Vyaderm Case - 2669 Words

[pic] EVA – A CATHARTIC CHANGE?! Prof. Zhaoyang Gu Course 45-701 By: Neha Arya Marc Brands Anil Konjalwar Alok Satyawadi EVA: North American Dermatology Division We will first calculate the 1999 actual EVA retroactively and if our figure matches Vyaderm’s then we will use that method to calculate EVA for 2000 and 2001. 1999 EVA Calculation: |In ‘000s |1999 | |Operating earnings |20,000 | |add R D expense |20,000 | |minus R D amort. |14,972.8 | |add ad expense |45 | |minus ad amort. |41.34 | |add goodwill |2500 | |NOPBT†¦show more content†¦The systems might actually work if they are set-up sensibly. For a manager who has been consistently meeting/exceeding her targets, the targets could be revised appropriately to keep her challenged. As shown in Exhibit 4, the cap does not need to be a flat line starting from point X, as seen in Figure 1. It could be set to have a gradient (Figure 2) after achieving a certain target. 2. Thresholds encourage short-term decision making Agree o Just like a cap is a limit on the bonus axis, threshold is like a floor (opposite of cap) on the performance axis. Any situation where there is a good chance of not meeting the threshold levels, managers will have a very short-term vision. The natural tendency will be to make decisions that get them above the thresholds for that period and worry about future later. Again, referring to Exhibit 4, Figure 1, a manager at a performance level Z2, trying to meet a threshold (Y) will try to do anything to be at (Y). o For managers who are way below the threshold may just ‘give-up’ and perform even worse. This refers to performance level Z1 in Exhibit 4, Figure 1. If the managers knew before hand that there was no possible way to meet their targets (due to controllable or un-controllable factors like changing market conditions), they would have absolutely no incentive to maximize their performance. 3. Negotiated targets promote sandbagging Agree oShow MoreRelatedVyaderm Pharmaceuticals Case Analysis Essay874 Words   |  4 PagesVyaderm Pharmaceuticals Case Analysis | | | As consultant to Sanders and Myers, I would suggest they rethink the continuation of economic value added (â€Å"EVA†) bonus payout process. The proposed EVA bonus payout structure is supposed to be an objective way to gauge and reward employee performance; however, through no fault of their own, the Dermatology group is slated to undergo severe ebbs and flows in their incentive and could potentially wreak havoc on employee morale and retention. ForRead MoreBridgeton Paper1671 Words   |  7 PagesTOPICS IN MANAGEMENT ACCOUNTING AMIS 4310 CASE QUESTIONS Seligram, Inc.: Electronic Testing Operations 1. What caused the existing system at ETO to fail? 2. Calculate the reported cost of the five components listed in Exhibit 6 using: a. The existing system. b. The system proposed by the accounting manager. c. The system proposed by the consultant. 3. Which system is preferable? Why? 4. Would you recommend any changes to the system you prefer? Why? 5. Would youRead MoreAccounting Case Essay1930 Words   |  8 PagesHow would the switch affect Dakota’s profitability? Caribbean Internet Cafà © 1. What managerial issues should David Grant consider before starting the Caribbean Internet Cafà ©? 2. Define the fixed, variable and start-up costs in this case. 3. What is the contribution margin per customer? 4 How many customer visits will CIC need in order for the cafà © to break-even in the first year? 5. How many customer visits will CIC need in order for the cafà © to break-even in year two? Read Morecafes monte bianco case analysis4234 Words   |  17 Pagesexecution, and overall enhancement of a firm’s value. Primarily taught through case studies, this course will utilize and build upon the concepts studied in prior Management Accounting courses, and allow the students an opportunity to see how these concepts fit together. Selected readings from textbooks and business periodicals will be used to blend in appropriate theory for newer subjects that may be the focus of some case studies. The world of business continues to change dramatically. As a result