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Volume 10 Issue 4

IMA Educational Case Journal
ISSN 1940-204X


Barbara Tarasovich, Sacred Heart University
Bridget Lyons, Sacred Heart University

THIS CASE IS INTENDED FOR STUDENTS IN an undergraduate- or graduate-level accounting course. At the under­graduate level, this case is suitable for an introductory managerial or financial accounting course. At the graduate level, this case can be used in managerial or advanced accounting courses. The case introduces the financial and business considerations that occur when analyzing capital investment decisions for internal repackaging of products. This is an actual case based on a real-world packaging decision for a product manufactured by Unilever, a Global 200 company.

Students analyze the financial information, project costs, capital investment and projected savings of a project to repackage one of the company’s major brands. The case introduces students to the process and forms used in practice—a capital expenditure proposal.

Keywords: Capital investment, NPV, IRR, MIRR, Payback, ROIC, Break-even.

David Gray, North Central College

THE CASE IS A SIMPLIFIED VERSION OF A REAL manufacturing planning and costing situation. EcoBags, Inc. is a privately owned manufacturer of flexible intermediate bulk containers (FIBCs) that has successfully created a market niche by developing products made from recycled materials. The founder and majority owner must con­sider the impacts that planned production levels will have on forecasted income and working capital spending. This production-level decision is complicated by the firm’s expected need to stay within a defined debt-to-equity ratio limit required by their lender. While published cases and classroom exercises have shown the impacts associated with overproduction, many frame the issue in terms of a manager seeking to raise reported absorption income to garner a better income-based bonus. This case represents a different dilemma in which the owner and founder must consider both income and cash flow impacts based on varying manufacturing planning schedules.

Keywords: Production planning, standard costing, financial impacts of overproduction.

Anne Sergeant, Grand Valley State University

THIS CASE IS DESIGNED TO PROVIDE STUDENTS WITH PRACTICE USING least-squares regression analysis and to apply the results to a business problem. It integrates statistical analysis and activity-based cost management with the management concepts of centralized decision making and implementation of change. The case can be used in either an undergraduate cost accounting course or a master’s of business administration (MBA) managerial accounting course. Upon completing the case, students should be able to develop regression models, use the models to make cost-saving recommendations, and communicate the findings and recommendations using professional business writing. The necessary prior learning includes an exposure to least-squares regression theory, Excel skills with a basic understanding of the data analysis tool pack, activity-based cost drivers, and cost management through activity management. The case analyzes purchasing department costs in a fictitious, entrepreneurial setting. The class time needed to complete the discussion is 45 minutes.

Keywords: Least-squares regression, Excel, cost drivers, activity-based cost management, centralization, change management.