Duo-Products Harvard Case Solution & Analysis

Duo-Products Case Solution 

Introduction

 This report attempts to cover the product class cost analysis of different products of the Duo- Products Company. This report could help the reader in order to identify the cost and profit that each product is generating, which ultimately could help the reader in order to identify that which product is more profitable and which product is incurring more fixed and variable cost as compared to the other products of the Duo-Products company.

Moreover, this report will also help the reader with respect to the break even analysis for the overall company and for each product, which could determine that how many units of each product are contributing in order to cover the fixed cost of the company.

 In addition to this, this report could also provide understanding about the different aspects of in house production and outsourcing, and how in house production could be more effective as compared to the outsourcing and on what basis outsourcing could be more profitable as compared to the in house production.

Situation Analysis

It is expected that by analyzing the current situation of the company, the management of the company could better understand the present performance of the company with respect to each product and could design the future strategies in order overcome the current problems that company is facing currently.

Major Issues

 The staff accountant, Paul Walsh,of the Duo-Products presented a break even analysis to the management of the company and he performed this analysis on the aggregate basis. Although it could provide a more insider view about the performance of the company however, the management of the company considered that performing break even analysis on average basis could be misleading and it could affect the future decision of the company with respect to the capacity utilization and new orders as the analysis on aggregate basis could not provide better information of each product of the company.Therefore, more detailed analysis of each product is required so that the management of the company could take effective designs with respect to pricing, capacity utilization and profitability of each product.

Company Overview

 Currently, Duo-Products is manufacturing three different types of door knobs and supplying these knobs to major manufacturers of doors. It is expected that the demand of the door knobs is closely linked with the construction and it is expected that construction industry is continuously growing industry and demand of the door knobs will also increase in future.

Therefore, the management of the company is more concerned about the detailed analysis of each product so that it could help the management in order to analyze that which product is more profitable and which product is not and as a result, this would help the management of the company in order design future policies with respect to each product for the best interest of the shareholders and in order to meet the obligation of maximizing shareholders’ wealth.

Alternative Available to the company

 It is expected that the company is operating with three different products and the variable cost of the Brass product is high among all. Moreover, the profit ratio of Sandstone product is zero therefore, the management of the company could change the product mix in order to design the optimum mix that could help the company with respect to minimizing cost and maximizing profitability.

Moreover, the management of the company could decrease or increase the selling price of the Sandstone product as the current price of this product is not according to the price mix of other products of the company.In addition to this, this is also not justifying the quality that Sandstone product is providing to its users................

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