This case study deals with the extension, customization, and profitability of two new product lines of a bicycle manufacturer. It can serve both as a discussion basis in class as well as an exam for advanced Master students in management, marketing, and ccounting. The case illustrates how variance analysis and Activity-based Costing help managers to better understand the different profitability of customized product lines. The rather open questions at the end of the case study allow for an adjustment to the level of knowledge of the students. Students will need to reflect on how a mechanical application of financial analysis can lead to dysfunctional decisions that run counter to a company’s business model.
International Journal of Business Strategy, 2015, Vol 15, Issue 2, p. 63-68
Customization; budget; variance analysis; business model; management accounting; case study; teaching notes; dysfunctional decision making