...BUS5431 - Managerial Accounting Individual Case Study 7-2 FIVE STAR TOOLS James Jiambalvo – Chapter 7 Case 2 Submitted by: K Greene Executive Summary: Five Star Tools is a small family-owned business that manufactures diamond-coated cutting tools (chisels and saws) used by jewelers. The production of these tools involves three major processes. The first of these processes involves steel “blanks” (tools without the diamond coating) that are cut to size. The second process involves the blanks being sent to a chemical bath that prepares the tools for the coating process. The final process is the major process in the line. The blanks are coated with diamond chips in a proprietary process that simultaneously coats and sharpens the blade of each tool. Following the coating process, each tool is inspected and defects are repaired or scrapped. In the past two years, the company has experienced significant growth and with that growth has come some growing pains. The company finds itself at capacity in the coating and sharpening process. This process requires highly skilled workers and expensive equipment. Because of growth a bottleneck has been created by this operational process and this in turn has cause the company to miss delivery deadlines on orders from several important customers. Maxfield Turner, the son of Frederick Turner, founder of Five Star Tools, president of the company is having a discussion over lunch with Betty Spence, vice president of marketing...
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...Precision Worldwide, Inc. Case Study BUS5431 – Managerial Accounting Summary Precision Worldwide, Inc. (PWI) manufactures industrial equipment and parts for sale in numerous countries. Repair and replacement parts account for a substantial part of the company’s business with the replacement part in question, steel rings, occur in the machines manufactured only in PWI’s German plant, but can also be used on some competitor’s machines. This steel ring has an average normal life of about 2 months. These individual rings are replaced as they wear out and recently competition has increased and now a competitor has entered the market with a superior and less expensive plastic ring that can replace the steel ring. The general manager of the German plant, Hans Thorborg has been considering the introduction of a similar plastic rings as a substitute for the steel rings. There is a lot of potential for this product in this market because there is a lower manufacturing cost and a greater durability compare to steel rings. The company is wondering if it is worth to shift from steel rings to plastic rings, but there are a lot of facts that they need to consider. There has been conflicting views concerning the future of the steel rings departments if they should change to plastic rings in order to acquire competitive advantage in this market and what will they do with the special steel after they have implemented the new product. A decision must be made as whether to start producing...
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