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• Background Note | HBS Case Collection | October 2016 (Revised October 2018)

  Cost Variance Analysis

  Robert S. Kaplan and Susanna Gallani

  This note was written to provide students with fundamental concepts and methods for the analysis of cost variances. It focuses on the decomposition of cost variances into price, quantity, and mix variance components, an approach that allows students to identify the root causes of differences between expected and actual costs.

  Keywords: Cost Accounting;

  Citation:

  Kaplan, Robert S., and Susanna Gallani. "Cost Variance Analysis." Harvard Business School Background Note 117-006, October 2016. (Revised October 2018.)  View Details

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• Case | HBS Case Collection | September 2016 (Revised October 2018)

  Springfield Hospital

  Susanna Gallani and Robert Kaplan

  One of the key roles of costing systems is to support the evaluation of performance and facilitate appropriate resource allocations. Through participation in a comparative cost study, management at Springfield Hospital, known for its heavy focus on operational excellence, become aware of opportunities for further improvement. Analysis of the differences in costs, uses, and allocations of resources will inform management in the decision and implementation of strategic plans. This case stimulates reflections on the importance of costing systems, in particular Time-Driven Activity Based Costing, and variance analysis as decision support mechanisms.

  Keywords: Activity Based Costing and Management; Health Care and Treatment; Health Industry;

  Citation:

  Gallani, Susanna, and Robert Kaplan. "Springfield Hospital." Harvard Business School Case 117-025, September 2016. (Revised October 2018.)  View Details

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• Case | HBS Case Collection | August 2018

  Revenue Recognition at HBP

  Paul Healy and Anywhere Sikochi

  In early 2014, Paul Bills, CFO of Harvard Business Publishing (HBP), sat down with David Wan, the company’s CEO, to discuss budget preparations for the coming year. Bills noted that the performance of Corporate Learning, one of HBP’s three business units, would be affected by a business model change for its largest product that required a change in the timing of revenue recognition. Corporate Learning was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server rather than on its clients’ servers, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12). As Bills and Wan discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.

  Keywords: Accrual Accounting; Budgets and Budgeting; Revenue Recognition; Financial Reporting; Publishing Industry; Education Industry; United States;

  Citation:

  Healy, Paul, and Anywhere Sikochi. "Revenue Recognition at HBP." Harvard Business School Case 119-029, August 2018.  View Details

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