THE CASE: PART 1 oomer's Energy Drinks (TED) is a publicly traded company, founded by Joe and Payton Parker in 1994. The company is headquartered in Baltimore, MD, and produces three different energy drink flavors that are popular both domestically and internationally. The primary customer group is young adults between 18 and 29. The majority of the company's sales are in the Americas and Europe, and they have manufacturing and distribution facilities in Baltimore, MD, Los Angeles, CA, Mexico City, Mexico, Sao Paulo, Brazil, and Frankfurt, Germany. Matt Cameron is a Certified Management Accountant (CMA) and a member of the Institute of Management Accountants (IMA). He has been with the company for 10 years, working his way up from an entry-level managerial accounting position in Baltimore to his current position as the Production Manager at the Frankfurt manufacturing facility. One of Matt's primary responsibilities is to schedule European production to meet demand for the company's drinks. European demand is cyclical, with approximately 35 percent of the company's sales occurring in the summer, 25 percent in the spring, 25 percent in the fall, and 15 percent in the winter. The company's general philosophy is to pursue a just-in-time inventory production approach; however, in order to have enough lead time to produce and distribute the product in advance of heavy-demand periods, production generally ramps up in March. To reduce excess inventory during low-demand periods, production generally slows We thank Valaria P. Vendrzyk (editor), an anonymous associate editor, two anonymous referees, and participants at the 2016 AAA Management Accounting Midyear Meeting for providing helpful comments on this manuscript. Supplemental material can be accessed by clicking the link in Appendix A. Editor's note: Accepted by Valaria P. Vendrzyk. Submitted: February 2016 Accepted: June 2017 Published Online: July 2017 29 THE CASE: PART 1 oomer's Energy Drinks (TED) is a publicly traded company, founded by Joe and Payton Parker in 1994. The company is headquartered in Baltimore, MD, and produces three different energy drink flavors that are popular both domestically and internationally. The primary customer group is young adults between 18 and 29. The majority of the company's sales are in the Americas and Europe, and they have manufacturing and distribution facilities in Baltimore, MD, Los Angeles, CA, Mexico City, Mexico, Sao Paulo, Brazil, and Frankfurt, Germany. Matt Cameron is a Certified Management Accountant (CMA) and a member of the Institute of Management Accountants (IMA). He has been with the company for 10 years, working his way up from an entry-level managerial accounting position in Baltimore to his current position as the Production Manager at the Frankfurt manufacturing facility. One of Matt's primary responsibilities is to schedule European production to meet demand for the company's drinks. European demand is cyclical, with approximately 35 percent of the company's sales occurring in the summer, 25 percent in the spring, 25 percent in the fall, and 15 percent in the winter. The company's general philosophy is to pursue a just-in-time inventory production approach; however, in order to have enough lead time to produce and distribute the product in advance of heavy-demand periods, production generally ramps up in March. To reduce excess inventory during low-demand periods, production generally slows We thank Valaria P. Vendrzyk (editor), an anonymous associate editor, two anonymous referees, and participants at the 2016 AAA Management Accounting Midyear Meeting for providing helpful comments on this manuscript. Supplemental material can be accessed by clicking the link in Appendix A. Editor's note: Accepted by Valaria P. Vendrzyk. Submitted: February 2016 Accepted: June 2017 Published Online: July 2017 29
