Accounting

• Start with an executive summary (100 words)

Superior Valve, a division of Able Corporation is a manufacturer of valves, with three separate divisions: Hydro-Con, Pneu-trol, and Made to Order (MTO). Superior’s most profitable division is Hydro-Con, its least, MTO.

Superior presently seeks to elevate their profitability to match that of the other divisions of Able. Superior is headed by General Manager Jerry Conrad. Frances Kardell is the Division Controller. Todd Talbot, the Group Controller, Ralph Darwin the division's Marketing Manager, and Daria Good is the Manufacturing Manager.

Superior is a fast growing company that sells valves to other companies such as Wadsworth Company, which require valves as part of their production process.

• A brief introduction not exceeding one quarter of a page (50 words)

Superior, looking to improve its profits, is presented with an opportunity to improve their profitability by altering their production landscape by shifting its MTO unit into manufacturing additional volume of Hydro-Con, for which a contract of 60,000 units has been placed by the Wadsworth Company. General Manager Jerry Conrad must consider all of the pros and cons involved with such a change.

The Superior Valve Division

1. Critically analyze the Wadsworth Company’s special order. Should the special order be accepted? If so, support your answer. If not, explain reasons. (100 words)

Superior Valve earns “variable profits”, and is “not as profitable as others in the industry or other similar-size divisions in the corporation” (Blocher, et al., 2006). Superior Valve is clearly not performing at a level that would be conducive to its preservation. The Wadsworth Company’s special order, while returning much less per unit, will eventually maximize profits. The additional output of volume made possible by the Wadsworth order and the elimination of the MTO division will eventually make the contribution margin express itself into greater...