Nypro was a large custom injection molding company that saw sales grow from $4 million in 1970 to $200 million in 1995. It used a daily profit and loss report to monitor the performance of each production facility. While this report provided useful operational data, the corporate controller was concerned it did not adequately capture indirect costs and may be measuring the wrong metrics as the company and information technology rapidly grew. Additional cost accounting methods like job order costing and activity-based costing could provide more accurate and balanced reporting to control the successful but growing company.

1. 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]

2. 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.

3. History and Performance
Total Sales in Nypro Inc
200
180
160
140
120
Gordon Lankton
100 Joining Nypro in 1962
as general manager
80
and co-owner. Driven
60
by an entrepreneurial
spirit and a global
40 vision. Introduced
daily P&L report that
20 used until 30 years.
0
1970 1975 1980 1985 1994
Sales (in million $) 4 10 45 50 200

4. 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

5. 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.

6. 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.

7. The Process

8. 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)

9. The Dilemma
Nypro’s 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 Nypro’s
internal reporting system obsolete. He
suspected they might even measure the
wrong thing.

10. 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)

11. 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

12. 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

13. 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

14. Thank You