Instructor’s Manual
Management Control
Systems
Third Edition
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Kenneth A. Merchant
Wim A. Van der Stede
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For further instructor material
d
please visit:
www.pearsoned.co.uk/merchant
ISBN : 978-0-273-73762-9
© Pearson Education Limited 2012
Lecturers adopting the main text are permitted to download the manual as required.
,Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies around the world
Visit us on the World Wide Web at:
www.pearson.com/uk
This edition published 2012
© Pearson Education Limited 2012
The rights of Merchant and Van der Stede to be identified as the authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
hz
otherwise, without either the prior written permission of the publisher or a licence permitting
restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd,
Saffron House, 6-10 Kirby Street, London EC1N 8TS.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-0-273-73762-9
zle
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing-in-Publication Data
A catalog record for this book is available from the Library of Congress
10 9 8 7 6 5 4 3 2 1
d
Typeset in 11/12 pt Times New Roman by 31
, Contents
Chapters Pages
I Introduction
1. Introduction 6
2. Model Syllabi 9
3. Case Matrix 70
4. The Case Method of Instruction: Suggestions for Students 75
II Teaching Notes for Cases
1. Leo’s Four-Plex Theater 81
2. Wong’s Pharmacy 83
3. Private Fitness, Inc. 84
4. Atlanta Home Loan 86
5. Armco, Inc.: Midwestern Steel Division 91
6. Loctite Company De Mexico, S.A. de C. V. 97
7. Puente Hills Toyota 101
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8. Houston Fearless 76, Inc. 106
Includes (1) Teaching Note Addendum: Student Exam Assignment
and Report; (2) the Houston Fearless 76, Inc. (A): Aftermath case; and
(3) the Houston Fearless 76, Inc. (B) case.
9. The Platinum Pointe Land Deal 125
10. Axeon N.V. 130
11. Alcon laboratories, Inc. 139
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12. Controls at the Bellagio Casino Resort 143
13. The Lincoln Electric Company 149
14. PCL: A Breakdown in the Enforcement of Management Control 154
15. Philip Anderson 155
16. Sunshine Fashion: Fraud, Theft and Misbehavior Among Employees 161
17. Fit Food, Inc. 162
18. Diagnostic Products Corporation 168
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19. Game Shop, Inc. 174
20. Family Care Specialists Medical Group, Inc. 182
21. AirTex Aviation 188
22. Kranworth Chair Corporation 195
23. Toyota Motor Sales 203
24. Zumwald, AG (with Erratum on page 208) 209
25. Global Investors, Inc. 213
26. Citibank Indonesia 219
27. HCC Industries 226
28. Patagonia, Inc. 232
29. VisuSon, Inc.: Business Stress Testing 238
Two VisuSon, Inc. databases are available online on the publisher’s
website – one for instructors, and one for students.
30. Harwood Medical Instruments PLC 244
31. Superconductor Technologies, Inc. 248
3
© Pearson Education Limited 2012
, Merchant & Van der Stede, Management Control Systems, 3rd edition, Instructor’s Manual
32. Tsinghua Tongfang Co. Ltd. 256
33. Raven Capital, LLC 262
34. Behavioral Implications of Airline Depreciation Accounting
Policy Choices 273
35. Las Ferreterías de México, S.A. de C.V. 277
36. Industrial Electronics, Inc. 282
37. Haengbok Bancorp 286
38. Berkshire Industries PLC 290
39. Catalytic Solutions, Inc. 299
40. First Commonwealth Financial Corporation 307
41. Statoil 315
42. Olympic Car Wash 324
43. Southern California Edison 327
44. Beifang Chuang Ye Vehicle Group 335
45. Hoffman Discount Drugs, Inc. 338
46. Formosa Plastics Group 342
47. Bank of the Desert 348
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The teaching notes for Bank of the Desert (A) and (B) are combined.
Includes Bank of the Desert: Appendix. The Bank of the Desert database
and a set of teaching slides are available online on the publisher’s website.
48. Vector Aeromotive Corporation 361
49. Golden Parachutes? 367
50. Pacific Sunwear of California, Inc. 371
51. Entropic Communications, Inc. 376
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52. Financial Reporting Problems at Molex, Inc. 382
53. Don Russell: Experiences of a Controller/CFO
Includes the Don Russell (A) case. 390
54. Desktop Solutions, Inc. (A): Audit of the St. Louis Branch
(B): Audit of Operations Group Systems 400
55. Landale PLC 405
56. Two Budget Targets 408
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57. Conservative Accounting in the General Products Division 411
58. Education Food Services at Central Maine State University 416
59. The Sales Acceleration Program 420
60. Expiring Software License 424
61. Lernout & Hauspie Speech Products 427
62. ConAgra Grocery Products Company 434
63. Lincoln Electric: Venturing Abroad 439
64. TECO Electric & Machinery Co. Ltd. 451
65. Kooistra Autogroep 455
66. City of Yorba Linda, California 464
67. Waikerie Co-Operative Producers Ltd. 469
68. Boston Lyric Opera 473
69. University of Southern California: Responsibility
Center Management System 492
4
© Pearson Education Limited 2012
Management Control
Systems
Third Edition
hz
Kenneth A. Merchant
Wim A. Van der Stede
zle
For further instructor material
d
please visit:
www.pearsoned.co.uk/merchant
ISBN : 978-0-273-73762-9
© Pearson Education Limited 2012
Lecturers adopting the main text are permitted to download the manual as required.
,Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies around the world
Visit us on the World Wide Web at:
www.pearson.com/uk
This edition published 2012
© Pearson Education Limited 2012
The rights of Merchant and Van der Stede to be identified as the authors of this work have been
asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
hz
otherwise, without either the prior written permission of the publisher or a licence permitting
restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd,
Saffron House, 6-10 Kirby Street, London EC1N 8TS.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-0-273-73762-9
zle
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing-in-Publication Data
A catalog record for this book is available from the Library of Congress
10 9 8 7 6 5 4 3 2 1
d
Typeset in 11/12 pt Times New Roman by 31
, Contents
Chapters Pages
I Introduction
1. Introduction 6
2. Model Syllabi 9
3. Case Matrix 70
4. The Case Method of Instruction: Suggestions for Students 75
II Teaching Notes for Cases
1. Leo’s Four-Plex Theater 81
2. Wong’s Pharmacy 83
3. Private Fitness, Inc. 84
4. Atlanta Home Loan 86
5. Armco, Inc.: Midwestern Steel Division 91
6. Loctite Company De Mexico, S.A. de C. V. 97
7. Puente Hills Toyota 101
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8. Houston Fearless 76, Inc. 106
Includes (1) Teaching Note Addendum: Student Exam Assignment
and Report; (2) the Houston Fearless 76, Inc. (A): Aftermath case; and
(3) the Houston Fearless 76, Inc. (B) case.
9. The Platinum Pointe Land Deal 125
10. Axeon N.V. 130
11. Alcon laboratories, Inc. 139
zle
12. Controls at the Bellagio Casino Resort 143
13. The Lincoln Electric Company 149
14. PCL: A Breakdown in the Enforcement of Management Control 154
15. Philip Anderson 155
16. Sunshine Fashion: Fraud, Theft and Misbehavior Among Employees 161
17. Fit Food, Inc. 162
18. Diagnostic Products Corporation 168
d
19. Game Shop, Inc. 174
20. Family Care Specialists Medical Group, Inc. 182
21. AirTex Aviation 188
22. Kranworth Chair Corporation 195
23. Toyota Motor Sales 203
24. Zumwald, AG (with Erratum on page 208) 209
25. Global Investors, Inc. 213
26. Citibank Indonesia 219
27. HCC Industries 226
28. Patagonia, Inc. 232
29. VisuSon, Inc.: Business Stress Testing 238
Two VisuSon, Inc. databases are available online on the publisher’s
website – one for instructors, and one for students.
30. Harwood Medical Instruments PLC 244
31. Superconductor Technologies, Inc. 248
3
© Pearson Education Limited 2012
, Merchant & Van der Stede, Management Control Systems, 3rd edition, Instructor’s Manual
32. Tsinghua Tongfang Co. Ltd. 256
33. Raven Capital, LLC 262
34. Behavioral Implications of Airline Depreciation Accounting
Policy Choices 273
35. Las Ferreterías de México, S.A. de C.V. 277
36. Industrial Electronics, Inc. 282
37. Haengbok Bancorp 286
38. Berkshire Industries PLC 290
39. Catalytic Solutions, Inc. 299
40. First Commonwealth Financial Corporation 307
41. Statoil 315
42. Olympic Car Wash 324
43. Southern California Edison 327
44. Beifang Chuang Ye Vehicle Group 335
45. Hoffman Discount Drugs, Inc. 338
46. Formosa Plastics Group 342
47. Bank of the Desert 348
hz
The teaching notes for Bank of the Desert (A) and (B) are combined.
Includes Bank of the Desert: Appendix. The Bank of the Desert database
and a set of teaching slides are available online on the publisher’s website.
48. Vector Aeromotive Corporation 361
49. Golden Parachutes? 367
50. Pacific Sunwear of California, Inc. 371
51. Entropic Communications, Inc. 376
zle
52. Financial Reporting Problems at Molex, Inc. 382
53. Don Russell: Experiences of a Controller/CFO
Includes the Don Russell (A) case. 390
54. Desktop Solutions, Inc. (A): Audit of the St. Louis Branch
(B): Audit of Operations Group Systems 400
55. Landale PLC 405
56. Two Budget Targets 408
d
57. Conservative Accounting in the General Products Division 411
58. Education Food Services at Central Maine State University 416
59. The Sales Acceleration Program 420
60. Expiring Software License 424
61. Lernout & Hauspie Speech Products 427
62. ConAgra Grocery Products Company 434
63. Lincoln Electric: Venturing Abroad 439
64. TECO Electric & Machinery Co. Ltd. 451
65. Kooistra Autogroep 455
66. City of Yorba Linda, California 464
67. Waikerie Co-Operative Producers Ltd. 469
68. Boston Lyric Opera 473
69. University of Southern California: Responsibility
Center Management System 492
4
© Pearson Education Limited 2012
