Scarpe case study

Scarpe Hints

Background

Give a brief history of Scarpe and Nadalini family. Then, describe their move into the North American market with lower-priced, machine-made shoes.

Describe the more complicated manufacturing process for machine-made shoes – batches, setup, etc.

Explain that their in-house accountant, Mr. Hoffman, tried to figure out overhead and did it two different ways – by direct labor and by machine hours. Neither gave an accurate cost accounting analysis.

Ms. Nadalini is very frustrated and wonders whether Scarpe should get out of machine-made shoes and expansion into the North American market. Also, they really didn’t make too many pairs of hand-made shoes last year. She needs a good cost accounting analysis.

Issue

Should Scarpe continue selling machine-made shoes, hand-made shoes, both, and under what strategy?

Alternatives

Hand-made only – sup-optimal

Machine-made only– sup-optimal

Hand-made and Machine-made Both -optimal

Change the percentage of volume of each -optimal

Strategically adapt target markets for each -optimal

Develop a new cost accounting system -optimal

Analysis – You could have multiple Optimal Alternatives

Recommendations -