Case Teaching Package
A case teaching package, including the (B) case, is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 12 pages in length and its case teaching package is 10 pages.

Abstract

This case is set in a modern American steel "finishing mill" in 1979, a good business year. The subject is profit variance analysis for the "TMW" billing program.

Linkages to Textbooks or Journal Articles/Fit Within a Course

This case originally had two primary teaching issues:

1. A fun, logical puzzle about what is the right measure of the lost profit from TMW. There are lots of good, conflicting arguments, and the student must sort through them to come to a conclusion.
2. A practical exercise in profit variance analysis where the student has to sort out controllable from non-controllable factors to create an "actionable" analysis.

As the Total Quality Management philosophy has become more prevalent, the case has come to be more a great object lesson in the bitter fruits of failing to understand and practice TQM.

We teach this case in one class period and schedule it near the end of the required management accounting course. By this stage of the term, our students will have been exposed to variance analysis concepts (earlier in our course) and to TQM concepts (in the required operations management course).

Study Questions

1. There is enough information in the case to estimate an income statement for the mill and mill assets for 1979. How is the mill doing? So what?
2. What, in your opinion, is the relevant measure of the profit impact of TMW?
3. Prepare the schedule requested by Mr. Palmintere at the end of the meeting. Consider carefully what format would provide the most useful information about the cost management problems here.
4. What other cost management issues are raised in the case?
5. What advice do you have for Mr. Palmintere?

The downloadable file for this case is in Microsoft® Word 7.0 for Windows®.

If you do not have Microsoft Word, you can download the free Microsoft® Word Viewer 97 right here:   For Windows 3.x   For Windows 95

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