Jucy Rentals: A Case for Jucy Gorgeous Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

JUCY Rentals (Jucy)isa company based in New Zealand which provides rental services within the country as well as in Australia. Jucy is famous for its affordable services to its customers and the company focuses on providing that by incurring the minimum cost by taking over its supply chain through vertical integration. Jucy has control over its whole supply chain and therefore has a long process of importing used cars from Japan then altering it through complex processes and then those vehicles are used for rental services within the country and also abroad.

Current situation

Tim and Dan, co-founders of the business, are very passionate about the success of business and they are “keen to grow it even more” as said by Tim. This is possibly the factor that makes them concerned about the current changing trends that will affect their business and that they want to introduce changes in their business accordingly.

The international market trends for campervan is moving towards the luxury sides. The founders realize this change and predict that this would also come to New Zealand for which they have taken initiative on a project, JUCY Gorgeous. This project will meet the demand for changing trends and the founders are willing to implement it, which would introduce some changes in the manufacturing process of their vehicles and the way they offer services.

Strategic Management Accounting Technique

There should be consideration of the nature and complexity of the business and its process in order to determine the right management accounting technique. Broadly, Jucy’s business can be split into two operations: one is manufacturing where they import the vehicles and alter them according to their needs through complex production processes and the other is a service where they offer rental service on those vehicles. Activity based costing system (ABC) seems to be the technique Jucy should implement. ABC costing works in four steps to trace the cost of a product or service back to its origin.

First is the actual product/service which is basically the end output. The second step is to track the resources that are used to make up the product. Here in the manufacturing area, ABC would track the resources that are consumed to make up a vehicle. Like raw material that is being used in the vehicle, electricity used in the manufacturing division. Third is the activity this means how much and in what way the resources are being consumed in the vehicles,such as laminating team working for 9 hours and the materials used (quantity) in the modification process installing items such as fridges, TV, carpets etc.Lastly,in the fourth step, the cost associated with those activities.

After reverse analyzing,it is known that what activities are being involved in the manufacturing and how much resources are being consumed. The same goes for rental service. The services offered are traced back via analyzing resources, activities and costs. For example, the service for 24 hour customer support will require staff that will handle queries and physical resource of a company such as a separate floor in building. Such resources will incur costs on the basis of their usage and hence the cost of customer service to Jucy can be determined.

All the costs that are identified from the above four step process are accumulated into a cost pool and then the drivers (activities) which are identified are assigned to each cost pool. A cost pool can be different for different processes like a cost pool for stripping old parts, assembly, paint, installation, delivery, etc. All these separate processes will have their costs and they will be charged for each vehicle based on the amount of use.

Jucy manufactures two types of vehicles Hi-Ace campervan and a station wagon (car). Both vehicles are different in their designs and specification and hence they both will consume activities differently. It might be possible that some activities are vehicle specific so this technique would help Jucy to identify the associated activities and make strategic decisions accordingly.

Jucy Rentals A Case for Jucy Gorgeous Case Solution

Alternative designs and anticipated production cost for the new project

The new project (Gorgeous) is going to aim for luxury categories to meet the changing demands towards such vehicles that provide luxurious experience. The alternative designs for the new project include a variety of changes. The designs will focus on necessary items and luxury items. The vehicle would be spacious. The design specifications would include enhancement of standard items such as LCD TVs to large LCD TVs and a much better look that is lavish and appealing. Alternative designs for components included luxurious beds, gas heaters and interior tables and chairs. It will also include luxury electronic items and soft furnishing. Marketing team also suggests some add-ons that will bring the vehicle in a much better shape according to customers’ needs. The add-ons include GPS and baby seats and other items that will add extra value.......................

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