Suregrip Corporation Case

MEMORANDUM

TO: Marvin Pearson, President

FROM: Diane Dallas, Controller

DATE: June 21, 2011

RE: Analysis and Recommendation Report for Supergrip Corporation Limited

As per your request during our Executive Committee meeting, please find the attached a report

providing current growth analysis as well as option recommendations for Supergrip Corporation

Limited (SCL)'s product lines in order to maximize profits for 2012.

The report provides analysis for 2012 budgeted and expected results including current cost

allocations and our pricing policy. Our current cost allocation has been refined in order to

better show the actual costs of each production unit we have. I also examined our competitors'

pricing strategy and whether to have our product prices more in line with our competitors as

well as new cost allocations. Other possible options for SCL include introducing high quality

wrench sets as a new product line and whether leasing additional casting machinery is

necessary to increase capacity.

The results of my analysis conclude that if the company implement the recommended options

of adopting the new pricing model, introducing the wrench sets as new product line, and

leasing additional machinery to increase overall capacity, company profits would increase.

Additional recommendations include evaluating products by variable costing for management

decisions and improving management awareness and response to current problems and events.

Please contact me if you have any question or would like to further discuss about the options

analysis and recommendations.

DD

EXECUTIVE SUMMARY

Supergrip Corporation Limited ("SCL") is a large manufacturer in the market of producing and

distributing pliers to wholesalers who then sell to retail outlets, automotive service shops, and

other general manufacturing companies. There are currently has five product lines including

custom, economy, 15cm, 20cm, and chain pliers. Marvin Pearson, as the President of SCL, he is

unhappy with the company's financial results in the fiscal year of 2011, decreasing profits over

the past several years, and the low profit margins SCL is generating.

As a Controller