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A distiller increases whiskey production and income declines because of accounting methods in use. Questions are raised regarding the treatment of expenditures which can be classified as production, inventory, or period costs. The necessary aging process raises added questions about prior period restatements and needed financing. A rewritten version of an earlier case by R.F. Vancil and R.H. Deming.

A strategic planning system is a structured process that organizes and coordinates the activities of managers who plan. A strategic planning system develops an integrated, coordinated, and consistent long-term plan of action, and facilitates adaptation of the corporation to environmental change. The following six issues influence development of a strategic planning system: communication of corporate performance goals, the goal-setting process, environmental scanning, subordinate managers' forces, the corporate planner's role, and the linkage of planning and budgeting.

A complex formal planning process adopted by a multibillion-dollar, diversified corporation headquartered in Europe involved a three-cycle system. The first cycle involved corporate executives and division managers and served two purposes: 1) to develop a tentative set of agreements between corporate and division managers about overall strategy and goals, and 2) to provide for more detailed planning in the next cycle. The second cycle, involving functional managers, served a dual purpose: it allowed tentative agreements to be reached on action programs to be implemented over the next few years, and it expanded the strategic focus of the business. The third cycle dealt with resource allocation decisions and budgeting at the functional level.

Profit centers effectively analyze a segment of a company's business and motivate managers; however, they present implementation problems. Profit centers characteristically employ over-simplified accounting procedures. The most important criteria to use in selecting from the variety of financial measurements is company strategy and structure. The managers and their companies need a unified goal. Organizations of simple structure may use traditional cost centers, marketing profit centers, production profit centers, and multiple profit centers. It is the responsibility of the management controller to synthesize the characteristics of the business and choose the appropriate financial objective.

Set in 1965, at a time when the company's mix of "sales" was shifting increasingly to customer leasing of its computers, the student is asked to evaluate possible revisions in the policies for depreciating the cost of a leased computer.

Describes the proper use of incremental analysis for capital investment decisions.

Spreadsheet supplement for case number 112034.