Business Case Studies & Business Publications

Airinit: Clearing the Accounting Air

Dikolli, Shane, Ye...

Case

Airinit: Clearing the Accounting Air

Dikolli, Shane; Yemen, Gerry

C-2442 | Published January 26, 2024 | 9 pages Case

Collection: Darden School of Business

Add To Cart Buy Now

Product Details

The fictional company Airinit, now a division of the conglomerate ArgentAxis Holdings (AAH) after a recent merger, manufactures air fresheners, and at the start of the year it planned to generate a healthy profit. However, during the year, several events occur that cause the company’s financial outcomes to deviate significantly, in an adverse way, from the original plans. To diagnose why the deviations occurred and more importantly whether any actions could be implemented to prevent the adverse outcomes from reoccurring, Airinit’s accounting area has prepared a detailed variance analysis for consideration. This case is taught at the University of Virginia Darden School of Business as a full-class role-play in an Executive Education setting. It is also suitable for inclusion as a full-class role-play in an introductory core class in MBA or Master of Accounting management accounting. Alternatively, where the interpretation of a budget variance analysis has not been covered in a core course management accounting, the case is suitable for inclusion as a full-class role-play in an MBA, Master of Accounting, or undergraduate intermediate management accounting elective class. Students at all levels can relate to the fundamentals of the business and the value chain that the business develops—from raw inputs to an in-house manufacturing process and finally to the marketing and distribution of a product. The case takes on an enterprise approach so that the students can see how the budget variance analysis framework can be used to diagnose the internal financial health of an overall business.

The key learning objectives for the case are as follows: (1) Understand and discuss the nature, purpose, and significance of various budget variances for controlling multidivisional business operations. (2) Learn and apply a systematic approach to analyze budget variances for enhancing decision-making in multidivisional businesses. (3) Assess how to practically utilize budget variances to make informed decisions for better control of multidivisional business operations. (4) Use economic theory to generate ideas for improving multidivisional business operations that are not well controlled.