Introduction Armco Inc., is the sixth largest producer of stainless, electrical, and carbon steels and steel products in the United States, and the Armco Inc Midwestern Steel Division is its largest division. The largest subdivision of the Steel Division is the Kansas City Works which produces two products: grinding media and carbon wire rod. In January 1991, a new performance measurement system for Kansas City Works was implemented by Bob Nenni, the Director of Finance, with the aim of providing
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Armco, Inc.: Midwestern Steel Division 34. J. Roberts, The Modern Firm: Organizational Design for Performance and Growth (New York, Oxford University Press, 2004), p. 181; and D. L. Wenner and R. W. LeBer, “Managing for Shareholder Value From Top to Bottom,” Harvard Business Review, 67, no. 6 (November–December 1989), pp. 2–8. 35. S. Datar, S. L. Kulp and R. A. Lambert, “Balancing Performance Measures,” Journal of Accounting Research, 39, no. 1 (June 2001), pp. 75–92; G. A. Feltham and J. Xie
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- The implementation of the process was done so quickly, that the top managers could not trainother managers to use the new system. And they could not introduce the new system in a step bystep format so they can be more aware day by day on what is going to be changing in the future.Here are the changes that can be recommended for the new system:- Specify the different kind of costs (fixed and variable), so that managers can have an idea of thedifferences and variations of each type of costs.- Implement
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Team 4 Case #4 Armco, Inc.: Midwestern Steel Division 1. The old performance measurement system had the following problems: - It did not provide information on the product mix being produced. It provided data on total tonnage produced, but did not breakdown “what” was produced. - The system compared “actual” to “objective” but did not provide data on what factors caused variance. - Costs were not broken down by: o Fixed costs o Variable
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Case – The Armco Kansas City Works The previous performance measuring system at Armco was based on cost and safety factors, which were considered the primary desired results parameters. But looking at the nature of operation of the company, which is based on manufacturing, the higher management recognized that these parameters of measurement were not adequate to measure the performance and efficiency of the process. In other words, more knowledge of the desired results was to be gathered and performance
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ARMCO INC. CASE CHAPTER 2 Armco Inc. is a producer of a variety of steel products such as stainless, electrical, and carbon, and many more. Armco was a leading steel manufacturer in the United Stated, being ranked sixth in 1990. Within Armco Inc., their Midwest division, Kansas City Works, was the largest. In 1990, Kansas City Works division approximately accounted for $250 million in sales, but within the last decade, sales declined. Two products were primarily produced in Kansas City Works
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| Management & Control Systems | Learning Group 4 | | [Geef de naam van de auteur op] | 9-2-2014 | This document contains all the cases made by learning group 4. | 1. What was wrong with the Midwestern Steel Division’s old system? (As part of your analysis, study Exhibit 3 carefully and figure out what the columns tell you, individually and in total.) Before 1991 the performances of the cost center managers and their superiors in the plant were evaluated in terms of cost
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1. Context 1.1 Brief analysis of the situation The management of Armco, Inc.: Midwestern Steel Division began implementing a new performance measurement system in January 1991. Bob Nenni, Director of Finance for the Midwestern Steel Division, explained the rationale for this new system: The old system had managers spending more time explaining why changes in cost were due to accounting system problems than they did fixing the problems. The new system will provide for management better
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construction company that purchased pipes from Armco, Inc., a pipe manufacturer, to be used in the construction of a passive solar heating system. Armco’s ten foot pipes were designed to be able store water horizontally but had also proven to be successful in previous construction projects when installed vertically. New Horizon’s solar heating system design called for five, thirty foot, vertically installed pipes which had not been tested. However, Armco didn’t manufacture this length of pipe so ten
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I. Introduction In January 1991, the management of the Kansas City Works of Armco’s Midwestern implemented a new performance measurement system that was “designed to give us better management focus on the things that are most important for them to worry about, earlier warning problems and improved commitment to achieve objectives”. However, the changes top management wanted to institute and integrate into the system were met with less than favorable impressions, not excluding outright dissatisfaction
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