Management Accounting Case Book

Product Costing at Fine Foods: Is it a Symptom or the Problem?

David Axelsson, Marcus Fogelkvist, and Gary M. Cunningham

THIS CASE FOCUSES ON ISSUES THAT APPEAR TO BE problems but are symptoms of more fundamental problems. These are common issues in management accounting and management control situations. It also provides a good overview of product costing and performance evaluation, accounting for special orders, and agency costs and benefits including nonquantifiable costs and benefits. The case is based on an actual food processing company that had these issues. It can be used to cover manufacturing accounting in many other contexts as well.

This case is designed primarily for master’s degree students taking advanced management accounting or management control courses. It can also be used in advanced undergraduate classes in management accounting in which students have had a prior background in basic cost and management accounting concepts.

Keywords: symptoms vs. problems, product costing, performance evaluation, special orders, nonquantifiable agency costs and benefits.

Product Costing at Fine Foods: Is It a Symptom or the Problem?

David Axelsson is the accountant and controller for an expanding wholesaler, board member for a family business, and member and vice-chairman of the board of directors for a local bank.

Marcus Fogelkvist is the international research and development group controller for a large hard goods manufacturing multinational company.

Gary M. Cunningham, ...