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Project Sparrow: Applying Costing Methods

Ian Dunn; Kaitlyn Oh

Product #:9B21B003
Supplier:Ivey
Discipline:Accounting
Setting:Germany, United States, 2019
Details:Case (PDF) • 5 pages • 2021-03-01

Subjects:

Pricing strategySales and marketingFinance and investingAccounting

Industries:

Fabrication and manufacturing

Geography:

EuropeNorth AmericaGermanyUnited States
Your Price:$10.54

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In 2019, the pricing manager at the US manufacturing facility for Sparrow GmbH (Sparrow), a chemical manufacturer based in Germany, asked the project manager at Roland Berger, a global management consulting firm, to provide her opinion on the pricing for Sparrow’s bid on a basic chemicals contract with Impendium Chemicals. The basic chemicals industry was a highly competitive and commoditized environment; as a result, pricing decisions with respect to formulating bids were very important. Although the company had traditionally relied on the estimates of salespersons for pricing, it needed to develop a more refined approach to its pricing strategy. The project manager had to decide which costing method was most appropriate for this contract and recommend a price for the bid.

Learning Objectives

This case is best positioned as an introduction to costing methods in an undergraduate-level introductory course in managerial accounting. Students should be familiar with cost behaviour prior to attempting this case. After working through the case and assignment questions, students will be able to do the following:
  • Understand the challenges of making a pricing decision in a highly competitive industry.
  • Choose from various methods of costing to produce the information necessary to make an informed pricing decision.
  • Use a full cost accounting system to glean the information necessary for making management decisions.
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Case Study: Project Sparrow: Applying Costing Methods (English version) | Ivey Publishing