Harvard
Business School
|
9-198-085
|
Rev.
April 7, 1998
|
Lehigh
Steel
Lehigh had gone from record profits to record
losses in less than 3 years.
-- Bob Hall, ABC Project Manager
Bob Hall
studied the product profit report prior to the 1993 First Quarter Financial
Review. The report was the culmination of a year’s effort calculating and
analyzing customer and product profitability using Activity-Based Costing
(ABC). Hall had been hired to implement ABC to restore profitability at Lehigh
Steel, which had reported record losses in 1991 after posting record profits in
1988. Not uncommon in an industry characterized by cyclic demand and large
capital investment, such losses could not be long sustained. Lehigh was under
pressure to return to profitability. (Continued...) *This question is shortened considering the space*Although THE ANSWER BELOW IS COMPLETE AS REQUIRED.
