Management Accounting Case Book

Patterson Manufacturing

Shane Moriarity, University of Oklahoma and Unitec New Zealand; Andrew Slessor, Unitec New Zealand

 

A SUBSIDIARY HAS BEEN ASKED to recommend a plan for improving their profitability. They have proposed to outsource the production of its largest-selling product, thereby reducing its cost and allowing more competitive pricing. Students are asked to evaluate the proposal and recommend to management whether the proposal should be adopted.

The case is suitable for an advanced undergraduate managerial accounting course or an MBA accounting course. It would be helpful for at least some of the students to have completed a management class with topics on business strategy.

Keywords: make or buy analysis, strategy, problem identification.

Patterson Manufacturing

Shane MoriarityUniversity of Oklahoma and Unitec New Zealand

Andrew SlessorUnitec New Zealand

INTRODUCTION

The vice president at your company, Columbia Holdings, has given you a new assignment: “Recently I asked the folks at Patterson Manufacturing to develop a strategy for improving their profitability. They have responded with a proposal. I want you to evaluate the proposal: Is it viable? Is it sustainable? Visit their operations and bring back a recommendation.”

As you travel to the site you review a brief history of the firm. Patterson Manufacturing was founded in a small northeastern city more than a century ago. Wesley Patterson started the firm alongside a fast-moving stream that provided ...