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

About Vershire Large 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 Background Traditionally, containers were made from one of several materials: aluminum, steel, glass, fiber-foil or plastic. In 1970, steel cans accounted for 88% but by 1990’s 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 Substitute Production efficiency Lighter 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 Preliminary report submission by each divisional managers Sales Forecast for the entire company Factors considered: economic conditions; impact on customers; market share for different products by geographic area Assumptions: Price; new products; changes in accounts; new plants; inventory carryovers; forward buying; packaging trends etc Completed forecasts sent to respective divisions for review, criticism and fine tuning

Sales Budget Objectives of Review and Approval process: To assess each division’s competitive position and formulate courses of action to improve upon it. To evaluate actions taken to increase market share or to respond to competitor’s 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 Budget At 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 Budget Role of Plant’s Industrial Engineering Department: Deciding Cost Standard and Cost Reduction Targets Determining Budget Performance Standards Determining Cost Centers within the Plant: Budgeted Cost reductions allowances for unfavorable Variances Fixed costs

Performance Measurement and Evaluation Month Items Actual $ Variance $ Year – to Date Variance $   Total Sales Variances due to Sales price Sales mix Sales volume Total Variable Cost of Sales Material Labour Variable overhead Total Fixed Manufacturing Cost Variances in fixed cost Net Profit Capital Employed Return on Capital Employed

Responsibility of Sales department price, sales mix and delivery schedules

Management Incentives Only capable managers were promoted with profit performance being the main factor Compensation package was tied to achieving profit budgets Plant efficiency reports were highly publicized even though different shops had different set up times

Thank You…