Colorscope Case Study Analysis Example

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Colorscope

...Accounting and Control Spring 2007 For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms. 15.963 Managerial Accounting and Control Spring 2007 Prof. Mozaffar Khan MIT Sloan School of Management Colorscope, Inc. What is the external environment that Colorscope currently faces? „ „ „ „ Cheaper technology is lowering entry barriers. Better technology is eroding quality-based competitive advantage. Intense competition from „ „ „ small stand-alones, large national chains, and backward (vertical) integration by large printers. 15.963 [Spring 2007] Managerial Accounting & Control 2 Colorscope, Inc. „ Intense price pressures, and erosion of rents (high margins). What has Colorscope’s competitive advantage been, and why? „ „ Reputation for quality - poor quality is extremely costly because „ „ „ pre-press is the last stage at which an error can be detected, mistakes in advertised price can be expensive for content provider to honor, and merchandisers take great pride in their catalogs. 15.963 [Spring 2007] Managerial Accounting & Control 3 Colorscope, Inc. „ Fast turnaround – this is very valuable to the content provider because it gives them more time to decide, for example, how much to discount which items (i.e., it gives them more time to observe their competitors actions in a fluid environment). Actual......

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Case Study

...University of Phoenix Material Case Study Analysis Paper Prepare a 1,400 to 1,750-word case study analysis paper based on the University of Phoenix Material, “Case Study for Student Analysis,” located in Week Two of the COMM/215 page. Below is a detailed description explaining how to prepare a case study analysis paper. _____________________________________________________________________________ Typically written in narrative form, a case sets forth, in a factual manner, the events and organizational circumstances surrounding a particular managerial situation. Placing the reader at the scene of the action, the real events presented provide an opportunity to help evaluate alternative courses of action. Case analysis is used in academics to help you demonstrate your ability to evaluate situations critically, to apply concepts you have learned in a class, to solve problems, and to communicate your findings and conclusions. The purpose of this exercise is to introduce you to case studies and the analysis process, and to a proper format for writing the case study analysis report. Try not to worry about trying to find the "right answer" to a case. Usually, there is no single right answer. Most cases are intentionally ambiguous and can be viewed from many different perspectives. Several feasible solutions are usually available to any give case. The best solution is the one you can best support with thoughtful analysis, logical arguments, and substantiating evidence from......

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Colorscope Case Study

...3. Firs of all, full absorption cost analysis can guide pricing decisions. To be survive and profitable in the long run, the prices charged must exceed total costs. As indirect costs, such as rent cost, are also necessary supporting cost to complete the job, indirect cost should not be ignored. If Colorscope uses the direct cost analyses to make its pricing decisions, the product will be under cost, resulting in under pricing. The underpriced product, although the manager has originally thought that it could bring about increasing, will in fact lead to less revenue than the cost of resources they use. What’s more, by taking indirect costs into consideration and allocating overhead costs to the product, company can calculate a cost of each particular product depending upon the resources it consumes. In addition, full cost analysis contributes to better management. Inaccurate product costs will mislead managers about the profitability of different products. Therefore, managers might unknowingly promote unprofitable products while deemphasizing profitable products. Lastly, full absorption cost analysis helps to find unnecessary costs that should be eliminated, to manage the overhead costs that are usually fixed in the short run but are variable in the long run, and to improve product quality through better product and process design. The full cost analysis is based on the assumption that overhead costs are variable with cost object. For example, the supervision, quality......

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Case Study Case Study Case Study

...This case study is an excellent example of how different types of parties can be brought together in a large scale transaction and how the original energy of those early meetings can be lost over time. I imagine that when Anthony Athanas was purchasing those old piers back in the 1960s many, if not all, of his colleagues, friends, and family members told him that he was off his rocker. I’m sure Athanas was looking at this land as his family’s ticket to financial prosperity and somewhat of a legacy that he could leave to his descendants for years and years to come. One of the items I wish the case would have divulged is the amount of money that Athanas had invested in the properties. For me this information would have given an insight to his net worth and how much he had riding on this investment. I assume it was substantial given his actions later in the process. Twenty years later Athanas’ dreams came true and all those naysayers were more than likely green with envy. The amount of pride Athanas’ had in his investment at that moment had to have been insurmountable. Being approached by a big time real estate development company and their extremely wealthy client, Hyatt Corporation, must have made Athanas feel larger than life and made him feel like something he isn’t, which is a developer himself. The case doesn’t give much insight into whether Athanas had any representation or anyone consulting him throughout the process. From the beginning, I saw this as matchup...

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Colorscope

...Management Accounting and Control Spring 2007 For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms. 15.963 Managerial Accounting and Control Spring 2007 Prof. Mozaffar Khan MIT Sloan School of Management Colorscope, Inc. „ What is the external environment that Colorscope currently faces? „ „ „ Cheaper technology is lowering entry barriers. Better technology is eroding quality-based competitive advantage. Intense competition from „ „ „ small stand-alones, large national chains, and backward (vertical) integration by large printers. 15.963 [Spring 2007] Managerial Accounting & Control 2 Colorscope, Inc. „ Intense price pressures, and erosion of rents (high margins). „ What has Colorscope’s competitive advantage been, and why? „ Reputation for quality - poor quality is extremely costly because „ „ „ pre-press is the last stage at which an error can be detected, mistakes in advertised price can be expensive for content provider to honor, and merchandisers take great pride in their catalogs. 15.963 [Spring 2007] Managerial Accounting & Control 3 Colorscope, Inc. „ Fast turnaround – this is very valuable to the content provider because it gives them more time to decide, for example, how much to discount which items (i.e., it gives them more time to observe their competitors actions in a fluid environment). „ Actual costing......

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Colorscope, Inc

...resource costs to cost objects base on separate activities. In stage one, the total overhead costs are allocated to the separate activities base on different resource drivers. In stage two, the costs of activities are allocated to each cost object base on cost drivers. In this case, because the wages and depreciation costs can be traced directly to each workstation, we only need to allocate the rent and other indirect costs to the five workstations. In stage two, we have to assign the overhead cost of each workstation to each job base on the labor hours that each job consumed. Table 1: Stage One: The total overhead allocation to different workstations Job Preparation Scanning Assembly Output Quality Control Idle Total Wages $ 8,000 $ 32,000 $ 64,000 $ 10,000 $ 11,000 $ 125,000 Depreciate 500 25,000 $ 10,000 14,000 500 50,000 Rent 2,000 2,000 8,000 4,000 1,000 13,000 30,000 Others 1,311.5 5,246 10,492 1,639 1,311.5 20,000 Total Overhead 11,811.5 64,246 92,492 29,639 13,811.5 13,000 225,000 Allocation rate $ 73.82 $ 100.38 $ 72.26 $ 148.20 $ 86.32 In table 1, we allocate the total overhead costs to different workstations. Because the labor hours of each workstation are available in this case, we can use the labor hours as the cost drive to assign the overhead of each workstation to each job. The overhead cost per labor hour is the rate that we use to allocate the indirect cost. Table 2: Stage two: Overhead costs assignment to Job 61001 Job 61001 Job......

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Colorscope

...Recommendations for COLORSCOPE INC. By GROUP – 2 (GROUP - CD) A report submitted in fulfillment of the assignments for MANAC - II WMP 2013 [pic] Indian Institute of Management, Lucknow Noida Campus 2010 Date: 28/October/2010 |WMP6004 |AKSHAY BANSAL | |WMP6005 |AMIT AGARWAL | |WMP6007 |ANKIT SURI | |WMP6008 |ANKUSH VED | |WMP6009 |ANUBHAV KUMAR JAIN | |WMP6012 |BIKRAMJIT DEBNATH | |WMP6015 |CHANDER SHEKHAR SIBAL | |WMP6052 |SUROJEET SADHU | CASE NAME: ColorScope Situation: Colorscope is an example of a small firm seeking ways to compete in an increasingly intense competitive environment in pre-press printing. The external environment had changed with the advent of new technology, and new players entering the market had increased the supply side of the industry. Because Colorscope was not the market leader, its only option is to adopt a cost containment and quality control strategy. A simplified activity-based costing system was used to measure customer profitability. Complications: Colorscope found that many customers were unprofitable, and a few customers were responsible for most of the firm's profits. On further analysis, it was......

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Colorscope Case Study Solution

...home front which may lead to tension and increased numbers of divorces etc. * Political issues: Loss of trust in administration and the government which may lead to political instability * Tension over taxes rise: Unemployment also brings up discontent and frustration amongst the taxpaying citizens. In order to meet the demands of the unemployment fund the government many a times may have to increase the taxes thus giving way to restlessness amongst the taxpaying citizens. * Insecurity amongst employees: The prevailing unemployment and the plight of the unemployed people and their families may create fear and insecurity even in the currently employed people. * Crime and violence: Increase in the rate of crime. * Suicide cases: Increase in the rate of suicide attempts and actual suicides as well. * Social outing: Unemployment may bring a decrease in social outings and interactions with other people, including friends. * Standard of living: In times of unemployment the competition for jobs and the negotiation power of the individual decreases and thus also the living standard of people with the salaries packages and income reduced. Causes of Unemployment in Pakistan: As our title of this post is causes and solutions of unemployment in Pakistan therefore in this part of post we will discuss about causes of unemployment in Pakistan as there are many reasons or causes of unemployment in Pakistan but most important causes of unemployment are......

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Colorscope Case Study

...3. Firs of all, full absorption cost analysis can guide pricing decisions. To be survive and profitable in the long run, the prices charged must exceed total costs. As indirect costs, such as rent cost, are also necessary supporting cost to complete the job, indirect cost should not be ignored. If Colorscope uses the direct cost analyses to make its pricing decisions, the product will be under cost, resulting in under pricing. The underpriced product, although the manager has originally thought that it could bring about increasing, will in fact lead to less revenue than the cost of resources they use. What’s more, by taking indirect costs into consideration and allocating overhead costs to the product, company can calculate a cost of each particular product depending upon the resources it consumes. In addition, full cost analysis contributes to better management. Inaccurate product costs will mislead managers about the profitability of different products. Therefore, managers might unknowingly promote unprofitable products while deemphasizing profitable products. Lastly, full absorption cost analysis helps to find unnecessary costs that should be eliminated, to manage the overhead costs that are usually fixed in the short run but are variable in the long run, and to improve product quality through better product and process design. The full cost analysis is based on the assumption that overhead costs are variable with cost object. For example, the supervision, quality......

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Case Study

...The Case Study Approach Linda P. Williams Liberty University Online Author Note Linda P. Williams, Department of Psychology, Liberty University Online Correspondence concerning this article should be addressed to Linda P. Williams, Department of Psychology, Liberty University Online, 1971 University Blvd, Lynchburg, VA 24515, E-mail: lwilliams91@liberty.edu The Case Study Approach Introduction At some point during the pursuit of a degree psychology, the time comes when a student must learn various research techniques. One of the many approaches is case study, which this paper will focus on. Areas of discussion include reasons for using a case study, advantages/disadvantages to the approach, and ways acquire information to perform a case study. The essence of a case study A case study is used to offer a mental accounting of a person, school, neighborhood, business, or group of individuals over the course of time, way of research. It is sometimes referred to as naturalistic observation, but does not always follow the same protocol. Mental accounting is done by means of observation of various behavior or mind sets operating in their natural environment. This is noteworthy, especially when participants have a distinct disorder worthy of being studied to further the cause of research and development. Depending on the purpose of the investigation, the case study may present the individual’s history, symptoms, characteristic behaviors, reactions to......

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Case Study

...Colorscope Case Study 1. Competitive advantages of Colorscope Colorscope, which was founded in Southern California in 1976 engaging in providing the special-effects photography services to the local advertising agencies. Since the reputation has increased with the excellent sales performance in 1988, Colorscope main client was the giants in the field of entertainment and ad-agency. Therefore, compared with other competitors, the competitive advantages of Colorscope are: * Customer loyalty and business reputation. Since Colorscope has already founded for several decades it has established a fixed customer relation with the high value customers within the print and pre-press industry. For instance, as Exhibit 3 shows that some loyalty customers of Colorscope are the large national companies which ranked at top 15 in American printers, especially the Donnelly which has ranked at first in American printers with high level sales revenue. Therefore, compared with other companies, Colorscope can provide personalized service to the specific company which needs a specialized service. * Operational and training method. Under a unique training method, the employees of Colorscope grasp multitask working skills so that they can handle all works during the producing process. In addition, the operational method was significantly efficient with the appropriate work-flows and pre-press facilities before 1990, which means its productivity can be developed at a high level compared......

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Case Studies

...Case studies Name: Tutor: Course: Institution: Date: Flying to the Auto Bailout on a Private Jet Basic problems In this case study, there is wastage of resources. The CEOs of the nation's three largest automobiles uses private jets to attend the corporate public relations congress. This is wastage of resources since they are using private jets to travel when their companies are struggling to stay afloat. Ignorance is another basic problem evident in this case study. These CEOs are very ignorant. They attend the corporate public relation congress in Washington unprepared and thus appear to know nothing about their problems. The three companies, GM, Ford and Chrysler, lack the concepts of public relations. The main issues American economy is melting down. Most of the workers are losing their jobs since the companies cannot handle many workers anymore. The companies have got inadequate cash. Bankruptcy is another main issue experienced in this case study. The General Motors Company and the Chrysler can no longer pay their debts. Key decisions * According to the case study, the leaders have to come up with a new public relations strategy. * The CEOs should correct any mistakes they have made before such as using private jets to travel. * Introduce innovation in products * The auto industry of the US should promote its products. * Ensure transparency in business operations. SWOT analysis Strengths * Availability of resources for the......

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Colorscope

...1. Why would any customer, let alone large advertising agencies and departmental stores, go to Colorscope rather than go to large printers listed in Exhibit 3? Before desktop publishing became popular, Colorscope had a competitive advantage through its expensive proprietary computer equipment that could produce complicated print special effects. Colorscope had also been able to build strong relationships with valuable customers through the years and had a good reputation for providing high quality work in its field. Another reason why Colorscope could compete with the large printers was the high fragmentation of the pre-press industry. This was due to the fact that most pre-press companies focused on just a few print products (e.g. catalogs, newspapers or coupons) and had strong specialized expertise in these. Because of that, Colorscope could provide higher quality than the large printers in the fields where it had specialized. Before the dawn of desktop publishing, which led to commoditization of the services, competition was more based on quality than on price. As a small agency, it is also probable that Colorscope could be more flexible in meeting specific demand and provide more tailored services to the few customers it served, compared to the large printers which would have a bigger and more bureaucratic organization. 3. What you have done above is a “full-cost” analysis. This is in contrast to a “direct-cost” analysis that ignores overhead costs. Is full......

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Colorscope Case

...963 Management Accounting and Control Spring 2007 For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms. 15.963 Managerial Accounting and Control Spring 2007 Prof. Mozaffar Khan MIT Sloan School of Management Colorscope, Inc. „ What is the external environment that Colorscope currently faces? „ „ „ Cheaper technology is lowering entry barriers. Better technology is eroding quality-based competitive advantage. Intense competition from „ „ „ small stand-alones, large national chains, and backward (vertical) integration by large printers. 15.963 [Spring 2007] Managerial Accounting & Control 2 Colorscope, Inc. „ Intense price pressures, and erosion of rents (high margins). „ What has Colorscope’s competitive advantage been, and why? „ Reputation for quality - poor quality is extremely costly because „ „ „ pre-press is the last stage at which an error can be detected, mistakes in advertised price can be expensive for content provider to honor, and merchandisers take great pride in their catalogs. 15.963 [Spring 2007] Managerial Accounting & Control 3 Colorscope, Inc. „ Fast turnaround – this is very valuable to the content provider because it gives them more time to decide, for example, how much to discount which items (i.e., it gives them more time to observe their competitors actions in a fluid environment). „ Actual costing......

Words: 805 - Pages: 4

Cost Accounting: Colorscope Case Analysis

...Colorscope must alter its operation sequence in order to reduce idle time during assembly. Since the company is following a sequential processing of jobs, a high idle time for assembly means that scanning is taking a significant amount of time. Colorscope may consider purchasing the technology of the next generation. Further, Colorscope must learn not to put all of its eggs in one basket: it should not allow one customer to account for more than 30% of its business. The company should attempt to retain its currently profitable clients by providing competitive pricing specialized attention to each client. Since Colorscope is not a market leader, The five departments(prep, scanning, assembly, output, and quality control) serve as appropriate overhead cost pools for Colorscope. These are the major states in the production process. Hours are not clocked in these departments in fixed proportions. In order to effectively determine the amount of overhead in each overhead cost pool, we first allocated overhead to the cost pools(the five departments), and then allocated : Before desktop publishing became popular, Colorscope possessed a competitive advantage through its expensive proprietary computer equipment that could produce complicated print special effects. Colorscope has also been able to build strong relationships with valuable customers through the years. The company has always possessed a solid reputation for providing high quality work in its field. Another reason why......

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Colorscope Inc.

Introduction

Andrew Cha, who is a specialist in graphics designing, started his own company after years of hard work and through experience gained by working with different companies; he established the firm with the name of Colorscope in 1976. Colorscope has different portfolio of customer ranging from impulse customers to long-term loyal customers, the amount of loyal customers comprise 80% of the total customers of the company.

colorscope case solution

The operational process at Colorscope started from receiving orders of customers; these orders were mostly related to magazines and some other sort art and graphics work. All the specifications and design requirements were recorded on phone calls and then the person who was entitled to record the task did the preparation; this involved the creation of templates by physically cutting and pasting text, graphics and photographs, and special effects were also included at an additional cost. Then in the next step of the production process, template pictures were digitalized and scanned. Further the task was sent to the assembly division where operator changed the color and shade of scanned images as per the specifications of the customer. Then the task was finally sent for quality control to the Quality Control (QC) Department and if the task was not as per the specifications of the customer; it was sent back to that specific process for reworking which meant that all the following processes had to be repeated for that specific task. Once passed from the QC Department; the task was completed.

Problem Statement

Colorscope is facing difficulties in retaining its customers partly because of the quality of their work and due to the prices charged to customers along with the absence of some sort of internal controls.

Analysis

Work Flow at Colorscope:

The work flow started at Colorscope from receiving orders on phone calls and then recording the specifications that might cause some data to be misinterpreted or erroneously recorded which caused reworking on the task, so that it was fully completed and returned to the QC Department. Since the receiving and recording of the task was the first stage of work; hence if there was any mistake at this stage then the entire process had to be repeated in order to rework the task. In the next stage of the process, templates of picture were created by physically cutting and pasting the graphs, images and text.

The scanning process was done using three laser scanners and the task was sent to the assembly department once the scanning process was completed. The assembly was done using the old fashioned and obsolete technology, which resulted in inferior quality of output and increased cost. New technology should be brought in to remain competitive in the printing industry and monitoring of work should be carried out to suggest the improvements needed.

Pricing Strategy:

Costs of work done at each process of the given task has to be analyzed and costing system such as activity based cost should be used while allocating the overhead cost such as rent cost to each process. Activity/capacity responsible for incurring the cost (cost driver) should be used to allocate the cost between each process. Since rent expenses directly relates to floor space hence; it would be reasonable to allocate rent on the basis of floor area occupied by each department.

Cost per task needs to be calculated as per Appendix-A based on activity based costing, and loss-making tasks should be evaluated further. In this evaluation, cost incurred as a result of in-house error and cost associated with idle time and space should not be considered as these are abnormal losses. New technology should be brought in to minimize the depreciation cost due to the use of old equipments.

This is noted as part of the job costing process that almost all the loss-making tasks have been reworked either due to changes in customer specifications or in-house errors; this should be evaluated that what is the policy of additional charges on rework requested by customer and the customer should be told in advance that later changes in work will require additional cost to be paid. Frequency of reworking tasks should be minimized. As per the Appendix-B, 8% of the jobs were reworked during June 1996 regarding the task preparation process and 15% in respect to rest of the three processes.

Accounting and Control System:

Activity based costing can be used as an accounting system for arriving at the base price of each task done by justifying the work against cost consumed by each process. So that each process is evaluated against its performance and cost consumed.

Control system should be in place for proper and smooth operations at all the stages of production processes. The work flow at the Colorscope is well standardized but it is not documented. It should be documented and communicated at all levels of production processes hence; there is no point in deviating from the standard procedures. Customer specifications should also be sent to each production process so that it is matched with the work completed at each step that will again help in minimizing the chances of rework.

Since all the staff is cross-trained and can perform the activities of the entire process involved without the need of any additional training hence; at every stage the task should go through a quality control process before it is forwarded to the next level, this will help in minimizing the chances of rework suggested by the quality control division at the final stage.

As part of the internal control system, supervisory controls should be introduced at all stages of processes in order to assess the performance of each individual and processes involved in the completion of a task, and based on that supervision corrective actions should be implemented.

Conclusion:

Based on above analysis, operations of Colorscope should be documented and well communicated regarding all the processes, and customer specifications should also be communicated to staff at all stages in writing so that reworking of tasks can be avoided. In addition, new technology should be brought in to enhance the quality of output and to minimize....................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Small company in the graphic arts business faces stiff competition in prices. The company should be responsible for reducing costs and improving the process of adoption. "Hide
on VG Narayanan, Joseph Cha Source: Harvard Business School 16 pages. Publication Date: December 9, 1996. Prod. #: 197040-PDF-ENG

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Colorscope Inc.

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