol=MWV This will take you to the 10Ks for Meadwestvaco. Use the 10K ending 12/31/2007 . Compare the results from requirement 1 and compare Eastvaco with Meadwestvaco. Which company would you consider to be the most financially viable and why?...
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This note was uploaded on 12/01/2011 for the course ACT 5060 taught by Professor Debroahpendarvis during the Fall '08 term at Nova Southeastern University.

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EastvacoCase2011 (3) - Eastvaco, Inc. A Comprehensive...

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