Colorscope

In: Business and Management

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http://ocw.mit.edu ____________

MIT OpenCourseWare

15.963 Management Accounting and Control
Spring 2007

For information about citing these materials or our Terms of Use, visit: ________________ http://ocw.mit.edu/terms.

15.963 Managerial Accounting and Control Spring 2007

Prof. Mozaffar Khan

MIT Sloan School of Management

Colorscope, Inc.
„

What is the external environment that Colorscope currently faces?
„ „

„

Cheaper technology is lowering entry barriers. Better technology is eroding quality-based competitive advantage. Intense competition from
„ „ „

small stand-alones, large national chains, and backward (vertical) integration by large printers.

15.963 [Spring 2007]

Managerial Accounting & Control

2

Colorscope, Inc.
„

Intense price pressures, and erosion of rents (high margins).

„

What has Colorscope’s competitive advantage been, and why?
„

Reputation for quality - poor quality is extremely costly because
„ „

„

pre-press is the last stage at which an error can be detected, mistakes in advertised price can be expensive for content provider to honor, and merchandisers take great pride in their catalogs.

15.963 [Spring 2007]

Managerial Accounting & Control

3

Colorscope, Inc.

„

Fast turnaround – this is very valuable to the content provider because it gives them more time to decide, for example, how much to discount which items (i.e., it gives them more time to observe their competitors actions in a fluid environment).

„

Actual costing differs from normal costing in that overhead allocation rate = actual overhead / actual volume of base.
„

This is ex post allocation rate – if actual overhead will not be known till year-end, then cost can only be determined then.
Managerial Accounting & Control 4

15.963 [Spring 2007]

Colorscope, Inc.

„

„
„ „

For…...

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