Leigh steel Case study

Case Study
Lehigh Case study
Assignment questions
1. Review Lehigh’s strategy during the recession in 1991 and discuss why product mix decisions are important after such a recession.

2. Compute the profits for the five sample products under standard costing, ABC and ToC and identify any differences in assumptions that you have made between these three costing approaches. You may find it useful to produce a ranked order of profitability under the various approaches and discuss the significant differences.

Sample products:
Method Condition Round Roller Wire Chipper Knife Round Bar Machine Col
Standard Costing $0.60
Rank 1 $0.00
Rank 2 ($0.25)
Rank 4 ($0.26)
Ranks 5 ($0.15)
Rank 3
ABC
ToC

3. Why is the continuous rolling mill a constraint and to what effect does this impact upon Lehigh?

4. How might you combine ABC and ToC to take advantage of the strengths of each and avoid the pitfalls?

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