Berkshire Threaded Fasteners Company

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Berkshire Threaded Fasteners Company

John K. Shank

Dartmouth College © 1996

ISBN 0-538-88956-X

Case Teaching Package

A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.


This case is 6 pages in length and its case teaching package is 10 pages.


This case is set in an "industrial commodities" firm in New England in 1974, as American dominance of world markets was slipping away. The case is about basic cost analysis issues. Or, is it?

This case is an updated version of one which goes back at least as far as the 1950s, written by Professor J.P. Culliton of Harvard Business School. It exists today in many versions under many names. Its durability results from its usefulness, early in a management accounting course, to reinforce the concepts of "profit contribution" and "relevant cost analysis" while still showing the usefulness of full absorption costing. The controversies in the case—full cost versus marginal cost—are timeless. They are just as relevant today in training "wise" managers as they were forty years ago.

Linkages to Textbooks or Journal Articles/Fit Within a Course

We use this case on day 2 of the required managerial accounting course. Our students already have had a heavy dose of "marginal cost" logic from earlier courses in economics, marketing, and finance. We don’t have to spend much time teaching relevant cost mechanics. Rather, our challenge is helping the student see how to use marginal cost and full cost information intelligently.

Study Questions

If the company had dropped the 300 series as of January 1, 1974, what effect would that action have had on the profit for the first six months of 1974?

In July 1974, should the company have reduced the price of the 100 series from $2.45 to $2.25?

Which is...