Santalo Sa Essay

1455 WordsSep 20, 20156 Pages
SANTALÓ, S.A. Managerial Accounting Individual assignment 24 April 2015 EXECUTIVE SUMMARY Problem statement Santaló, S.A is a manufacturer of prosthetic devices and durable medical equipment, headquartered in Barcelona, Spain. Santaló had sales offices in 25 European countries and manufacturing plants in 3. First, companywide sales fell significantly below budget. Second, fixed manufacturing and launching costs exceeded budget by a large amount. Therefore major changes had to been made to all budget allocations, affecting the profitability of all CBUs. The problem occurs that one of the best managers was severely affected: he reports that the accounting system is distorting his performance. Company’s accounting staff replied by saying nothing can be done without having it messing up the numbers. Role in case analysis My role in this management case is that of a Country Business Unit (CBU) manager who has to comment on what to expect from the measurement system, what costs should be included in measuring sales subsidiaries, how to allocate the joint costs and what changes are to be recommended to Santaló’s measurement and reporting system. Key decision criteria The main goal is to set up an accounting system which can accurately measures the CBU performance. To achieve that the key decision criteria is based on the following decisions: 1. What should get measured and how; 2. What should a good measurement system accomplish; 3. What changes are necessary and recommended in order to accomplish the desired management control system. Analysis summary The analysis evaluated the current measurement system. This measurement system didn’t separate a CBU from companywide sales leading to performance distortion. CBUs were rewarded and evaluated on costs which they don’t control. Aside that, the cost allocations of joint costs is not

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