Management: Cost Accounting and North Country Auto
Case Analysis Questions
Patten Corporation
I find this a very rich case that makes for a great introduction to my course. To get the most out of it, you need to spend some time thinking about what the company does. Read the case carefully.
1. What does Patten Corporation do? What does it buy? What goods or services does it sell? How does Patten make money?
2. Is Patten profitable or unprofitable? If it is profitable, what does the company do that makes it profitable? If profitable, is it likely to remain profitable? If not profitable, why not? If not profitable, will it ever become profitable? Why or why not? Is it cash flow positive or cash flow negative? If cash positive, why? Is it likely to remain cash positive? If cash negative, why? How long is it likely to remain cash negative? What inferences do you draw from Patten’s profits and cash flows?
3. If you ran Patten Corporation, would you be concerned about the company’s current performance? What issues would keep you awake at night?
4. How does Patten recognize revenues? Do you agree or disagree with this revenue recognition policy? If you disagree, what alternative revenue recognition policy would you propose using? Why is the revenue recognition policy you recommend better than Patten’s current revenue recognition policy?
Bridgeton Industries: Automotive Component & Fabrication Plant
This case is a terrific preview to many of the subjects we will discuss in the course. Read the case and work through the following questions to help you get familiar with the numbers. Pay particular attention to question 6.
1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since
Patten Corporation
I find this a very rich case that makes for a great introduction to my course. To get the most out of it, you need to spend some time thinking about what the company does. Read the case carefully.
1. What does Patten Corporation do? What does it buy? What goods or services does it sell? How does Patten make money?
2. Is Patten profitable or unprofitable? If it is profitable, what does the company do that makes it profitable? If profitable, is it likely to remain profitable? If not profitable, why not? If not profitable, will it ever become profitable? Why or why not? Is it cash flow positive or cash flow negative? If cash positive, why? Is it likely to remain cash positive? If cash negative, why? How long is it likely to remain cash negative? What inferences do you draw from Patten’s profits and cash flows?
3. If you ran Patten Corporation, would you be concerned about the company’s current performance? What issues would keep you awake at night?
4. How does Patten recognize revenues? Do you agree or disagree with this revenue recognition policy? If you disagree, what alternative revenue recognition policy would you propose using? Why is the revenue recognition policy you recommend better than Patten’s current revenue recognition policy?
Bridgeton Industries: Automotive Component & Fabrication Plant
This case is a terrific preview to many of the subjects we will discuss in the course. Read the case and work through the following questions to help you get familiar with the numbers. Pay particular attention to question 6.
1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since