ACC 770 Case 26 3

ACC 770 Case 26 3

Case 26 – 3

Hanson Manufacturing Company

Pablo Santacruz

For Professor C. E. Reese

In partial fulfillment for the requirements for

ACC 770 – Managerial Accounting

School of Business/Graduate Studies

St. Thomas University

Miami Gardens, Fla.

Term A2/ Fall, 2014

December 11, 2014



Table of Contents

Issues: Questions.................................................................... 3 – 4



Facts................................................................................... 5 – 6



Analysis.............................................................................. 3 – 4



Conclusions: Solution and/or Recommendations........................... 3 – 4



Reference/Citations/Bibliography.............................................. 7



Issues (Questions at end of case facts)

Analysis

Conclusions: Solution and/or Recommendations

1. If the company had dropped product 103 as of January 1, 1993, what effect would ... Show more content on Helpwriting.net ...Price cutting was rare.

During 1992, Hanson's share of industry sales was 12% for type 101, 8% for 102, and 10% for 103. The industry wide quoted selling prices were $9.41, $9.91, $10.56, respectively. Wessling order no immediate changes, however he advice to wait for results of the first half of 1993. He instructed the accounting department to provide detailed expenses and earnings statements by products for 1992. In addition, he requested an explanation of the nature of the costs including their expected future behavior (exhibit 3). For control purposes, he had the accounting department prepare monthly statements using as standard costs the actual costs per cwt. from 1992 profit and loss statement (exhibit 2).

Late in July 1993, Wessling received from the accounting department the 6 months' statement of cumulative standard costs including variances of actual costs from standard (exhibit 4). The statement revealed that the first half of 1993 was profitable. However, during the latter half of 1993, the sales of the entire industry weakened, and Hanson's profit was small.

In January 1994, Samra announced a price reduction on product 101 from $9.41 to $8.47 per cwt. Wessling forecast that if Hanson Company held to the $941 price during the first 6 months of 1994, their unit sales would be 750,000 cwt. He felt that if they dropped their price to $8.47 per cwt., the 6 months volume would be

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