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Abrams Company - Case Study Analysis on Management Control Systems

Autor:   •  February 13, 2012  •  Case Study  •  269 Words (2 Pages)  •  1,701 Views

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Abrams Company

CASE STUDY ANALYSIS ON MANAGEMENT CONTROL SYSTEMS

CASE CONTEXT

• Abrams Company is a manufacturer of parts for use in automobiles, trucks, buses and farm equipment. They produce three major groups of parts: ignition, transmission and engine parts. These products are sold to Original Equipment Manufacturers (OEMs) and wholesalers. The wholesalers, in turn resold the parts to "aftermarket" (AM).

• ABRAMS COMPANY ORGANIZATION (Partial):

• Product Division

 Managed by a VP& GM, expected to earn a target ROI.

 Responsible for production and selling major of parts produced to OEMs.

 Have separate OM Sales dept. that works with OEMs in developing new products or changing existing products.

 Remaining parts are sold to AM marketing division.

• AM Marketing Division

 Managed by a VP&GM solely responsible for marketing Abram's entire line of parts to AM wholesalers.

• 1992 Total Sales is $500M. Breakdown: $130M Ignition parts, $100M transmission parts, $90M engine parts and $180M AM Division sales.

• ROI Calculation

 Profit- overheads- imputed taxes

 Totals assets – current liabilities

 For each plant, a target ROI was calculated. Each product division's OEM sales were traced to the plants that made the parts.

 Book value was used to value property, plant,

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