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Compagnie Du Froid, S.A. Case Study

Autor:   •  December 9, 2018  •  Case Study  •  685 Words (3 Pages)  •  124 Views

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Assignment #3

  1. What is your evaluation of each of the three businesses? What is your evaluation of the managers who run them?


Actual Profit earned is $1242 which is $760 less than profit anticipated in flexible budget (in ‘000s). The increase in the profits above the actual budget is a result of the 20% increase in sales in 2009. Even though the profits were above the actual budget, France’s earnings were lower than it could have been, had the division budgeted for the actual volume of sales. Additionally, some of the decrease in earnings was because France had to sell some of its products to the Spain at a lower contribution margin. France also put a lot of resources into expanding to the west coast, which will take some time to show benefits. And this was not reflected in any of the budget plans. The manager here should be more focused on developing current relationships instead of diving time between two regions. It is important to focus on allowing one business to thrive in order to make expansion easier. Focusing more time on the “core” business should take precedent before anything else happens.


Actual Profit earned is $517 (in ‘000s). This is about equal to the profit that was anticipated in flexible budget. It seems as if a lot of labor was required to manufacture the ice cream in Italy. This may stem from the fact that the machines in Italy had to be moved from France. These machines were older and not as efficient as other machines that other divisions were using.

But unlike the France manager, the Italy manager took this factor into mind and included it in the profit plan. This resulted in a much more attainable and feasible sales goal. The Italy division achieved its sales goals and as a result, expanded into most of the country’s west coast. This might cause problems if goals are set higher the next year because of the country’s access to low-efficiency machines and high wages. But if sales goals are set appropriately, Italy will continue to meet the minimum that it needs to in order to keep up appearances.


(All in ‘000s)

Flexible Budget was $5065; Actual Profit earned was $4241; Profit Variance comparing to Master Budget was not good at (Profit Plan) = (1047); Variance comparing to Flexible Budget = (824). Spain’s output and comparison of a flexible budget instead of master budget, which shows that the Spain manger did an exceptional job by anticipated profits low. There were unfortunate situations that Spain had to deal with. For example, the average summer temperature was 1.7 degree Celsius lower than anticipated, which resulted in a price drop and may have contributed to the 5.1% decrease in sales. Also, Spain had to import product from France because of inventory issues that were a result of the new machines performing inadequately. This added an overhead expense of about $2147.


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