CMA 302 – Tutorial Case Study: Final Draft Birch Paper Company 1. Background Birch Paper Company is a medium sized partly integrated company that produces Kraft papers and paperboard. There are four producing divisions and one timberland division which supplies part of the company’s pulp requirements. The divisions are - Northern Division - Southern Division - Thompson Division - Division 4 - Timberland Each division is operating independently with its own division manager. Also, each division’s performance had been judged on its profit and return on investment (ROI). The company policy of decentralizing responsibility and authority for all …show more content…
The Northern Division received 3 different bids: $480 – Thompson Division $430 – West Paper Company $432 – Eire Papers, Ltd [Calculation] Thompson Division tota Costs to Birch Paper = $288, being $400 made up of $280 for materials (linerboard and corrugating medium) and $120 for other costs. However because Thompson sources its materials from Southern division who make a $112 profit on materials, the total Cost to Birch Paper Company is materials $168 + other cost $120 = $288 West Paper Company Costs = $430 Eire Papers, Ltd Costs to Birch Paper Company = $391 that being $432 less sourcing profits from Southern Division ($90 x 40%) = $36 and Thompson Division Contribution $5 = $391 Although the West Paper Company looks at first to be the best choice, the truth is to be the Thompson Division as it has the lowest cost if we assume that all transfer prices within the company were calculated at costs. The lowest costs that associated within the company would make Birch Paper Company to earn the highest profits and revenues. [pic] Should Mr Kenton accept this bid? Why or why not? Mr Kenton has two options, 1 – To accept the lowest bid of $430 from West Paper. By doing so would result in the best interests for the Northern Division as it would gain the most profits .
3- As we can see the company would loss 0.52 cent per 1 kg if it decides to sell at 6.85 price and allocates the fixed expenses at 1.20 per 1 kg.
I would classify Forest Hill Paper Company (FHPC) as a “small paperboard manufacturer that produces a broad line of paperboard in large reels.”
Options:-Portion of debt through insurance company-Continue at 90 day terms-Factor receivables-Collateralize assets-Mortgage general purpose building-Independent Canadian Financing-Flat dividends-Payment Terms - accelerate receipt-LIFO / FIFOEvery available option has a positive and a negative aspect to it. Here we will decipher what option gives Padgett Paper Products the best financial structure, provides the most flexibility for continued growth, and reduces the risk for all parties involved.
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
The unit cost per bale appears to be falling which would agree with the General Manager’s alternative cost report. It’s hard to accurately compare the costs of producing each bale if total costs aren’t taken into account. Basing the overhead costs on a
The largest paper company in the world sits right here in Memphis, Tennessee, International Paper Company. They manufacture in North America, Europe, Latin America, Asia and North Africa. International Paper was established in 1898 and has grown to house 113,000 employees. The company achieves their success from the goals they stand for: “Good corporate governance is the foundation upon which we build and achieve our goals. We create an awareness of the importance of diversity, ethical behavior and personal integrity, which are our foundation. We support hundreds of community-based educational, civic and
Synopsis and Objectives The owner of a midsize folding carton printer is considering the replacement of an old machine for cutting sheets of paper from rolls (a sheeter) with a new one. This standard capital budgeting analysis, which requires identification of both the relevant cash flows and the relevant discount rate, is enhanced by an alternative that is not explicitly stated but can be readily identified and analyzed—to outsource all sheeting and close down the sheeting operation. This alternative, which turns out to be financially optimal based on quantifiable case facts, forces students to consider strategic and other nonquantifiable
More fundamentally giving each division manager the responsibility of its divisions operations and not allowing it to interfere with other divisions.
Forest Hill Paper Company is a small, closely-held company. Relatively few shareholders own the majority shares of the company. It is most likely a private company.
In order to enhance implementation of strategies and quality of production and optimize the allocation of resources, the corporation sets up nineteen separated departments. The whole organizational structure is set as Figure I.
Zumwald manages ran the company on a highly decentralized basis. The managers of each division were allowed considerable autonomy if their performances were at least on plan. Performance was evaluated, and management bonuses were assigned, based on each division’s achievement of budgeted targets for return on invested capital (ROIC) and sales growth. Even though the company was partly vertically integrated,
Sandwell Paper Company is a large paper wholesaler, which ties its roots to Omaha, Nebraska in the 1980s. The firm started in sales and distribution to its consumers and bought its paper from other wholesalers. Sandwell Paper Company grew as its sales grew and eventually became a warehouse operation of its own. The product line includes fine printing and industrial wrapping grades of paper. The fine printing paper line is the more profitable as well as specialized of the two parts of the paper product line. The printing line is profitable because printers don not want large inventories but want fast delivery and for this reason they are pay premium to wholesalers to keep inventories of wide range. They want to ideally
The multidivisional structure centers on the use of separate businesses or profit centers. The M-Form is used by many organizations that compete in the global economy. Each unit is operated as a separate business with its own corporate staff including President. Some parent companies do little more help provide capital and guidance to units to an organizational-wide strategy. The overall target is to maximize the overall organization’s performance. In order to achieve their target managers and parents companies use uses strategic and financial control.
The weaker paper or paperboard is one of the resulted damage from the fibers separated mechanically. However, this process resulted the yield of paper per unit volume of wood is still greater than that produced by chemical pulping, because since both lignin and cellulose fibers remain intact. The Pulp yields from all of the mechanical pulping processes typically are near 90 to 95 percent recovery, which is a much higher yield per unit of wood than with the chemical pulping methods because of the retention of lignin. However, paper made from mechanical pulp is discoloured and becomes brittle with age because of its lignin content, which results in a shorter useful life than paper made from chemical
Synopsis and Objectives The owner of a midsize folding carton printer is considering the replacement of an old machine for cutting sheets of paper from rolls (a sheeter) with a new one. This standard capital budgeting analysis, which requires identification of both the relevant cash flows and the relevant discount rate, is enhanced by an alternative that is not explicitly stated but can be readily identified and analyzed—to outsource all sheeting and close down the sheeting operation. This alternative, which turns out to be financially optimal based on quantifiable case facts, forces students to consider strategic and other