VERSHIRE COMPANY

Rochak Acharya (2)

Swati Kamilla (21)
Prerna Malhotra(30)
Milind Nayak (37)
Prasanna Pujari (42)
Aakanksha Vats (61)

About Vershire
Large business in the packaging industry with several major
divisions.

This division is one of the largest manufacturers of aluminum
beverages cans in the United States.

Customers loyalty was always at stake.

The hierarchy normally consisted of a divisional manager
being reported to by two line managers (manufacturing and
marketing depts.)

Industry Background
Traditionally, containers were made from one of several
materials: aluminum, steel, glass, fiber-foil or plastic.
In 1970, steel cans accounted for 88% but by 1990s
aluminum cans started dominating and accounted for
75% of the metal can production.
For beverage processors, the cost of the can usually
exceed the cost of the contents.

Aluminum : New Substitute
Production efficiency
Lighter weight could help in transportation costs
Aluminum is easier to lithograph, producing a better reproduction
at lower costs.
Aluminum is favored over steel as a recycling material, because
the lighter aluminum can be transported to recycling sites more
easily, and recycled aluminum is far more valuable.
Aluminum is known to reduce the problem of flavoring one of the
major concerns of both the brewing and soft drinks industries.
Hence aluminum is a great threat to the traditional tin plated steel,
despite being expensive.



Sales Budget


Preliminary report submission by each divisional
managers
Sales Forecast for the entire company
Factors considered: economic conditions; impact on
customers; market share for different products by
geographic area
Assumptions: Price; new products; changes in accounts;
new plants; inventory carryovers; forward buying;
packaging trends etc
Completed forecasts sent to respective divisions for
review, criticism and fine tuning
Sales Budget
Objectives of Review and Approval process:

1. To assess each divisions competitive position and
formulate courses of action to improve upon it.
2. To evaluate actions taken to increase market share or to
respond to competitors activities.
3. To consider undertaking capital expenditures or plant
alternations to improve existing products or introduce
new products.
4. To develop plans to improve cost efficiency, product
quality, delivery methods, and service.

Manufacturing Budget
At Plant Level:
Calculation of Profit=
Sales budget-(Budgeted Variable Cost + Budgeted Fixed
Overheads)
Budgeted Variable Costs included direct Materials, Direct
labor and Variable Overhead Budget


Manufacturing Budget
Role of Plants Industrial Engineering Department:

Deciding Cost Standard and Cost Reduction Targets
Determining Budget Performance Standards
Determining Cost Centers within the Plant:
Budgeted Cost reductions
allowances for unfavorable Variances
Fixed costs


Performance Measurement and
Evaluation
Month
Items Actual $ Variance $ Year to Date Variance $

Total Sales
Variances due to
Sales price
Sales mix
Sales volume
Total Variable Cost of Sales
Variances due to
Material
Labour
Variable overhead
Total Fixed Manufacturing Cost
Variances in fixed cost
Net Profit
Capital Employed
Return on Capital Employed
Responsibility of Sales
department
price,

sales mix and

delivery schedules
Management Incentives
Only capable managers were promoted with profit
performance being the main factor
Compensation package was tied to achieving profit
budgets
Plant efficiency reports were highly publicized even
though different shops had different set up times

Thank You