Insteal Wire Products – ABM at Andrews Case Study
Insteel group assignment
Make sure that all 4 task components are found in that document.
Group Project 1 (10% of course assessment)
A group report on the implementation of Activity Based Management at Insteel
You are asked to conduct an analysis of the activity based management activities at Insteel, provide some calculations in order to assess the viability of the new
investment in the manufacture of galvanised pallet nails, and judge to what extent the activity based management activities have been a success overall. You
should produce a report . Your report should answer four questions.
1. Restate the profitability of galvanised pallet nails for the period 1996-97 in mind which costs should be treated as decision relevant. taking into account the fact
that in that year nine months were spent on trying to make production work and only one month was actually spent on production.
We have already did this task: and i’ll attach it to you Attachment: Restatement, and here is how we did it.
1) We Excluded and eliminated certain costs which is (Information system and All EVA costs).
2) From the assigned costs we kept (Freight, Pricing & Advertising and (Labour only for one month).
3) We calculate (cost / driver). means cost divided the driver.
4) Multiplied (cost / driver) X (Units of Driver Consumed). See Exhibit 5.
5) Sales – (Material – ABC – Pricing & Advertising – Freight) = Profitability
• Now what you have to do is write the calculations in words what we did exactly and the reasons why we eliminated IS & All EVA Costs, why we don’t
calculate these costs in ABC?
• Why we calculate cost assigned Pricing & Advertising – Freight ?
Read Attachment: ABM at Andrews Case Study + Attachment: Restatement.
2. Produce a forecast of the profitability of galvanised pallet nails for the period 1997-98.
For the tasks 1 and 2 you will need the data from the Insteel case study and you will need to make use of the activity based costing methodology.
• You have to do the forecast calculations for your 1997-98 using table 2, Exhibits 4 and 5 in Attachment: ABM at Andrews Case Study. Put your calculations in a
format of table. Also See Attachment name: Restatement to help you.
• Tasks 1 and 2 should have a written solution. write the calculations in words.
3. Prepare a list of reasons for why activity based management at Insteel could be considered a success and a list of reasons why it could be considered a failure.
4. Offer an overall verdict of whether activity based management was a success.
For the tasks 3 and 4 you should reflect on the paper by Narayanan and Sarkar (2002).
(For tasks 3 and 4 like you need to think about the arguments in Narayanan and Sarkar and decide which ones work and which ones are the most important.)
• First, Read Attachment: ABM at Andrews Case Study + Attachment: Restatement
To do tasks 1 & 2.
• Second, Read Attachment: Insteel Explanation article
To do tasks 3 & 4.
This sections (1,2,3 and 4) should be approximately 900 – 1000 words in length.
The department has a zero tolerance towards plagiarism (coping, outsourcing, etc.). Also, if a student’s report is taken from another student’s report, both students
will be awarded ZERO.
PLEASE, WRITE IN YOUR OWN WORDS
Warning: If I check your work and it’s copied from the internet or anywhere else… you will be in a big trouble plus your mark will be counted as ZERO.
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