Essay About Recommendation Report And New Cost Allocations

Suregrip Corporation Case
Essay Preview: Suregrip Corporation Case
Report this essay
MEMORANDUM
TO: Marvin Pearson, President
FROM: Diane Dallas, Controller
DATE: June 21, 2011
RE: Analysis and Recommendation Report for Supergrip Corporation Limited
As per your request during our Executive Committee meeting, please find the attached a report
providing current growth analysis as well as option recommendations for Supergrip Corporation
Limited (SCL)s product lines in order to maximize profits for 2012.
The report provides analysis for 2012 budgeted and expected results including current cost
allocations and our pricing policy. Our current cost allocation has been refined in order to
better show the actual costs of each production unit we have. I also examined our competitors
pricing strategy and whether to have our product prices more in line with our competitors as
well as new cost allocations. Other possible options for SCL include introducing high quality
wrench sets as a new product line and whether leasing additional casting machinery is
necessary to increase capacity.
The results of my analysis conclude that if the company implement the recommended options
of adopting the new pricing model, introducing the wrench sets as new product line, and
leasing additional machinery to increase overall capacity, company profits would increase.
Additional recommendations include evaluating products by variable costing for management
decisions and improving management awareness and response to current problems and events.
Please contact me if you have any question or would like to further discuss about the options
analysis and recommendations.
EXECUTIVE SUMMARY
Supergrip Corporation Limited (“SCL”) is a large manufacturer in the market of producing and
distributing pliers to wholesalers who then sell to retail outlets, automotive service shops, and
other general manufacturing companies. There are currently has five product lines including
custom, economy, 15cm, 20cm, and chain pliers. Marvin Pearson, as the President of SCL, he is
unhappy with the companys financial results in the fiscal year of 2011, decreasing profits over
the past several years, and the low profit margins SCL is generating.
As a Controller