第三届IMA管理会计案例大赛+案例英文版

August2012ISTRATEGICFINANCE47ByDavidAxelsson,MarcusFogelkvist,andGaryM.Cunningham,CPAKaySmithisfrustrated.ThemanagerofStrategicMarketingUnitTwo(SMU2)forFineFoods,Inc.,aproviderofbrandedhighqualityfoodproducts,Smithisunhappywithwhatsheperceivestobeunfairandinappropriateproductcostingforherunit,especiallyforwhatFineFoodsconsiderstobespecialorders.Smith’seducation,experience,andexpertiseasafoodscientistandprocessengineerhaveearnedhercon-siderablerespectatFineFoods,butshehaslimitedaccountingknowledge.Thislackofaccountingknowl-edgehasinhibitedherabilitytoexpressanddemonstrateherconcerns,whichsheviewsasserious.Believingsheisafastlearnerwithproperguidance,Smithhashiredyou,arecentaccountinggraduate,todevelopadraftmemo-randum,aslidepresentation,andaglossaryoftermstohelphermakehercasemoreforcefullytomanagement.FineFoods,Inc.FineFoods,Inc.,whichhasitsrootsintheupperMid-westUnitedStates,producesawiderangeoffoodprod-uctsinacompetitiveindustry.AlmostallitsproductsaresoldundertheFine’n’Fastbrandname,whichiswidelyrecognizedforitshighqualityandhasaloyalcustomerfollowing.Mostproductsarepackagedinsizesforendconsumptionandaresoldthroughsupermarkets,conve-nienceshops,andsimilaroutlets.Dependingonthenatureoftheproductandconsumerpreferences,prod-uctsaresoldfrozen,refrigerated,canned,boxed,orpack-agedinotherways.Someitems,likesmallindividualpacketsofketchup,mayonnaise,andmustard,aresoldtofastfoodrestaurantsandsimilaroutlets.Thecompanyalsosellshalf-galloncontainersofsaladdressings,ketchup,mustard,andsimilaritemswithaplasticpump2013STUDENTCASECOMPETITIONTheStudentCaseCompetitionissponsoredannuallybyIMA®toprovideanopportunityforstudentstointerpret,analyze,evaluate,synthesize,andcommunicateasolutiontoamanagementaccountingproblem.ProductCostingatFineFoods:IsItaSymptomortheProblem?andbrandedwiththecompanylogosothatrestaurantcustomerscanservethemselvesatsaladbarsandsimilarplaces.Otherproductsaresold,ofteninbulk,toinstitu-tionaluserssuchaslargefoodservicegroups,caterers,andthelike.Theseproductsmayormaynotbebranded.Asmallportionofsalesismadetootherfoodproducers,forexample,saladdressingpacketsaresoldtoproducersofpackagedfreshsaladgreens.FineFoods,Inc.doesn’tdealwithfreshproducts.FineFoods,Inc.isownedbyGreatPlainsCapital,aprivateequityfirm.GreatPlainsCapitalgivesFineFoodsalmostcompletefreedomandcontrolovermanagement,productselection,performanceevaluation,andsoforth.Becauseitisprivatelyowned,thereisnoexternalfinan-cialreporting,noristhereanyobligationtouseanysetoffinancialaccountingstandardsforinternalreporting.AnyexternalfinancialreportingisonagrouporconsolidatedbasisanddonebyGreatPlainsCapital.GreatPlainsCapitalalsoownsFineFoodsCanada,Ltd.,whichsellsproductsalmostexclusivelyinCanada,withprimaryoperationsnearbyintheprairieprovinces.FineFoods,Inc.andFineFoodsCanada,Ltd.don’thaveanymutualownershipineachother,andthere’snoman-agementconnectionbetweenthetwo.BecausethetwocompaniesproducemanyidenticalproductsusingtheFine’n’Fastbrand,theydosharerecipesandprocesstechnology.FineFoods,Inc.alsoproducessomeproductsforFineFoodsCanada,Ltd.thatdon’thavesufficientmarketsizeinCanadatojustifyseparateproduction.GreatPlainsCapitalalsoownssmallercompanieswiththeFine’n’FastnamethataremostlyimportersofFine’n’FastproductsincountriesoutsideoftheU.S.andCanadawherehighquality,brandedNorthAmericanfoodproductshavenichemarkets.TheseproductsareproducedbyFineFoods,Inc.FineFoods,Inc.(FineFoodsfromthispointforward)isorganizedintothreestrategicmarketingunits(SMUs)basedonthemarketstheyserve.SMU1servessupermar-ketsandsimilaroutlets.SMU2servesmostlyinstitutionalcustomerswhoorderinlargevolumesandofteninbulkquantities.SMU2alsosellsspecialordersfromtimetotimethatinvolveunbrandedbulkproductsthatareexported.SMU3servesaffiliatedFineFoodscompaniesinothercountries,mostlyforimportintothosecountries;governmentalorganizationsthatsellfoodandhavefoodservicefacilities,suchasmilitaryorganizations;andsimi-larcustomersthathavespecialcontractingrequirements.ProductssoldbyallthreeSMUsaremanufacturedbythesameproductionfacilities,includingwarehouses,foodpreparationandcookingfacilities,andpackagingfacilities.TheSMUsalsosharemostheadquartersactivi-ties,suchasIT,accountingandotheradministration,humanresources,andsimilaractivities.SMU1andSMU2havetheirownmarketingandsalesdepartments,whiletherearenoseparatedepartmentsforthesetasksinSMU3.Figure1showsanorganizationalchartforFineFoods,Inc.CostAllocationSmithtellsyousomewhatstronglyandpersistentlythatshebelievesherunitisbeingtreatedunfairlyinthewaycostsareallocatedtoproducts.Inparticular,shehasaproblemwiththeproductcostallocationforspecialordersofproductMP,abasicproductthatiswidelycon-48STRATEGICFINANCEIAugust20122013STUDENTCASECOMPETITIONTOPMANAGEMENTSUPPLYCHAINMANAGEMENTITHUMANRESOURCESFINANCER&DSMU2SMU3SMU1MARKETING/SALESMARKETING/SALESFigure1:FineFoods,Inc.OrganizationChartsumedinNorthAmerica.SMU2istheonlyunitwithspecialorders,andalmostallthespecialordersareforproductMP.WhileallthreeunitssellproductMP,itrep-resentsasignificantlylargerpercentageoftotalsales