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Management accounting


CASE STUDY 3 Easton Corporation makes two different boat anchors—a traditional fishing anchor and a highend yacht anchor—using the same production machinery. The contribution margin of the yacht anchor is three times as high as that of the other product. The company is currently operating at full capacity and has been doing so for nearly two years. Bjorn Borg, the company’s CEO, wants to cut back on production of the fishing anchor so that the company can make more yacht anchors. He says that this is a “no-brainer” because the contribution margin of the yacht anchor is so much higher. Required: Write a short memo to Bjorn Borg describing the analysis that the company should do before it makes this decision and any other considerations that would affect the decision. PART B – 10 Marks You had to practically apply the decision making models and tools you have learned about throughout the subject. Reflect on your experience in completing the various assessments in this course. What major learning on measurement and decision making can you apply in practice as a manager in your organisation? The list below provides some questions you may wish to consider in your critical reflection. These are suggestions only. You may address issues that are not on this list. 1. Has what you have learned in this subject created an increased awareness of the importance of decision making as a management activity? Why or why not? 2. Which model or tool most influenced you as you worked your way through the subject? Why? 3. How critical do you believe the quality of decision making is to an organisation? Why? 4. Which of the models and tools would you use as a manager? Why?