Case ID: 102030     Solution ID: 23571     Words: 1552 Price $ 75

Anagene Inc Case Solution

Case Solution

An innovative, traded on an open market biotech organization has started generation and offers of its center item - cartridges that allow DNA tests to be examined on a microchip. In the early quarters, deals are hard to figure and the organization has encountered fluctuating generation volumes and unusual gross edges, which has vexed the top managerial staff. The fund staff examines whether to receive another costing methodology in light of limit. With a lot of unused limit, the choice of how to apply limit expenses is basic to the organization's administration and its reporting method with experts.

Excel Calculations

Overhead Allocation Calculations             

Table B   Anagene, Inc. Cartridge Financials ($, except for volume and gross profit %)                      


Income Statement for Anagene Inc

Questions Covered

1. Describe Anagene’s competitive environment, including its industry, its specific customer base, its product / customer heterogeneity, and the major concerns facing Anagene.*

2. Considering your answer to item 1, is it likely that the existing cost system may adversely and significantly affect decisions to emphasize certain products or affect profit?   Why (a general answer is expected)?*

3. Using the Excel format on my.asu, complete the exercise for Youngstown.   What “lessons” can be taken from this exercise? Do the “lessons” relate to Anagene?   Give one example.*

4. What has caused the fluctuating margins for Anagene’s cartridges?

5. Should Kelly even be concerned with the assignment of overhead costs to cartridges and gross margins that include allocated overhead? Why not use variable contribution margin (selling price less variable costs, primarily materials) for management decision-making and reporting?

6. Refer to items 3 and items 4, what role does practical capacity, expected production, and actual production play in formulating an approach for assigning overhead? How are these matters useful to managers? Draw on text and readings for your answer.

7. What approach do you recommend that Daniel Yeltin adopt?   Explain.   For your recommended approach, what will be the cartridge product costs and margins?

8. Suppose sales in 2001 equal 26,000 unit, as in the budget constructed in January, and that actual manufacturing expenses turn out to equal budgeted expense.   Prepare an income statement for the year (just include the manufacturing expense for expense) that will help senior management and the board understand the economics of cartridge production in 2001.