
Case Studies
The case studies below describe how real companies use data analytics employing managerial costing and related financial and operational data to address strategic and operational challenges. (Names have been changed at the companies' request.)
Health and Food
Industrial
Technology

Leaves Inc
Leaves Inc is a manufacturer of tea products in all sizes, types, and packages. Their products are manufactured in different plants around the world and sold in multiple countries to retailers and customers in the hospitality industry. While the company had good insight into the product cost of goods manufactured, it lacks insight into the cost to serve its customers. Implementation of a cost-to-serve costing model enabled the company to gain insights on the true profitability of its customers, resulted in a number of strategic decisions by its management.

LePetomane Gas
LePetomane Gas is a distributor of welding and other industrial gasses. Management was concerned that their costing system did not provide an accurate measure of customer profitability and the information necessary to effectively manage revenue. This case describes the development of a costing system that provided such information, and its impact on the company's operations and profits.

Internet Connectivity Services
This case study examines a familiar scenario: An innovative strategy to capture new markets is conceived and implemented, investments are made, and operation experience is gained. Here a mid-sized North American Communications firm expanded its fiber network to provide Internet Protocol Connectivity (IPC) Services in order to drive profitability and support future growth. A detailed analysis of the program highlighted the importance of holistically considering the impact of business decisions on the company's revenues, costs, and investments, resulting in actions that significantly improved revenue and increased the program's payback.

US Semiconductor Company
The finance team at a very large manufacturer in the semi-conductor industry of power analog and power discrete components began to question why logical operational decisions were not leading to improved financial outcomes. The team looking at this problem decided to build a causal operational model of the plant that included tracking fixed and proportional consumption of resources, tracking capacity use, and identifying idle resource capacity. This operational model helped them identify where bottlenecks would occur based on various product volume and mix scenarios. Using the new model, they were able to better simulate and forecast operational and cost performance and were also able to more accurately identify cost elements that had cash flow impacts.

Plastic Film Extrusion, Inc.
The company in this case produces hundreds of extruded plastics for the healthcare market and hygiene markets. It was experiencing planning difficulties and poor utilization of its manufacturing equipment, causing serious operating consequences. By implementing a causal decision support costing model the company was able to resolve these issues.

ABC Industries
ABC Industries is a mid-sized, closed-die forging company with annual sales of $25 million generated EBIT of $500 thousand. It had been developing its cost information using traditional costing methods but felt the need to create a managerial costing model that more closely reflected the operation of the business, manufacturing activities. Implementation of its new costing model resulted in a new understanding of its activity and process costs, radically changing the way it operated its business.

Parts Maker, Inc.
Parts Maker, Inc. is a mid-sized manufacturer of automotive components. Its $24 million annual sales were split evenly among three product types: fuel doors assemblies, roof racks and structural stampings. The company had been losing money for a half-dozen years with losses reaching an all-time high of $0.5 million.
The company's traditional costing system showed each of the three types of products generating annual losses of between $130 thousand and $200 thousand.
After creating a managerial costing model that more closely reflected the operation of the business, it because apparent that two of the businesses were generating while the third was losing a massive amount of money. Based on the new information, operational changes were made and the company was restored to profitability.

Community Health Plan
CHP was large multi-state health maintenance organization (HMO). As it expanded it became clear that the pricing of its contracts was not in line with market rates.
Under its conventional costing system, CHP allocated the cost of central services largely on the basis of regional membership. It decided to implement a multi-stage activity-based costing (ABC) system. The differences in member costs between the two systems were substantial. The new system provided CHP with a tool for rationalizing the pricing of its services in the various regions that it served.

Mostlé SA
After implementing a more detailed costing system, food producer Mostlé SA Chief Executive Ada Schmidt made an unexpected and alarming discovery: her company was producing 130,000 variations of its various brands, and 30% weren’t making money.
The information provided by the new costing system led to major changes in strategic direction.

American Fittings
American Fittings is manufacturing company that produces products for the energy industry. To address a downward trend in profitability, the company’s management took two steps: It adopted lean principles in manufacturing and it developed a descriptive and predictive, causality-based cost model.
​
The model’s descriptive ability enabled the company to accurately measure the cost of each of its products as well as the cost of serving individual customers. Armed with this information, the company was able to identify its “profit zones”–product categories where market prices provided the greatest margins–and identify customer behavior characteristics that ate into those margins.