Profit & Loss Report

Study Case in Nypro, Inc

Management Control Systems Class - Group 2

Eka Avianti Ayuningtyas [11P2149]
M Farhan Lucky [11P2156]
Meidi Indah Nurmiati [11P2158]
Lingga Wardhana [11P2155]

Company
Nypro was a large custom injection molding
company with sales of over $ 200 million in
1995.
Its strategy was to partner with major precision
plastic users in the medical and
computer/communication industries.

It offered modern, clean-room, high-quality,

globally available plastic parts.
Nypro customers included Johnson & Johnson,
Verbatim, 3M, H-P, Abbott Labs, and Gillette.

History and Performance

Gordon Lankton
Joining Nypro in 1962
as general manager
and co-owner. Driven
by an entrepreneurial
spirit and a global
vision. Introduced
daily P&L report that
used until 30 years.

Strategy
Develop the capability to make unique
plastic pieces of high quality

Develop the molding process for large-scale

operations
Build a worldwide network of custom
injection molding operations
Partner and joint venture with employees
and other companies
Develop clean-room manufacturing
capability

The Organization

view by industry

Nypro's network of 41 locations

in 14 countries assures our
global customers that Nypro is
able to handle their most
challenging projects, wherever
and whenever we are needed.

The Process
Feeding raw plastic material into the barrel of
molding machine.

The small beads of plastic material were

melted upon entering the machines and then
mixed with various plastic resins and injected
to the mold.
Once properly cured (hardened and cooled),
the proceess was repeated.

The Process

The Daily P & L Report

The Report served as the primary control data
report for Nypro. By 11.00 am each day, each
facility reported the key data for the previous
three shifts.
The report had been computerized in the early
1970s, and it was developed into a daily profit
and loss statement 15 years later.
This report give information to management to
judge the performance of each production
facility and for the general managers to
evaluate their operations. (Page 164)

The Dilemma
Nypros corporate controller, Ted Lapres,
worried about internal reporting systems. While
there as certainly a wealth of reported
information available.
Ted was worried that the rapid growth in
information technology was making Nypros
internal reporting system obsolete. He
suspected they might even measure the
wrong thing.

Questions & Our Discussion (1)

Do you think the daily P&L should be continued? Was it based
on good cost accounting data and principles ?

P&L Report still continued. It will help to control

manufacture's operational. For managerial position no need to
review daily but it can be reviewed weekly or monthly. Since it
need time to review every managerial decision, and it is not
on daily basis.
P&L Report is not based on good cost accounting data and
principles. Because this report only measure effective and
efficiency based on operational and only report direct cost
(machine utilization and labor cost). There is no data for
indirect cost (advertising, salary for marketing, finance etc)

Questions & Our Discussion (2)

What other measures would you recommend ? Should they
replace the daily P & L, or should they be additional ?

The other measurement that we recommend is job

order costing. Since with job order costing we can know
overhead cost for every job order.
Job order costing in not replacing daily P&L but
company must have Job order costing besides P&L report

Questions & Our Discussion (3)

Do you see any opportunity to employ an ABC-type cost
systems ?

Yes there is opportunity to employ an ABC-type cost

systems. With ABC cost systems company can improve
accuracy on measure cost for every product.
Below is criteria for company that use ABC cost system
a. Company that use huge capital (many production
machine)
b. Company that have product diversification
c. Diversification product use same facility
d. Every product have same production process

Questions & Our Discussion (4)

Given the daily and monthly reports, was this enough control
to manage this growth company ? Did they need more balance
in their reporting system ?
No there is never enough, we need to grow up every day

Thank You