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Jenis-Jenis Activities dari Case Hadout No. Activities No. 1 Purchasing Materials 13 2 Preparing Materials 14 3 Cleaning out previous color 15 4 Physical change over -> Set Up 16 5 Scheduling production order 17 6 Packaging Product 18 7 Preparing Shipping document 19 8 Preparing inspection 20 9 Releasing Materials 21 10 Empty the valve 22 11 Maintaining records on the 4 produc 23 12 Shipping products 24 Soal: 1. Tentukan Cost Driver yang dari activities di 2. Indentifikasi cost driver biaya pemasaran de 2.a. Tentukan cost object apa saja yang dipilih u 2.b. evaluasi cost drivernya yang dipilih untuk m Case Winchell Lighting Inc. Introduction In January 1986, Ken Johnson, VP and GM of Winchell Lighting, Inc. Marketing Analysis. The Strategic Marketing Analysis effort arose The goal was to trace marketing cost to individual product lines a Company Background 1985 Inco Sales Cost of Sales Material $ 45,529.00 Labor $ 7,082.00 Overhead $ 32,393.00 Gross Profit Winchell Lighting Inc. memproduksi dan menjual produk-produk light Produk Komersil dijual melalui kontrak distribusi dan industrial s

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SoalJenis-Jenis Activities dari Case HadoutNo.ActivitiesNo.Activities1Purchasing Materials13Mixing Ink2Preparing Materials14Invoicing sales3Cleaning out previous color15Inserting inks into pen4Physical change over -> Set Up16Maintain a minimum supply of raw material5Scheduling production order17Improving the production process6Packaging Product18Supplying machine capacity7Preparing Shipping document19Payment of material8Preparing inspection20Collection of A/R9Releasing Materials21Identifying BOM for each product10Empty the valve22Monitoring finished goods inventory11Maintaining records on the 4 products23Machine Maintenance12Shipping products24Performing engineering change for productsSoal:1.Tentukan Cost Driver yang dari activities diatas, cost driver yang sama boleh digabung2.Indentifikasi cost driver biaya pemasaran design of cost management system case Winchell Hal 377.2.a.Tentukan cost object apa saja yang dipilih untuk menjadi tempat pembebanan biaya2.b.evaluasi cost drivernya yang dipilih untuk membebankan biaya tersebut, apakah sudah benar atau belum, kalau belum tolong berikan saranCase Winchell Lighting Inc.IntroductionIn January 1986, Ken Johnson, VP and GM of Winchell Lighting, Inc. (WLI) assigned Pamela Wright, Marketing Analyst, and Elizabeth Conrad, Division Controller, to undertake the 1985 WLI StrategicMarketing Analysis. The Strategic Marketing Analysis effort arose from a collaboration, strating in 1982, between WLI management and the members of the planning group of WLI's parent, Hawkes.The goal was to trace marketing cost to individual product lines and channel so that the overall profitability of each line and channel could be determined.Company BackgroundWinchell Lighting Inc. memproduksi dan menjual produk-produk lighting. Consumer Linesnya sendiri dijual melalui mass-merchandisers dan supplier grosiran. Produk Komersil dijual melalui kontrak distribusi dan industrial suppliers.1985 Income Statement ($000)Sales$127,960.00100%Cost of SalesMaterial$45,529.00Labor$7,082.00Overhead$32,393.00$85,004.0067%Gross Profit$42,956.0033%Sales and General Administrative ExpensesMarketing Expenses$20,953.00General/administrative$10,861.00$31,814.0025%Operating Income$11,142.008%Product Lines1. Consumer Incandescent Fixtures contained a broad range of fixtures designed specifically for easy installation In the residential market. They were all Surface mounted, requiring no carpentry work.The products inclouded pendants, close-to-ceiling fixture, and chandeliers. Residential units were manufactured to less demanding standards than commercial fixtures and were considerably cheaper.2. Consumer Flourescent Fixtures contained a small range of surface-mounted fixture designed specifically for the residential market.3. Commerical Recessed Fixtures contained fixtures for incandescent bulbs designed to be recessed into the ceiling.4. Commerical Fourescent Fixtures contained fixtures for fluorescent lighting designed to be recessed into the ceiling.5. Commerical Track contained both track and the fixtures designed to be attached to the tracks. Tracks were lenghts of plastic tubing into which the fixtures could be snapped. Track lighting usedconventional incandescent, tungstenhalogen, and, recently, compact fluorescent lighting.6. Commerical Ceiling Fixtures contained high-quality ceiling-mounted fixtures that had a high artistic content.7. Commercial Wall Fixtures contained a diverse set of fixtures that were wall mounted. Many of these fixtures used the new compact, energy-efficient fluorescent light sources.8. Commercial External Fixtures contained fixtures specifically designed for external use. These fixtures were of heavy construction to withstand weather conditions that required waterproofelectrical connections.Competitive EnvironmentSales to the consumer markets generated about 15% of Winchell's total dollar volume. WLI was the only company in the two almost independent consumer segments. Fluorescent segment wasdominated by 3 U.S. based competitors - Gold, Conway, and Englehart - who together controlled about 70% of the market. The incandescent segment was more competitive, with 3 U.S. Companiescontrolling about 70% and imports the other 30% of the market. Most of the U.S. companies used offshore sourcing to match the low cost of imported products.Market Share Analysis-Consumer ProductsFlourescentSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsMass MerchandisersCommercial SuppliersContractIndustrial SuppliersGoverrnmentOEMWLI152510102515Gold302530252025Conway202010202030Englehart251040203030Gellis1020102550% of WLI total product255051055line salesIncandescentSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsMass MerchandisersWholesale SuppliersIndustrial SuppliersWLI202020Commonwealth252525Celebrity252525Imports303030% of WLI total product305020line salesThe commercial Market, accounting for the other 85% of Winchell's revenues, had three other full-line producers - Haddon, Conway, and Hobart - plus 2 companies, Somerset and King, thathad gained a respectable % of the track and external fixture markets, respectively.MARKET SHARE ANALYSIS - COMMERICAL PRODUCTSRecessedSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsMass MerchandisersWholesale SuppliersIndustrial SuppliersWLI151515Haddon202525Hobart201010Conway203030Others252020% of total product702010line salesFlourescentSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsContractIndustrial SupplierGovernmentOEMWLI10152010Haddon45453575Hobart20555Conway2025250Others5101510% of total product40251520line salesTrackSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsContractIndustrial SupplierGovernmentOEMWLI202020Haddon202020Hobart202020Conway202020Somerset202020% of total product202515line salesCelingSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsContractIndustrial SupplierGovernmentOEMWLI30302030Somerset50505050Haddon15152510Others5555% of total product30202030line salesWallSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsContractIndustrial SupplierOEMWLI102010Conway501025Haddon254050Hobart15205King01010% of total product202060line salesExternalSHARE BY CHANNEL OF DISTRIBUTIONCompetitorsContractIndustrial SupplierGovernmentOEMWLI50506050Conway3030530Haddon10102510Others10101010% of total product20204515line salesMarketing ChannelsThe marketing department was organized along functional lines with separate departments for the three major business segments: Commerical Incandescent, Commerical Fluorescent, and ConsumerProducts. The Commercial Incandescent department supported a full line of fluorescent lighting fixtures and sold them to the commerical market through a separate sales force. The Consumerdepartment had its own sales force, which sold consumer products to mass merchandisers and wholesales suppliers.WLI sold its products through 6 distinct distribution channels. 2 of these channels, mass merchandisers and wholesale suppliers, served the consumer market, and the 4 served the commercial market.The six channel were as follows:1. Mass merchandiser - Mass merchandisers were the large-volume consumer outlets, such as K-Mart, Caldor, and Zayre, that sold directly to the public. They typically carried a small range of lightingfixtures. The mass merchandisers often promoted these products heavily, and WLI provided support for this activity. WLI favored these companies with a liberal returns policy and deep cash discount.in 1985, mass merchandiser sales amounted to apporximately $ 11 million.2. Wholesale suppliers - Retail hardware chain such as The Value and Ace) had formed cooperative associaltions to obtain bulk discounts based on their combined purchasing power. The associationused central warehouse to store their bulk-purchased merchandise that would be shipped, in small lots, to member on request. In 1985, WLI's sales to wholesale suppliers were $ 3 million.3. Contract distributors - WLI provided complete lighting system for commercial buildings. To Compete in this market, WLI employed highly skilled marketing personnel who worked closely with architects. High-quality productsand timely delivery were critical for this market segment. When an architect asked for a bid, the salesperson examined the architect's building plans and generated a complete list of lightingfixtures for the project. This activity required considerable knowledge of WLI's product lines and of local fire, building, and electrical codes. The end document provided a detailed specificationfor every fixture in the building. Contract sales were nearly $ 80 millions in 1985. The recessed and fluorescent product lines' sales were not independent in the contract channel. Architects selectedthe type of fixtures that were to be used, usually a mixture of recessed and fluorescent lights. WLI had little real influence on the type of fixture selected.4. Industrial Suppliers - A large protion of the industrial supplier business was replacement of lighting fixtures. Building owners and operators purchased their lighting fixture from 2 type of wholesalers.Master wholesalers such as Mass Gas and Electric and Standard Electrical Supply, specialized in supplying lighting fixtures to smaller distributors, such as Mass Hardware, who carried a broad rangeof products for the building trade. Independent store, such as Commonwealth Light in Boston, carried a larfe variety of fixtures sold directly to the end users. The independent stores demandedhigh-quality products and timely delivery but did not required specialized or customized products.Sales persons to industrial suppliers had to be well informed about the company's products. They regularly called on suppliers to take inventory, assist in the preparation of orders to keep the suppliersadequately stocked, and alert the suppliers about building code changes that would affect WLI products. Intermediary agents and distributors, if applicable, were also involved in this process. In 1985,sales to suppliers totaled $25 million.5. Government - The US Government occasionally requested a bid for very large volumes of fixtures. Over the years, WLI had not placed much effort into getting listed on the governement's acceptablevendor lists, Sales in 1985, amounted to just over $ 400.000.6. Original equipment Manufacturers (OEMs) - Certain equipment manufacturers, required special light flixtures for their products. For example, Sampson Furniture needed recessed fixtures for glasscabinets, and Lamb Cabiners required fluorescent fixtures for its aluminium and glass display cabinets. Since this kind of company was difficult to identity, WLI responded to bid requests but did notacceptively seek out the business. Once a contract was awarded, the OEMs typically sent in large orders a t regular intervals. Sales in 1985 amounted to just over $ 9 million.The Strategic Marketing AnalysisIn 1982, WLI had adopted a product-channel perspective following a cost study performed with the assistance of the Hawkes Strategic Planning Group. Douglas Farish, Vice-President of Strategic Planningat Hawkes, commented on the process of developing the new product-channel perspective at WLI.In 1981, the Hawkes planning department initated the development of a strategic data base by business segment. Each Hawkes business was partitioned into much finer system. Only by disaggregatingcould we focus on economic units that were reasonably coherent - that is, units within which we had roughly the same share, perceived quality, and profitability.The existing accounting system, which broke the business into about 150 product groupings, falied to reflect the different costs of doing business in each distribution channel. With marketing expensesexceeding 15% of sales revenue, management wanted to know how each product line was performing in total and by channel. Thus, the product-channel perspective was developed.As we began the initial marketing cost analysis, we quickly learned that tracing period expenses was more difficult than allocating factory overhead. While in the factory, proxies for cost drivers can oftenbe found where actual data do not exist, the same cannot be said of many selling, general, and administrative activities. To understand the economics of how work was generated in the SG&A depart-ments, we relied heavily on the qualitative information stored in the heads of managers who were most familiar with the activity of each departement. The art of this sort of analysis is to be able toquantify the qualitative, that is, to convert the qualitative insights of managers into a quantitative model.We organized a series of meetings to bring together a number of managers from a given function so that different perspective on the same issue could be represented. My primary function as moderatorof these sessions was to pose the right questions so that we could discover the principal drivers of cost. I also systhesized the estimates given me and fed them back to the managers so that they couldjudge their reasonableness.In addition to debriefing knowledgeable managers, we sampled the experience of the sales force to gather qualitative data for the model-building effort. Ultimately, I wanted WLI management toacquire the skill we had developed through experience in reducing soft data to a reasonably reliable model. This was important because the system needs to be revised periodically to reflect changesin the relative importance of the cost drivers and of our expenditure of effort among channels. The system therefore must not be rigid, but rather capable of evolving with the business.By 1986, the company had developed specific procedures to facilitate the marketing cost study. The analysts strated from a channel profitability report in which SG&A expenses were treated as a commonor below-the-line cost and not alloocated to individual product lines. The difference in gross margins across the 6 channels reflected the margins earned over manufacturing costs on the products soldthrough each channel. In the past, if management wanted to know operating profit after fully allocating all costs, the cost analysts had allocated SG&A costs based on sales revenue. Since SG&Aexpenses were about 25% of sales revenue, the operating profit for each channel equalled the gross margin % less 25%.Channel Profitability Report(Existing System $000)Mass MerchandisingConsumer Wholesale SuppliersContractIndustrial SuppliersCommercial GovernmentOEMTotalNett Sales$10,694.00$3,120.00$79,434.00$25,110.00$402.00$9,200.00$127,960.00Material$8,503.00$2,083.00$25,089.00$6,886.00$99.00$2,869.00$45,529.00Labor$29.00$63.00$4,798.00$1,437.00$33.00$724.00$7,084.00Overhead$150.00$268.00$22,172.00$6,503.00$154.00$3,146.00$32,393.00Total$8,681.00$2,413.00$55,029.00$14,826.00$286.00$6,739.00$87,974.00Gross Profit$2,013.00$707.00$27,375.00$10,284.00$116.00$2,461.00$42,956.00Gross Margin19%23%34%41%29%27%34%SG&A$31,814.00Operating profit$11,142.00Profit Margin9%Net invested capital$54,141.00RoI21%Description of Marketing ExpensesThe strategic marketing analysis attempted to trace more accurately the selling and marketing expenses to indivudal channel and product lines. The analysis strated from detailed descriptions of eachmarketing expense category reported in the income statement.Marketing Expenses by Category (000)Categoty1985 Expenses%Commission$7,376.0035%Advertising$230.001%Catalog$714.003%Co-op Advertising$1,006.005%Sales Promotion$1,132.005%Warranty$94.001%Sales Administration$8,957.0043%Cash Discount$1,444.007%Total$20,953.00100%CommisionsWLI products were sold on a commission basis by independent manufacturer's representatives. These representatives often carried a complementary line of products manufactured by other firms, butthey were not allowed to carry directly competitive products.Representative did not maintain an inventory. They sold to customers, and then WLI shipped the product directly to the customers. The manufacturing representative received a 5% commission foroncandescent products and up to 12 1/2 for fluorescent products. The higher rate for fluorescent sales reflected in historical attempt to increase sales in certain fixture lines.WLI commercial products were also slod by company personnel who received a flat 5% commision but no base salary. WLI paid benefits such as health, pension, and FICA. Sales personnel absorbed alltravel expenses, including any automobile costs. In some instances, a +- 1/2% commission adjustment was made to compensate for the size of the salesperson's territory.CatalogThe company publised 3 catalogs; fluorescent commercial, incandescent commercial, and consumer. The commercial catalogs were published as 3-ring binders to facilitate easy updating and insertionof new product descriptions. Because the product descriptions did not contain price data, the binder arrangement also allowed for price list supplements as required. WLI products were endorsed bySweet's Catalog, the architect's reference manual for all building materials. WLI paid Sweet's to prepare and include separate subsections in the Sweet's Catalog.WLI's contract sales business used the latest lighting technology and, therefore, required up-to-date commercial catalog information. Industrial suppliers also used placement business and only stockedbestsellers, they could use out-of-date catalogs with little risk. In both instances, products were ordered just as specified in the catalogs: Unique design could not be obtained. All WLI representative keptcopies of the catalogs and passed order requests through to WLI headquarters. Because of the large number of requested for the catalogs, no records were kept at headquaters or by representatives onwhere the catalogs were sent.The WLI consumer catalog contained 8 to 10 pages listing all product sold in the mass merchandiser and wholesale supplier channels.AdvertisingAdvertising expenditures were primarily the cost of advertising in trade and industry publiocations, attendance at trade shows, and the costs of displays and exhibits. The firm placed advertisements inpublication such as Lighting Institute Magazine, Light Fixture Digest (used by the supplier channel) Discount News, Do It Yourself, and the Hardware Retailer. Peripheral journals, such as ArchitecturalRecord, were not generally used.2 of the most noteworthy trade shows attended were the Lighting Fixture Institute Show and the National Hardware Show. The advertising expenses for these shows included registration fees and thecosts of creating and installing the booth, exhibits, and displays.Cooperative AdvertisingCooperative Advertising was directed to the consumer market. Mass merchandisers placed calor pull-outs in Sunday newspapers. Local hardware stores placed smaller advertisements in local papers.Radio advertisements were used to annouce promotions and special prices.The advertising Checkin Bureau monitored advertising copy for WLI. It received a supply of sticks, a copy of the advertising bill, and a proof of the advertising. WLI then paid the advertisers for theircosts up to a cap set a 5% of last year's sales.Sales PromotionSales Promotion were used to increase sales in both the commercial and consumer markets. Some commercial promotions offered incentives to distributor to purchase WLI products by awardingpoints based on the number of specified product items ordered. These points were exchangeable for gift certificates or merchandise at a major department store. Others offered baker's dozen sales.in which the distributor received, say, 12 products for the price of 10. The costs of such promotion schemes included developing, printing, and distributing brochures, mailings, and order forms.Consumer promotions were product specific. They typically consisted of baker's dozen or special discount offers to mass merchandisers and wholesale suppliers.WarrantyWarranty expenses were incurred on major contracts to overcome problems that could only be resolved in the filed. Sales returns were not included in warranty expenses but were treated as a directdeduction from sales.Sales AdministrationSales Administration expenses included costs that were too small to be treated as separate line items. (Sheet Sales Administration)Cash DiscountIf WLI shipped before the 25th of the month and payment was received before the 10th of the following month, the customer could take a 2% discount. If WLI shipped after the 25th of the month,the discount could be taken if payment was received before the 10th of the second month. About 60% of goods were shipped during the first 25 days of each month.Tracing Marketing ExpensesWright and Conrad described the procedures they used for assiging marketing costs to the product lines and distribution channels.PW :The distribution of Marketing Expenses starts with the document describing each component of expense. It formed the basis for our analysis. After we were sure we understood how each expensebehaved, we began to develop allocation routines. Obviously, we relied heavily on the procedures used in prior years.Catalog expense was slightly more difficult. We publish 3 catalogs, one for each of the 3 business segments, It is easier to talk about the commerical and consumer segments separately.The WLI commercial catalogs are really a collection of mini poduct line catalogs that we combine together in a 3-ring binder. This approach is economical because it allows us to change 1 product linecatalog without replacing the others. Unfortunately, we do not keep development costs for each product line catalog separately, so we could not break it down any further than the catalog level.This forced us to estimate the relative share of catalog costs by product line and channel.In contrast, the Sweet Catalog is used only in the contract business. We simply took all of the associated costs for this catalog and assigned them to the contract channel.For catalog that covered several channels, we split catalog costs using the number of different outlets in each channel as the allocation base. We assigned catalog costs to the product lines on the basisof sales dollar in each channel.We assigned the cost of consumer catalogs in the same way. The mass merchandiser only stock a limited range of products and do not need a large catalog. But the wholesalers, who stock our entire line,need full-line catalogs, Again we used our knowledge of the number of outlets and the intensity of use in each channel to estimate their relative share of catalog costs.Commission and catalog expenses were relatively easy. Advertising, on the other hand, was more difficult because of the range different activities we undertake. We broke advertising into 2 sections, trade and coorperative.These 2 types of advertising are quite different from each other.Cooperative advertising was completely different. First, it predominatly occurs in the 2 consumer channels, mass merchandising and wholesale suppliers. Second, the Advertising Checking Bureau invoicescould be traced to each channel, which gave us an accurate measure of the advertising expenses in each channel.Tracing channel Costs to product lins, and there was no easy way to determine how much benefit was attributable to each line. It was simply not practical to count square inches, in any case, in many ads, thelargest image was the company name. The local radio spots suffered from the same problem. We were not going to count seconds, and anyway the company name was often the most prominent partof the ad.Sales promotions occur at the product and product line level, so we ended up adopting exactly the opposite approach than we had taken for advertising. Instead of tracing costs to the segments or channels,and then to product lines, we traced promotion costs first to product or product lines and then summed up the costs for each product line in a channel. This was relatively straightforward because werecord promotion expenses by product code.Sales administration is a collection of 9 relatively small expense catagories. We had to deal with each one separately. We were surprised by how much resources were required by some channels and notby others. The allocations all made sense after we looked at them. It was magnitude of the effect that was unexpected.Allocation of Sales Administration Expenses to ChannelConsumer (%)Commercial (%)Mass MerchandisingWholesale SuppliersContractIndustrial SuppliersGovernmentOEMCustomer service116384311Marketing MGMT210601000Sales Policy342830803Marketing traveland entertainment84443505Postage835352300Administrative traveland entertainment2115422100Warehousing521601400Meeting1212423500Fixed Expenses1318502000The channel Profitability Report is the most important. It demonstrates how significant the marketing cost analysis really is. The resulting channel profitabilities, return on investment, and residualincomes are very different from what we used to think they wereEC:Commissions were the simplest to handle. We traced commission payments to the various product lines and then allocated them to channel on the basis of the sales volume of product lines in eachchannel.We used our knowledge of the business to guide us. For example, we knew that the incandescent commercial catalog is used in the contract and industrial supply channel. However, the contractbusiness is always into new products, and it requires the most up-to-date catalogs, we are continuously sending them catalogs. The industrial supply channel is exactly the opposite. In the replacementbusiness, the suppliers usually only stock a limited range of the bestsellers. These tend not to change from year to year, and consequently industrial suppliers are not bothered if their catalogs are notup to date.Our catalogs do not contain price information because prices change more frequently than the contents of the catalogs. We issue a new price list whenever we want to change prices. The expense of printingand distributing these lists was assigned using the same ratios as we had identified for the catalogs themselves.Trade advertising in the industry magazines could be easily traced to the 3 business segments. First, we have project control over all advertising-related costs. Second, we advertise incandescent andfluorescent products separately. Third, the consumer market is reached by different magazines. The real problem was how to allocate the costs among the channels served by each magazine. We feltthat some magazines really only served one channel. For example, The Lighting Ledger served industrial suppliers and Discount Store News reached mass merchandisers. Other magazines, for exampleElectrical Suppliers, covered several channels, in which case we estimated the relative benefit by channel and allocated the costs accordingly.In the end, we opted to use sales within the channel to allocate advertising costs to the product lines.We used the same approach with warranty expenses. These occur when we have to go into the field and correct a problem that has developed in a large commercial contract. If the expenditure is above$ 10.000 then we open a special project. These expenses are easily traced to the channel in which they occurred. However, if the expenditure is below $ 10.000 then the cost are captured only by productline. These can be allocated to the channels on the basis of the sales of each product line in that channel.Cash discounted were allocated to channel by selecting large representative accounts within each of the channels and determining their accounts-receivable-to-sales ratio. From these ratios, we computedthe day's-sales-outstanding (DSO). We used the DSOs to estimate the cast discounted in each channel.After performing all the analysis, we produced 2 sets of reports. The first reported the marketing costs as a % of sales for each major product line. The second added up all the marketing costs in each ofour 6 distribution channels to obtain a new Channel Profitability Report. For the channel report, we also traced the utilization of net invested capital, including working capital items such as inventoryand accounts receivable, to individual channels so that we could measure the return on capital for each channel.Production and Marketing Costs as a % of SalesCommerical Track LightingDistribution ChannelCommercialContract (%)Industrial Suppliers (%)Government (%)OEM (%)Sales100%100%100%100%Material29.5%28.6%34.4%35.3%Labor15.3%6.5%8.6%8.5%Overhead25.1%22.0%33.0%28.2%Total69.9%57.1%76.0%72.0%Gross Margin30.1%42.9%24.0%28.0%Commission5.9%5.4%2.8%4.0%Advertising0.2%0.2%0%0%Catalog0.6%0.6%0%0%Co-op advertising0.5%0.5%0%0%Sales Promotion0.5%0.5%0%0%Warranty0.1%0.1%0%0%Sales administration7.2%6.8%4.7%3.8%Cash Discount1.1%1.0%2.8%1.2%Total16.1%14.7%10.3%9.1%General and ADM8.5%8.5%8.5%8.5%Profit Margin5.5%19.7%5.2%10.4%1985 Channel Profitabilty Report(Marketing Cost Analysis)($000)ConsumerCommercialMass MerchandisingWholesale SuppliersIndustrial SuppliersGovernmentOEMContractTotalNet Sales$10,694$3,120$25,110$402$9,200$79,434$127,960Material$8,503$2,083$6,886$99$2,869$25,089$45,529Labor$29$62$1,437$33$724$4,798$7,083Overhead$150$268$6,503$154$3,146$22,172$32,393Total$8,681$2,413$14,826$286$6,739$52,059$85,004Gross Profit$2,013$707$10,284$116$2,461$27,375$42,956Gross Margin19%23%41%29%27%34%34%Marketing ExpensesCommission$696$270$1,344$12$372$4,682$7,376Advertising$46$12$380.0$2$132$230Catalog$36$14$1600.00.0$504$714Co-op Adv$380$90$1200.00.0$416$1,006Sales Promotion$494$128$1140.0$2$394$1,132Warranty$2$2$220.0$4$64$94Sales Adm$908$268$1,714$20$351$5,696$8,957Cash Discount$118$56$252$12$114$892$1,444Total$2,680$840$3,764$44$845$12,780$20,953General and Adm$907$265$2,131$36$781$6,740$10,860Operating profit$(1,574)$(398)$4,389$36$835$7,855$11,143Profit Margin-15%-13%17%9%9%10%9%Net Invested Capital$5,447$1,643$10,974$184$2,748$33,154$54,150RoI29%-24%40%30%30%24%21%Residual Income-2936-809164610149-433$(2,373)

Toshiba:Allocated on the basis of equipment utilized and working capital levels

Sales AdministrationAllocation of Sales Administration ExpensesCustomer service. Customer service involved order entry and editing using an online system. The largest users were the industrial suppliers, who placed many small orders, thereby creating a lot of paperworkand contractors, who, while only placing a small numbers of orders, required much telephoning back and forth to establish the correct mixture of products. Other users, such as the OEMs, mass merchandisers,and the government, required little attention.Customer service expenses were allocated on the basis of management estimates. Contractor and industrial suppliers received the highest amounts because most of the customer service activity wasconcentrated in those 2 channels.Marketing management. Marketing management expenses were the salaries of all of the managers in the marketing department.Marketing management expenses were allocated proportionally to the time spent by the managers. For functional managers this was relatively easy because they were assigned to particular segments. It wasmore difficult for support function managers because their activities were firm-wide (research manager and pricing manager). Where possible, the costs of these activities were traced to the channel.Otherwise, they were allocated on the basis of sales dollars.Sales Policy. Sales Policy expenses arose from settling disputed claims. Mass merchandisers had the largest numbers of disputed orders, typically complaining about short shipments and other shipmentmistakes. They used their large outstanding receivable balances as leverage against the firm and would withhold payment until all issues relating to the shipment were settled. The firm used a commonsense approach on whether to fight. Contractors similarly disputed pricing, shrinkage, and any shrortages of the trivial accessories, such as screws, that accompanied their orders. Other channels, such asthe industrial suppliers, raised similar issues but to a lesser extent.Sales policy expenses were first traced to the 3 business segments and then allocated to the channels using managerial estmates. Within the channels, they were allocated to the product lines usingrelative sales dollars.Marketing travel and entertainment. Marketing travel and entertainment expenses consisted of the travel expenditures of the marketing managers. The contract business required extensive travelbecause there were no regional managers, large individual contracters, the competitiveness of the business, and the technical complexity required a lot of handholding and entertainment by management.The other channels required relatively little travel, typically only for shows and other events.Marketing travel and entertainment expenses were traced to the person that filled the expense report and hence to the business segment. Certain channels required more travelling than others- forexample, the contractor channel, because there are no regional managers. These costs were allocated using a mixture of managerial estimates and sales lars.Postage. The majority of postage expenditures were related to catalog mailings. They were allocated on the basis of the catalog expenses in each channel.Administrative travel and entertainment. Administrative travel and entertainment expenses are the costs incurred when the director of marketing, the pricing manager, or marketing analyst traveled to meetcontractors, mass merchandisers, and industrial suppliers. The 3 individuals that charge to this line item were asked to estimate the % of their share of these costs by channel.Warehousing. Warehousing expenses were the costs of keeping finished goods inventory in the warehouse ready for shipment. These costs were allocated to the product lines based on the inventorylevel of each product line and to the channels by relative sales level.Meetings. Meeting expenses were incurred for the firm's regular national sales meetings. The costs of national sales meetings were tracked to the 3 business segments and then allocated to the channelson the basis of managerial estimates.Fixed Expenses. Fixed Expenses consisted of a number of different items such as depreciation, heat, light, and power, telephone, building maintenance, suppliers and equipment rental charges.The expenses were allocated to each segment by department using a number of different allocation routines and then to the channels using managerial jdugement.

Jawaban Soal 1No.ActivitiesNo.Activities1Purchasing Materials13Mixing Ink2Preparing Materials14Invoicing sales3Cleaning out previous color15Inserting inks into pen4Physical change over -> Set Up16Maintain a minimum supply of raw material5Scheduling production order17Improving the production process6Packaging Product18Supplying machine capacity7Preparing Shipping document19Payment of material8Preparing inspection20Collection of A/R9Releasing Materials21Identifying BOM for each product10Empty the valve22Monitoring finished goods inventory11Maintaining records on the 4 products23Machine Maintenance12Shipping products24Performing engineering change for productsJenis-jenis Cost DriverTransaction DriverDuration DriverNo.ActivityCost DriverType of Driver1Purchasing MaterialsNumber of ink bottleTransaction Driver2Scheduling production orderMinutes to schedulingDuration Driver3Cleaning out previous color and empty the valveMinutes to wash out the valveDuration Driver4Preparing inspectionMinute to inspectDuration Driver5Releasing materials and mixing inkNumber of ink bottleTransaction Driver6Inserting inks into penNumber of pen producedTransaction Driver7Psysical change over -> Set UpMinutes to set upDuration Driver8Preparing materials and maintain aNumber of ink bottleTransaction Driverminimum supply of raw material9Maintaining record on the 4 productsMinute to record the amount of each productDuration Driver10Performing engineering change forNumber of spare partTransaction Driverproducts and indentifying BOM forMinutes to identifying BOMDuration Drivereach product11Monitoring finished goods inventoryMinutes to monitoringDuration Driver12Machine maintenanceMinutes of Machine's operational capacityDuration Driveruntil overhaul (Machine Hours)13Supplying machine capacityMachine HoursDuration Driver14Invoicing Sales and AR CollectionNumber of Pen producedTransaction Driver15Preparing Shipping DocumentNumber of Pen producedTransaction Driver16Packaging Product and shipping productNumber of Pen producedTransaction DriverSIMPLIFICATION OF ACTIVITIESNo.ActivityGrouping of ActivitiesCost DriverType of Driver1Purchasing MaterialsScheduling Production RunsNumber of Production RunsTransaction Driver2Scheduling production orderScheduling Production RunsNumber of Production RunsTransaction Driver3Cleaning out previous color and empty the valvePhysical changeoverSetup timeDuration Driver4Preparing inspectionScheduling Production RunsNumber of Production RunsTransaction Driver5Releasing materials and mixing inkScheduling Production RunsNumber of Production RunsTransaction Driver6Inserting inks into penPhysical changeoverSetup timeDuration Driver7Psysical change over -> Set UpPhysical changeoverSetup timeDuration Driver8Preparing materials and maintain aMaintaining RecordsNumber of ProductsTransaction Driverminimum supply of raw material9Maintaining record on the 4 productsMaintaining RecordsNumber of ProductsTransaction Driver10Performing engineering change forMaintaining RecordsNumber of ProductsTransaction Driverproducts and indentifying BOM foreach product11Monitoring finished goods inventoryMaintaining RecordsNumber of ProductsTransaction Driver12Machine maintenanceSupplying machine capacityMachine HoursDuration Driver13Supplying machine capacitySupplying machine capacityMachine HoursDuration Driver14Invoicing Sales and AR CollectionMaintaining RecordsNumber of ProductsTransaction Driver15Preparing Shipping DocumentMaintaining RecordsNumber of ProductsTransaction Driver16Packaging Product and shipping productScheduling Production RunsNumber of Production RunsTransaction Driver

Jawaban Soal 2 Cost ObjectTentukan cost object apa saja yang dipilih untuk menjadi tempat pembebanan biayaType of CostCost ObjectsType of CostCost ObjectsMarketing ExpenseMarketing ChannelsSales Administration ExpenseMarketing ChannelsMass MerchandisersMass MerchandisersWholesale suppliersWholesale suppliersContract distributorsContract distributorsIndustrial suppliersIndustrial suppliersGovernmentGovernmentOriginal Equipment ManufacturersOriginal Equipment ManufacturersProduct LinesProduct LinesConsumer Incandescent FixturesConsumer Incandescent FixturesConsumer Flourescent FixturesConsumer Flourescent FixturesCommercial Recessed FixturesCommercial Recessed FixturesCommercial Fluorescent FixturesCommercial Fluorescent FixturesCommercial TrackCommercial TrackCommercial Ceiling FixturesCommercial Ceiling FixturesCommercial Wall FixturesCommercial Wall FixturesCommercial External FixturesCommercial External FixturesBusiness Segments

Jawaban Soal 22.bEvaluasi cost drivernya yang dipilih untuk membebankan biaya tersebut, apakah sudah benar atau belum, kalau belum tolong berikan saranCost ObjectCost PoolCost DriversEvaluasi & SaranMarketing ChannelsCustomer:Marketing ExpensesMass Merchandisers1. Commision ExpenseSales volume in the product lineCommision expense terbagi menjadi 2, yaitu: commision expense untuk consumer fixture dan commercial fixture. Cost driver untuk commision expense consumer fixture yang dipilih adalah number of sales volume in the product line sudah benar. Namun, diketahui bahwa commision expense untuk commercial ficture adalah flat 5% dan dapat mencapai 12% commision adjustment, biayanya tidak berubah berdasarkan number of sales, sehingga sebaiknya commision expense untuk commercial fixture dikategorikan ke dalam Channel Expenses.Wholesale suppliers2. Catalog Expense- Semua Sweet Catalog Expense dialokasikan ke Channel "Contract Distributor'- Catalog Expense yang mencakup beberapa channel dialokasikan menggunakan cost driver sales dollar pada setiap channel berdasarkan jumlah outlets- Semua Sweet Catalog Expense dialokasikan ke Channel "Contract Distributor' sudah dialokasikan dengan benar- Catalog Expense yang mencakup beberapa channel dialokasikan menggunakan cost driver sales dollar in each channel berdasarkan jumlah outlets tidak sepenuhnya benar, karena misalnya untuk Catalog Expense Incandecent Commercial sebaiknya dialokasikan seluruhnya ke Channel Contract Distributor karena berdasarkan pengamatan yang dilakukan Channel Industrial Supplier tidak membeli fixtures berdasarkan katalog.- Untuk channel lainnya yang tidak didedikasikan menggunakan katalog dapat dialokasikan dengan cost driver sales dollar pada setiap channel berdasarkan jumlah outlets.Contract distributors3. Advertising ExpenseSales volume in each channelTidak setuju. Advertising Expense berupa publikasi di majalah dan acara show tidak dapat ditelusuri dengan akurat ke product line dan channel, sehingga sebaiknya Advertising Expense dikategorikan kedalam "Channel Expenses".Industrial suppliers4. Cooperative Advertising ExpenseTidak menggunakan cost driver karena Cooperative Advertising Expense dapat langsung dialokasikan ke channel (Mass Mechandising dan Wholesale Supplier).Setuju.Government5. Sales Promotion ExpenseTidak menggunakan cost driver karena Sales Promotion Expense dapat langsung dialokasikan ke product line.Setuju. Hal ini didukung dengan sistem pencatatan Sales Promotion Expense berdasarkan product code.Original Equipment Manufacturers6. Warranty Expense- Expenditure lebih dari $10,000 tidak menggunakan cost driver karena dapat langsung dialokasikan ke channel yang bersangkutan- Expenditure kurang dari $10,000 dialokasikan menggunakan cost driver Sales Volume product line pada channelSetuju. Mempertimbangkan Warranty expense secara total hanya 1% dari total marketing expense.Product Lines7. Cash Discounts ExpenseDay's Sales Outstanding (DSO) large representative accounts pada setiap channelSetuju. Namun perlu diberi batasan spesifik mengenai larga representative accounts berupa jumlah sales dollarFixtures:Consumer Incandescent FixturesGeneral & Administration ExpenseConsumer Flourescent Fixtures8. Customer Service ExpenseTidak menggunakan cost driver. Biaya dialokasikan sesuai estimasi manajemen berdasarkan besarnya konsentrasi customer service untuk masing-masing channel.Tidak setuju. Alokasi Customer Service Expense tidak dialokasikan berdasarkan data kuantitas, sehingga kurang akurat. Maka sebaiknya Customer Service Expense dikategorikan sebagai "Channel Expense".Commercial Recessed Fixtures9. Marketing Management Expense- Marketing management expense untuk functional manager tidak menggunakan cost driver karena dapat langsung dialokasikan ke channel berdasarkan fungsinya yang terpisah- Marketing management expense untuk support function manager, bila memungkinkan, dapat dialokasikan ke masing-masing channel, apabila tidak, maka dialokasikan berdasarkan sales dollarsTidak setuju. Alokasi marketing management expense untuk support function manager sebaiknya dikategorikan sebagai "Channel Expense" karena pengalokasian dengan cost driver yang tidak tetap dapat menciptakan kebingungan dan kemungkinan tidak akuratnya pengalokasian semakin besar. Selain itu, pengalokasian berdasarkan sales dollar kurang tepat karena product line dengan harga yang lebih mahal cenderung akan mendapat alokasi biaya lebih besar, padahal tidak secara otomatis berhubungan dengan gaji manager.Commercial Fluorescent Fixtures10. Sales Policy ExpenseBiaya dialokasikan ke masing-masing channel sesuai estimasi manajemen, lalu dialokasikan ke product line berdasarkan sales dollars.Tidak setuju. Alokasi Sales Policy Expense tidak dialokasikan berdasarkan data kuantitas, sehingga kurang akurat. Maka sebaiknya Sales Policy Expense dikategorikan sebagai "Channel Expense". Selain itu, pengalokasian berdasarkan sales dollar kurang tepat karena product line dengan harga yang lebih mahal cenderung akan mendapat alokasi biaya lebih besar, padahal tidak secara otomatis berhubungan dengan tingkat dispute claim.Commercial Track11. Marketing Travel and Entertainment Expense- Marketing travel & entertainment expense yang dapat ditelusuri ke orang yang mengajukan expense report dapat dialokasikan ke channel yang bersangkutan- Marketing travel & entertaimnet expense yang tidak dapat ditelusuri ke orang yang mengajukan expense report (karena tidak ada regional manager), maka dialokasikan berdasarkan kombinasi antara estimasi manajemen dan sales dollar.Tidak setuju. Alokasi Marketing travel & entertainment expense sebaiknya dikategorikan sebagai "Channel Expense" karena pengalokasian dengan cost driver yang tidak tetap dapat menciptakan kebingungan dan kemungkinan tidak akuratnya pengalokasian semakin besar. Selain itu, pengalokasian berdasarkan sales dollar kurang tepat karena product line dengan harga yang lebih mahal cenderung akan mendapat alokasi biaya lebih besar, padahal tidak secara otomatis berhubungan dengan kenaikan/penurunan marketing travel & entertainment expense, seperti Government channel yang menghasilkan sales dollar paling kecil mungkin saja mengeluarkan biaya entertainment yang cukup besar.Commercial Ceiling Fixtures12. Postage ExpenseJumlah Catalog Expense masing-masing channelSetuju. Karena dijelaskan bahwa mayoritas Postage Expense adalah untuk Catalog.Commercial Wall Fixtures13. Admin Travel and Entertainment ExpenseBiaya dialokasikan ke masing-masing channel sesuai estimasi Director of Marketing, Pricing Manager, Marketing AnalystsTidak setuju. Alokasi Admin travel & entertainment Expense yang dialokasikan berdasarkan estimasi adalah kurang akurat dan cenderung menghasilkan alokasi yang subyektif dari masing-masing director/manager. Maka sebaiknya Admin travel & entertainment Expense dikategorikan sebagai "Channel Expense".Commercial External Fixtures14. Warehousing ExpenseInventory level masing-masing product line, lalu dialokasikan ke masing-masing channel berdasarkan sales levelSetuju.15. Meetings ExpenseBiaya dialokasikan berdasarkan estimasi manajemen.Tidak setuju. Alokasi Meeting Expense yang dialokasikan berdasarkan estimasi adalah kurang akurat dan cenderung menghasilkan alokasi yang subyektif. Selain itu, meeting expense merupakan corporate level expense. Maka Meeting Expense dikategorikan sebagai "Channel Expense".16. Fixed ExpenseBiaya dialokasikan oleh masing-masing departemen sesuai rutinitas, lalu dialokasikan ke masing-masing channel berdasarkan managerial judgment.Tidak setuju. Alokasi Meeting Expense yang dialokasikan berdasarkan managerial judgment adalah kurang akurat dan cenderung menghasilkan alokasi yang subyektif. Selain itu, Fixed Expense merupakan biaya tetap yang tidak berubah seiring dengan kenaikan/penurunan sales dari masing-masing channel. Maka Fixed Expense dikategorikan sebagai "Channel Expense".