VERSHIRE COMPANY

VERSHIRE COMPANY Rochak Acharya (2)Swati Kamilla (21)Prerna Malhotra(30)Milind Nayak (37)Prasanna Pujari (42)Aakanksha Vats (61)

About VershireLarge business in the packaging industry with several major divisions.

This division is one of the largest manufacturers of aluminum beverages cans in the United States.

Customers loyalty was always at stake.

The hierarchy normally consisted of a divisional manager being reported to by two line managers (manufacturing and marketing depts.)

Industry BackgroundTraditionally, containers were made from one of several materials: aluminum, steel, glass, fiber-foil or plastic.In 1970, steel cans accounted for 88% but by 1990s aluminum cans started dominating and accounted for 75% of the metal can production.For beverage processors, the cost of the can usually exceed the cost of the contents.

Aluminum : New SubstituteProduction efficiencyLighter weight could help in transportation costs Aluminum is easier to lithograph, producing a better reproduction at lower costs.Aluminum is favored over steel as a recycling material, because the lighter aluminum can be transported to recycling sites more easily, and recycled aluminum is far more valuable.Aluminum is known to reduce the problem of flavoring one of the major concerns of both the brewing and soft drinks industries.Hence aluminum is a great threat to the traditional tin plated steel, despite being expensive.

Sales Budget

Sales Budget

Objectives of Review and Approval process:

To assess each divisions competitive position and formulate courses of action to improve upon it.To evaluate actions taken to increase market share or to respond to competitors activities.To consider undertaking capital expenditures or plant alternations to improve existing products or introduce new products.To develop plans to improve cost efficiency, product quality, delivery methods, and service.

Manufacturing BudgetAt Plant Level: Calculation of Profit= Sales budget-(Budgeted Variable Cost + Budgeted Fixed Overheads)Budgeted Variable Costs included direct Materials, Direct labor and Variable Overhead Budget

Manufacturing BudgetRole of Plants Industrial Engineering Department:

Deciding Cost Standard and Cost Reduction TargetsDetermining Budget Performance Standards Determining Cost Centers within the Plant:Budgeted Cost reductionsallowances for unfavorable VariancesFixed costs

Performance Measurement and EvaluationMonthItemsActual $Variance $Year to Date Variance $Total Sales Variances due to Sales price Sales mix Sales volumeTotal Variable Cost of Sales Variances due to Material Labour Variable overhead Total Fixed Manufacturing Cost Variances in fixed costNet ProfitCapital EmployedReturn on Capital EmployedResponsibility of Sales departmentprice,

sales mix and

delivery schedules

Management IncentivesOnly capable managers were promoted with profit performance being the main factorCompensation package was tied to achieving profit budgetsPlant efficiency reports were highly publicized even though different shops had different set up times

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