Hanson Manufacturing Company Case Study Essays

...For the exclusive use of Y. ZHAO Harvard Business School 9-193-159 May 26, 1993 Kaufmann ManufacturingCompany (A) Ms. Mary Kaufmann, president and sole owner of Kaufmann ManufacturingCompany (a manufacturer of a single, specialized, industrial product), had just received the financial results of her company for the second six months of 1992. At first, she was pleased by what she observed. However, when she compared these results to those of the first six months of 1992 and the budgets she had originally cast for the two six-month periods (see Exhibits 1, 2 and 3), she became confused. Ms. Kaufmann could not understand why profits had increased so dramatically in the second half of the year, even though actual sales volume had fallen to 188,000 units. She thought that a part of the improved profit could be attributed to the $3 selling price increase which she had authorized effective July 1, 1992; however, she did not believe its effect would be so dramatic. She thought that another part of the profit increase could be attributed to control of production costs, yet when she examined the manufacturing statements (Exhibit 3) she observed that production showed an overall unfavorable variance of $217,000 for the second six months of 1992 as compared to an overall favorable variance of $124,000 for the first six months of 1992. In order to gain an understanding of these...

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