Product Profitability at Merrydale Limited
This case explores the use of accounting information in decision-making. As the title implies, the case addresses the product-range decision: how to decide which products to drop from a product-line when the company (Merrydale) is making losses. Primarily it is an exercise in relevant costs and the contribution approach to decision-making. However other issues are also raised, for example the need for costing systems and questions of strategy.
KeywordsMarginal Cost Product Profitability Full Cost Unit Contribution Unit Profit
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- 1.For product-market strategy see: Ansoff, I., Corporate Strategy (Penguin Books, 1968).Google Scholar
- 2.For linear programming see: Haley, K.B., Mathematical Programming for Business and Industry (Macmillan, 1967).Google Scholar
- 3.For management information design for operational, management and strategic decisions see: McCosh, A.M., Rahman, M. and Earl, M.J., Managing Information (Macmillan, forthcoming)Google Scholar