Mueller-Lehmkuhl GmbH - The Case Centre

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Case

Reference no. 9-187-048

Subject category: Finance, Accounting and Control

Authors: Robin Cooper (Harvard Business School); Dagmar Bottenbruch (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1986

Version: 1 April 1990

Length: 13 pages

Data source: Field research

Topics: Profitability analysis; Cost accounting; Cost allocation; Cost analysis; Strategic planning; Strategy formulation

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Abstract

Mueller-Lehmkuhl sells apparel fasteners and rents attaching machines. It views these two products as effectively a single item and prices them accordingly, the fasteners at high profit and its attaching machines at a loss. The cost system allocates the cost of the attaching machines to the fasteners. The Japanese have entered the market and found a way to unbundle the two products. As a result they are challenging the European way of doing business. The case asks the student to analyze the true cost and profitability of the products.

Location:

Germany

Size:

USD100 million sales

Other setting(s):

1985