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

2. 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.)

3. 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.

4. 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.

5. 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

6. 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.

7. 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

8. 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

9. 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

10. Responsibility of Sales department
price,
sales mix and
delivery schedules

11. 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

12. Thank You…