Nicole Molson is the manager of Strategic Marketing Unit Two (SMU2) at Quality Treats, Inc., a provider of branded,

Individual Written
Cases Part 2 (50 Marks)
Due Thursday April
10th

Instructions:

·
A Hard copy of the report should be submitted
at the beginning of the class.

·
You are required to complete both of
the following cases:

Quality
Treats, Inc. Case

(24

Marks)

Milton University
Bookstore Case (26

Marks)

·
Font type should be Arial and the font size
should be 12 points.
·
Line spacing should be 1.5
lines.
·
Follow the required page
limits as stated for each requirement.

·
Marks for professional
presentation are integrated with the marks of each requirement.
·
The assignment should be done
independently by each student.

·
It is the student’s
responsibility to ensure that the assignment is completed when due.

·
The Business Faculty requires
the Harvard style of referencing for academic papers. Please see Quote, Unquote
Referencing, and a Speedy Guide to Harvard Referencing at http://www.viu.ca/business/resources.asp.

·
Errors happen in the real
life every day, so if you see an error in the cases. Note the error in your
report and use your best judgment to continue your analysis.

Quality
Treats, Inc. Case (24 Marks)

INTRODUCTION

Nicole Molson is the manager of Strategic
Marketing Unit Two (SMU2) at Quality Treats, Inc., a provider of branded,
high-quality food products. Molson is unhappy with what she perceives to be
unfair and inappropriate product costing for her unit, especially for what
Quality Treats considers to be special orders. Molson’s education, experience,
and expertise as a food scientist and process engineer have earned her
considerable respect at Quality Treats, but she has limited accounting
knowledge, which holds her back from expressing her serious concerns.
Therefore, Molson asked you, soon to be an accounting graduate, to develop a
memorandum and a glossary of terms to help her make her case more forcefully to
top management.

QUALITY TREATS, INC.

Quality Treats, Inc., rooted in the upper Midwest
United States, produces a wide range of food products in a competitive
industry. Almost all of its products are sold under the Fine ’n’ Fast brand
name, which is

Page 1 of 18

widely recognized for its high quality and has a
loyal customer following. Most products are packaged in sizes for
end-consumption and are sold through supermarkets, convenience shops, and
similar outlets. Depending on the nature of the product and consumer
preferences, products are sold frozen, refrigerated, canned, boxed, or packaged
in other ways. Some items, such as individual packets of ketchup, mayonnaise,
and mustard, are sold to fast food restaurants and similar outlets. The company
also sells half-gallon containers—branded with the company logo—of salad
dressings, ketchup, mustard, and similar items with a plastic pump so that
restaurant customers can serve themselves at salad bars and similar places.
Other products are sold, often in bulk, to institutional users, such as large
food service groups, caterers, and the like. These products may or may not be
branded. A small portion of sales is made to other food producers, for example,
salad dressing packets are sold to producers of packaged fresh salad greens;
Quality Treats does not deal with fresh products.

Quality Treats is
owned by Jordan Meadows Group, a private equity firm. Jordan Meadows Group
gives Quality Treats almost complete freedom and control over management,
product selection, performance evaluation, and so forth. Because it is
privately owned, external financial reporting is not mandatory, nor is there
any obligation to use any set of financial accounting standards for internal
reporting. Any external financial reporting is on a group or consolidated basis
and performed by Jordan Meadows Group.

Jordan Meadows Group also owns Quality Treats
Canada, Ltd., which sells products almost exclusively in Canada, with primary
operations nearby in the prairie provinces. There is no mutual ownership or
management connection between Quality Treats and Quality Treats Canada. Because
the two companies produce many identical products using the Fine ’n’ Fast
brand, they do share recipes and process technology. Quality Treats also
produces some products for Quality Treats Canada that do not have sufficient
market size in Canada to justify separate production. Jordan Meadows Group also
owns smaller companies with the Fine ’n’ Fast name that are mostly importers of
Fine ’n’ Fast products in countries outside of the U.S. and Canada where
high-quality, branded North American food products have niche markets. These
products are produced by Quality Treats.

Quality Treats is
organized into three Strategic Marketing Units (SMUs) based on the markets they
serve. SMU1 serves supermarkets and similar outlets. SMU2 serves mostly
institutional customers who order in large volumes and often in bulk
quantities. SMU2 also sells special orders from time to time that involve
unbranded bulk products that are exported. SMU3 serves affiliated Quality
Treats companies in other countries, mostly for import into those countries;
governmental organizations that sell food and have food service facilities,
such as military organizations; and similar customers that have special
contracting requirements.

Products sold by all three SMUs are manufactured
by the same production facilities, including warehouses, food preparation and
cooking facilities, and packaging facilities. The SMUs also share most
headquarters activities, such as information technology, accounting and other
administration, human resources, and similar activities. SMU1 and SMU2 have
their own marketing and sales departments, while SMU3 does not have separate
departments for these tasks. Figure 1 shows an organizational chart for Quality
Treats.

Page 2 of 18

COST ALLOCATION

Molson strongly and persistently tells you that
she believes her unit is being treated unfairly in the way costs are allocated
to products. In particular, she has a problem with the product cost allocation
for special orders of product MP, a basic product that is widely consumed in
North America. SMU2 is the only unit filling special orders, and almost all of
the special orders are for product MP. While all three units sell product MP,
it represents a significantly larger percentage of total sales for SMU2 than it
does for the other two units. SMU1 and SMU3 do not perceive a product costing problem
because a substantial portion of their sales come from other products, which
means the product costs for product MP are not a major part of their cost of
sales.

After talking with Molson, you review what you
learned in your accounting classes about product costing and special orders.
With this knowledge, you set out to conduct an in-depth look at product costing
and accounting for special orders at Quality Treats, especially in SMU2.

THE PRODUCTION PROCESS

In order to learn about product costing at
Quality Treats, you decide that first you need to understand the physical flow
of products through production lines. A simplified diagram of the product MP
production process, which is typical of many of the company’s products, is
shown in Figure 2.

Basic raw food items begin production with
preliminary inspection, sorting, and so forth. The raw material then goes to
the first stage of preparation, which can involve chopping and peeling, as well
as some preliminary cooking. After possible temporary storage, additional
ingredients are added, such as seasonings, flavorings, and so on, and then the
final cooking and processing occurs. The prepared product is then packaged,
frozen, stored temporarily (if necessary), and then shipped to the customer.

PRODUCT COSTING

The management of
Quality Treats believes that it must allocate all costs to its products
in order to get a true and accurate measure of each product’s profitability.
Here is a look at the product costing procedure that would apply to product MP,
as well as virtually all other products. Product MP is one of several different
products that comes from the same initial raw material but are then processed
and sold in different configurations and package sizes.

Raw material, packaging material, and direct
production salaries are added to determine what Quality Treats calls direct
calculated costs. Electricity, steam, water, and warehouse costs are then
allocated based on estimates and a mark-up to cover spoilage and other
incalculable costs. This calculation gives an amount the company calls variable
manufacturing costs. Material costs are determined based on the cost
required for one unit of product. Direct salaries are determined by the amount
of time normally required for one unit multiplied by the hourly labor cost.

Quality Treats allocates what it considers to be fixed
production costs in a complicated process. A list of what Quality Treats
considers to be fixed production costs is shown in Table 1.

Page 3 of 18

Costs for production management, steam boilers,
and quality are shared by different factories. Estimates are made about usage
of these activities, and costs are allocated to factories based on these
estimates. If only one factory uses a service, the entire cost of the service
is allocated to that factory. When these and other costs are assigned to
factories, two approaches are used for further allocation to product groups
(such as salad dressings, canned soups and vegetables, and puddings) and
products:

• All costs for steam boilers, building
maintenance, vehicles, and sanitation are allocated directly to products using
net weight or gross weight.

•
Remaining
factory costs are first allocated to product groups. One allocation is a fixed
percentage based on estimates that do not change for each product group. Other
costs are allocated based on the weight, labor time, and production time of the
product produced. If the allocation of remaining factory costs is a fixed
percentage, then allocation to products is based on production time.

•
For special
orders (virtually all product MP), the total freight out is accumulated
for a month and then allocated based on the weight of product shipped. The
estimated freight cost is included in the sales price. Similar procedures are
followed for other products, for which Quality Treats pays the freight.

Media and sales promotion costsfor SMU1 and SMU2 are allocated to product groups
and to individualproducts based on weight of product sold.

Quality Treats allocates what it calls other
fixed costs in two ways:

• Sales and marketing costs, which are incurred
only in SMU1 and SMU2, are allocated to products based on sales volume.

•
Costs for
top management, business administration, information systems, human resources,
supply management, and logistics are allocated in two steps. Costs are first
allocated to cost centers based on number of employees, labor time, production
time, or set percentages. Then costs are further allocated to products based on
gross sales, amount of time spent on internal reviews, number of marketing
campaigns, quantity sold, number of orders, net weight of product delivered, or
equally to each product.

Molson is concerned that the amount of costs
allocated to special orders for product MP is excessive and therefore causing
her unit to be viewed less favorably than the other units. Among other things,
she believes allocations based on weight are unfair because product MP is a
relatively dense, bulky, and heavy product that, while profitable, has a
relatively low profit per pound compared to other products.

SPECIAL ORDERS

Because of Molson’s concerns, you further explore
what Quality Treats considers to be special orders. According to Molson,
a special order is one in which the contract specifies that it can be rejected
within one year before delivery, otherwise it is not special. Such special
orders constitute 2% of total revenues for Quality Treats.

Virtually all of the special orders are for
product MP and for a food distributor in Mexico. Product MP is not a normal
part of the diet of Mexican people, but there is a niche market for it. The
market is not

Page 4 of 18

large enough to motivate a Mexican food
production company to produce the item, but Quality Treats is motivated to
provide the items to Mexican food suppliers as so-called special orders because
the company is already producing the product for a variety of customers in the
U.S. and Canada. It is packaged unbranded for sale in Mexico because it will be
used primarily by institutional food preparers; it is shipped frozen in
10-pound packages.

The raw material used to make product MP can be
kept in storage for a fairly long time under proper conditions, and there is
always a ready stock on hand because it is used in many other products. Once
product MP is produced, it can be kept frozen for up to one year. These factors
provide a high degree of flexibility in scheduling production to meet such
special orders. Production of product MP can be readily scheduled when there is
idle production capacity. Sometimes requests for these special orders come
unexpectedly; other times, SMU2 approaches the customer to indicate that idle
capacity is planned. Typically, orders are in relatively large quantities.

SMU2 accepts
special orders when the contribution margin (CM1) is positive. Quality Treats
defines CM1 as net sales minus variable manufacturing costs, fixed
manufacturing costs, and freight out (see Table 2). Molson is convinced that
decisions to accept the special orders are good for the company and contribute
to Quality Treats’ overall profitability, but she is frustrated at the impact
on the results of her unit’s operations.

PERFORMANCE EVALUATION IN QUALITY TREATS

Halfway through your project, you discuss it with
friends and colleagues who are recent accounting graduates from VIU. As you
describe Molson’s concerns with Quality Treats’ product costing, as well as
your frustration with analyzing and developing recommendations, one friend
interrupts to say that the product costing problem appears to be only a symptom
of a larger issue. Your friend had recently covered the issue of symptoms vs.
underlying problems in her management control class, and it seemed to her that
the major issue is performance evaluation of the SMUs, not just product
costing.

Somewhat skeptical, you look at some of your
textbooks and other sources to brush up on performance evaluation. Then you
explore performance evaluation at Quality Treats. You begin by speaking to
Davie Jacob, the controller of Quality Treats, who explains how the company
computes CM1, CM2, CM3, CM4, and operating profit for each unit (see Table 2).
Jacob says the SMUs have the ability to control the costs of their divisions,
and other costs are allocated easily and fairly. Targets are established for
CM1, CM2, CM3, CM4, and operating profit, and the numbers are reviewed monthly
to see if corrective action is necessary. Evaluation of performance against the
targets is made at the end of the year.

Molson, however, tells you that the primary
evaluation for the SMUs is operating profit. Jacob and another unit controller
confirm it. Molson feels the method used by Quality Treats to calculate
operating profit does not reflect the true performance of the SMUs because unit
management cannot control several of the cost elements included in the
calculation. Further, she believes using operating profit as the primary
indicator for evaluating units has a negative motivational effect on the
employees of her unit.

Page 5 of 18

nizations in a similar
industry. For example, Ford Motor Company would likely begin the benchmarking
process by comparing its performance against other U.S. automobile
manufacturers such as General Motors and Chrysler. To reach for greater
standards of excellence, Ford would likely consider foreign automobile
manufacturers that have been well known for high efficiency and quality, such
as Toyota, the current world-wide leader in automobile sales. Emma currently
benchmarked the performance of the bookstore against other college bookstores
and major booksellers.

In performing a benchmarking analysis, it was
imperative for Emma to benchmark processes that were aligned with
organizational strategic objectives. Since the Bookstore was a profit center,
it was imperative that she compare the profitability of the various product
lines with other universities. The Bookstore also had an objective to provide
service excellence. Thus, if available, it would be beneficial for Emma to
benchmark customer satisfaction data with other universities. Once processes
that were consistent with strategic objectives were identified, it was
necessary to collect and analyze internal information vis-á-vis external
information from competitors.

The benchmarking process did not stop once areas
of excellence and inferior performance were identified. Rather, it was
imperative for Emma to identify how to sustain the areas of excellence and
improve the areas of inferior performance. In determining how to improve poor
performance, she needed to understand the reason behind the poor performance.
Once that was attained, it would be possible to determine a long-term plan for
improvement.

Page 11 of 18

Table 3

Milton University Bookstore Sales, Cost of Goods Sold (CGS) and Gross
Margins (GM) by Product Lines

Year

2013

2012

2011

Product lines

Sales Amount

Sales %

Sales Amount

Sales %

Sales Amount

Sales %

New Texts

5,185,712

46.7%

4,100,486

44.6%

4,080,462

46.6%

Used Texts

1,488,414

13.4%

1,266,066

13.8%

1,112,628

12.7%

Class Notes

518,235

4.7%

498,095

5.4%

533,166

6.1%

General Books

332,519

3.0%

109,008

1.2%

93,050

1.1%

Supplies & Sundries

698,426

6.3%

634,677

6.9%

612,036

7.0%

Clothing

1,295,043

11.7%

919,151

10.0%

810,761

9.2%

Computers

869,481

7.8%

1,032,966

11.2%

971,819

11.1%

Software & Accessor.

722,778

6.5%

640,685

7.0%

551,243

6.3%

Total Sales

11,110,607

100.0%

9,201,132

100.0%

8,765,163

100.0%

Product lines

CGS Amount

GM %

CGS Amount

GM %

CGS Amount

GM %

New Texts

3,969,948

23.4%

3,162,516

22.9%

3,248,727

19.9%

Used Texts

947,651

36.3%

808,577

36.1%

737,618

35.0%

Class Notes

401,411

22.5%

387,414

22.2%

377,456

24.0%

General Books

229,710

30.9%

78,411

28.1%

66,461

30.0%

Supplies & Sundries

436,121

37.6%

383,828

39.5%

395,493

35.4%

Clothing

686,562

47.0%

486,788

47.0%

434,528

46.4%

Computers

829,308

4.6%

928,598

10.1%

924,587

4.9%

Software & Accessor.

551,550

23.7%

524599

18.1%

431,883

21.7%

Total Cost of Sales

8,052,260

6,760,730

6,616,751

Total Gross Margins

3,058,347

27.5%

2,440,403

26.5%

2,148,413

24.5%

MILTON’S BENCHMARKING INFORMATION

In her years as the Bookstore manager, Emma had
developed various financial performance measures to help assess the performance
of the Bookstore. Over the last few years, she had used these measures as part
of her benchmarking analysis. She felt fortunate to have a fairly comprehensive
benchmarking database available to her. It was provided annually to all
bookstore members free of charge by the Association of Universities and
Colleges of Canada (AUCC). The only requirement was that each bookstore had to contribute
its own data to the benchmarking database in order to use it. The AUCC database
included income statement, product line, and other types of benchmarks.

With the looming threat from online textbook
vendors, Emma had started to benchmark Milton’s textbook prices against the
major online textbook vendors. She also tracked mail orders and Web orders from
Milton’s own website (started in 2010). Her task now was how best to use this
benchmark information. She believed that her first step was to compare her
current financial and operating results with the benchmark data to pinpoint
areas in need of improvement. This analysis would likely uncover some areas
that needed her attention, which would be useful in identifying areas in need
of improvement.

Page 12 of 18

MILTON BOOKSTORE:
ROLE AND STRATEGIC OBJECTIVES

A key role of the
Bookstore was to supply the Milton University community–which included but was
not limited to faculty, students, alumni and parents–with textbooks, supplies,
clothing and gifts, computers and software, and much more. The Bookstore’s
formal mission statement was as follows:

The Milton
Bookstore is an academic resource for the students, faculty, staff, alumni, and
guests of the University. The Bookstore serves the University with a business
presence dedicated to providing service excellence that meets or exceeds the
needs of each customer and University department.

The Bookstore
played a significant role in enabling parents of freshmen to participate in
getting their children ready for the first day of class. Additional temporary
staff was hired to ensure there was adequate assistance available for new
students and returning students who were purchasing their textbooks. These
staff members were readily available and happy to answer any question that new
parents or students might have regarding textbooks or the University in
general. Also, congruent with the University laptop requirement for all
students, the Bookstore sold computers and software. This was a great way for
parents to enjoy one-stop back-to-school shopping.

Additionally, the Bookstore tried to promote the
University as a brand name by selling clothing and accessories with the
University logo and/or name. Availability of clothing and accessories was also
a service provided to students, parents, and alumni who wanted to show their
support for the school.

Sales of merchandise with the University logo
indirectly promoted the University, but the Bookstore did not try to formally
create alumni support nor was that a formal goal. This was the function of the
University Alumni Advancement (funding) office.

As indicated by the
mission statement, by the role taken to familiarize new parents and students,
and by the sale of merchandise with the University logo, the Bookstore operated
in a manner aimed at achieving high customer satisfaction. To measure customer
satisfaction the Bookstore conducted an annual customer satisfaction survey and
a separate faculty satisfaction survey. Customer suggestion forms were also
readily available on the Bookstore website.

Recently, a key area of customer (student)
concern had been the significant increase in textbook costs due to the increase
in the average price of a textbook from $50 to $150 over the last five years.
Significant contributors to this increase were publisher updates to textbooks,
which were occurring more often (about every two years versus the prior
standard of about every five years). Given the increase in textbook costs, as a
profit center the Bookstore had not been able to subsidize this change in cost.
As a profit center, the focus of the Bookstore was to contribute to the overall
profitability of the University as well as being efficient and controlling
costs.

Page 13 of 18

Table 4 AUCC Benchmarks: 2013 Income Statement
versus Milton Bookstore

25th

75th

% of Sales

Average

Percentile

Median

Percentile

Milton

New Course Books

47.5%

41.1%

46.3%

52.6%

46.7%

Custom Materials

2.0%

0.0%

0.0%

1.9%

4.7%

Used Course Books

20.7%

14.1%

20.8%

29.6%

13.4%

General Books

2.5%

1.1%

2.4%

3.6%

3.0%

Total Book Sales

72.7%

56.3%

69.5%

87.7%

67.8%

Computer Hardware

3.3%

0.0%

1.2%

3.4%

7.8%

Software & Accessories

3.3%

0.6%

2.5%

5.9%

6.5%

Supplies & Sundries

12.5%

10.5%

12.3%

23.4%

6.3%

Clothing

8.2%

3.4%

6.8%

14.0%

11.7%

Sales

100%

100%

Cost of Goods Sold

74.2%

71.3%

74.3%

75.7%

72.5%

Gross Margin

25.8%

24.3%

25.8%

28.8%

27.5%

Labor Expenses

12.9%

10.3%

12.4%

15.0%

12.6%

Operating-Utilities

0.3%

0.1%

0.0%

0.5%

0.5%

Maintenance

0.6%

0.1%

0.4%

0.7%

0.4%

Rent

1.9%

0.0%

1.5%

2.5%

1.2%

Postage & Printing

0.4%

0.2%

0.4%

0.6%

0.2%

Telephone

0.3%

0.1%

0.2%

0.3%

0.1%

Outside Services

0.3%

0.0%

0.2%

0.5%

0.2%

Insurance

0.1%

0.0%

0.0%

0.1%

0.1%

Consumables

3.1%

1.5%

2.0%

4.9%

1.6%

Travel

0.2%

0.1%

0.1%

0.2%

0.1%

Total Operating Expenses

20.1%

20.1%

23.9%

25.3%

16.9%

Operating Income

5.7%

0.3%

2.6%

6.7%

10.6%

Other Income

2.1%

0.2%

0.8%

1.7%

1.5%

Other Expense

1.3%

0.0%

0.1%

1.1%

0.0%

Net Income

6.5%

2.6%

8.4%

11.5%

12.1%

Departmental Gross Margins

New Course Books

21.4%

19.5%

22.4%

25.0%

23.4%

Custom Materials

23.7%

Not Available

22.5%

Used Course Books

33.7%

30.7%

34.9%

38.0%

36.3%

General Books

28.5%

22.0%

28.3%

34.0%

30.9%

Total Book Sales

25.5%

23.4%

25.7%

28.0%

28.3%

Computer Hardware

7.3%

3.3%

7.2%

10.0%

4.6%

Software & Accessories

21.3%

14.5%

21.7%

27.5%

23.7%

Supplies & Sundries

33.2%

27.0%

34.7%

41.3%

37.6%

Clothing

36.7%

32.3%

38.6%

44.6%

47.0%

Total Net Sales

26.2%

23.4%

26.7%

29.6%

27.5%

Page 14 of 18

Table 5 Other AUCC Benchmarks for 2013 versus
Milton Bookstore

25th

75th

Other measures

Average

Percentile

Median

Percentile

Milton

Shrinkage as a % of Sales

1.20%

0.36%

1.07%

1.89%

1.00%

Sales per FTE Student

$1,025

$861

$1,026

$1,187

$1,338

Sales per FTE Employee

$444,665

$350,385

$440,618

$536,855

$383,124

Sales per sq.ft. of Total Space

$1,229

$618

$954

$1,323

$741

Sales per sq.ft. of Selling Space

$1,587

$792

$1,119

$1,881

$1,112

25th

75th

Average

Percentile

Median

Percentile

Milton

Total Space in Square Feet

$23,495

$14,993

$20,006

$32,025

$22,500

Square Feet per FTE Student

$2

$1

$2

$2

$3

Ratio: Selling to Storage Space

3.4:1

3.0:1

4.3:1

5.8:1

3.3:1

Number of FTE Employees

30.1

22.5

27.9

37.1

26.4

Average # of Full-time Employees

30

24

30

36

30

Average# of Part-time Employees

23

3

9

41

9

25th

75th

Average

Percentile

Median

Percentile

Milton

Used Text Sales as a % of New Text

41.49%

32.31%

45.24%

52.45%

28.70%

Sales

Used Text Sales as a % of Course Book

28.23%

19.88%

30.00%

37.93%

20.70%

Sales

25th

75th

Average

Percentile

Median

Percentile

Milton

Sales Change from Prior Year

6.4%

2.5%

6.7%

11.8%

20.8%

Online Sales as a % of Total Sales

3.1%

1.0%

1.7%

4.5%

1.9%

Campus Contrib. as a % of Sales

6.7%

3.9%

7.0%

8.8%

12.1%

# of Hrs Store is Open per Week

55.0

51.0

54.5

58.0

52.0

Average Inventory (000)

$1,919

$1,494

$1,865

$2,226

$1,376

Average Sales per Store (000)

$12,357

$11,289

$12,305

$12,984

$11,111

Average # of FTE Students

19,788

14,237

18,203

21,336

12,708

25th

75th

Inventory Turnovers:

Average

Percentile

Median

Percentile

Milton

New Course Books

5.4

3.6

5

7

9.1

Used Course Books

5.8

4

5.6

7.3

9.5

Total Course Books

5.7

4.1

5.3

6.7

9.4

General Books

1.6

1

1.4

2

1.8

Total Books

5.2

3.7

5

6.3

9.1

Hardware

9.2

4

8.6

20.8

13.7

Software & Accessories

5.5

2.6

4

6.5

3.9

Supplies & Sundries

2.7

1.8

2.3

3.3

1.9

Clothing

2.6

1.6

2.3

3.2

3.1

Page 15 of 18

Table 6

Milton University Bookstore Quarterly Textbook Benchmarking Average
Prices, September (Fall 2013)

Average

Text Title, Author & ISBN

Milton

Amazon

Ecampus

B&N

Wal-Mart

Price

History of Human Rights

$ 18.50

$ 16.97

$ 17.68*

$ 19.96

$ 15.27

$ 17.68

Othman; O520234979

Organizing for Power

37.00

34.50

30.88

31.00

30.88

32.85

Mondeos; O231067194

Dogmas & Dreams

48.00

44.95

42.70

44.95

36.86

43.49

Legend; 1566430437

Modern Real Estate Practice

37.25

49.70

42.26

50.69

44.73

44.93

GalaL; O793144280

Human Resources For Non HR

34.75

32.50

30.88

32.50

32.66*

32.66

Kulik; O805842969

Ecology

99.00

92.81

94.05

98.75

88.17

94.56

Mullins; OO72951710

Contemporary Financial Mgmt

124.50

96.98

113.00

125.95

119.65

116.02

Mayer; O32416470X

Pocket Guide To Writing History

13.50

13.95

15.27

13.75

13.49

13.99

Ampulla; O312403577

Cosmic Perspective

92.75

96.00

93.24*

93.00

91.20

93.24

Bennett; O805387382

Calculus & Its Application

103.00

103.00

97.85

103.00

97.85

100.94

Bittinger; O321166396

September, 2013 Fall Quarter

$ 60.83

$58.82

$ 57.78

$ 61.36

$ 57.08

$ 58.76

* Textbook currently unavailable online. Average textbook price was
used for comparative purposes.

Table 7

Milton University Bookstore Quarterly Textbook Benchmarking Average
Prices, Prior Studies of Prices

Average

Prior Benchmarking Studies

Milton

Amazon

Ecampus

B&N

Wal-Mart

Price

March, 2013 Spring Quarter

$ 63.99

$ 62.12

$ 61.24

$ 63.77

$ 64.06

$ 63.04

January, 2013 Winter Quarter

$ 79.03

$ 80.03

$ 76.87

$ 79.94

$ 78.28

$ 78.83

September, 2012 Fall Quarter

$ 78.02

$ 81.07

$ 74.66

$ 79.12

$ 79.30

$ 78.43

Page 16 of 18

MILTON BOOSTORE: BENCHMARKING ANALYSIS

Emma and Tom had agreed that the Bookstore
benchmarking should include the Bookstore’s income statement, five product
lines, and financial and operating performance measures. These items were to be
benchmarked against the Association of Universities and Colleges of Canada
Stores’ (AUCC) benchmarking information. In completing this analysis it was
imperative for Emma to identify performance gaps between the Bookstore results
and the AUCC averages and develop tactics to correct such gaps.

FINAL THOUGHTS

Emma had a
significant amount of financial and operating information to use in the
Bookstore’s annual performance review. From past experience, she knew that
benchmarking analysis was a very useful tool for such performance evaluation.
She also thought that these analyses could help develop strategies for dealing
with the threat of reduced profits due to emerging technologies.

She realized that she had a significant amount of
work to do in order to analyze all the available historical and benchmarking
information. She hoped to summarize such information in the Bookstore’s
benchmarking analysis report. Also, she had to quickly develop this report for
her upcoming meeting with Tom and the Chancellor.

Tae trends and experiencing the samefinancial
difficulties, should Milton be benchmarked against the 25th percentile, the
average, or the 75th percentile? Why? Assuming all AUCC bookstores are
experiencing superior financial performance and sales growth and Milton is
experiencing financial difficulties, is the 25th percentile, the median, or the
75th percentile the best source for benchmarking? Why? (2 Marks ~ half a
page limit)

Q4.Due to
prior superior performance regarding sales of custom materials, assume that
Milton has theobjective to maintain excellence for this product line.
Against which comparison point should this product line be benchmarked (e.g.,
median, 25th percentile)? Why? (2 Marks ~ half a page limit)

Q5.Assume that
there is an independent bookstore located near the campus of Milton University
thatalso sells apparel with the Milton logo as well as new and used
textbooks. Against which comparison point should these product lines be