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Colorscope, Inc.

Harvard Business School Case #910-410
197040
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100 900 750 650 600 400 425 450 475 500 2 Service-Bureau 2 Service -Bureaus such as Kinko's and Alphagraphics typically do jobs that are cheaper.Exhibit 1 Price trend of color separations to scan. assemble. proof and output printer specified film for a hypothetical direct mail catalog page with one image Price/Page of work ($): 1991 1992 1993 1994 1995 Colorscope 1. . and involve fewer and/or smaller pages.

300. binding. Printing (3 days). 200300 images.Exhibit 4 Time/Cost Breakdown for the Catalog Producer Direct mail catalogers constituted over 90% of Colorscope's customers.000 $30.000 $120. studio and location shots.000 . Photography (2 weeks). cutting.000 $50. Prepress (2 weeks). To produce an average project run. producing layouts. second class bulk rate post. gaining management approvals. in this example. writing copy. costs would break down as follows: Design (3 weeks). $10.000 $1. addressing for national distribution Distribution (23 weeks). 1 million copies of a 52-page catalog. 2 rounds of proofs to the project manager.

packaging. dir. retail .Exhibit 5 Top American Pre-press Competitors (does not include printers that have integrated forward) Company WACE USA Applied Graphics Technologies Black Dot Group Schawk. catalogs mags. books 1 1 4 1 2 packaging. packaging. dir. agency 16 mags. packaging mags. pkg.850 1. newsp 13 packaging 4 mags. mail. mail. agency packaging. Inc. mail. agency mags. pkg. packaging magazines. mail. books mags. direct mail. mail. dir. mail. publishing. books mags. Sales Employees (M$US) 200 130 109 104 1. packaging. agncy. dir.060 900 729 American Color 76 840 Intaglio Vivi-Color Enteron Group 60 56 450 400 Kwik International Color Associates TSI Graphics Blanks Color Imaging Kreber Graphics. dir. agncy. pkg. mail. direct mail. 41 37 27 24 22 110 390 313 230 165 Facilities Primary Business (sites) 20 13 12 12 magazines. dir. dir. packaging. Inc. agncy.

00 $ 500.000 9.00 $ 500.000 50.000 23.000 12.75 $ 750.000 4.50 $ 687.000 1.00 $ 500.00 $ $ 578.000 22.400 8.50 $ 625.000 20.50 $ 612.00 $ 687.00 $ 562.00 $ 750.000 10.000 20.200 $ 600.00 $ 718.400 40 585 .000.600 23.000 11.Exhibit 8: Jobs completed in June 1996* Job # 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Total Customer # Pages 10 16 10 16 10 32 11 16 11 16 12 16 12 32 12 32 12 32 13 128 14 16 14 16 14 16 14 16 14 16 15 16 15 16 16 32 16 4 16 4 17 16 17 16 18 4 19 4 19 16 20 1 545 *All figures are disguised Revenue $9.50 $ 625.50 $ 687.00 $ 390.600 9.000 2.800 8.000 8.63 $ 487.000 9.00 $ 500.000 11.00 $ 600.00 $ 625.00 $ 1.000 2.800 11.35 23.75 $ 687.000 12.00 $ 350.000 7.50 $ 718.000 0 $315.50 $ 500.000 11.50 $ 687.

92 501.64 295.59 4.64 369.15 3.400.68 2.59 794.312.413.00 Hours clocked in different work stations include rework hours given in Exhibit 10.85 867.11 2.00 50.064.85 5.30 4.33 2.85 2.29 295.38 30.419.00 32.68 501.75 442.93 1.30 2.99 501.15 1.63 794.68 2.007.191.007.33 369.89 2.609.30 3.023.907.011.600.55 722.00 8.75 147.37 1.29 295.07 2.212.601.14 2.11 2.44 2.600.30 2.007.53 13.68 2.212.007.52 57.818.78 2.11 3.400.29 73.000.15 1.03 18.000.64 147.00 .89 144.29 516.890.00 64.049.92 1.312.456.606.75 295.167.007.30 2.26 2.33 2.745.335.06 3.30 2.907.68 2.29 295.606.034.47 516.150.00 50.624.82 8.29 295.015.00 6.29 221.92 501.601.11 73.37 4.93 442.208.107.034.81 2.108.92 2.405.191.95 1.409.22 4.Exhibit 9: Hours clocked at different workstations in June 1996* JOB# Job Preparation 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Idle Time Capacity 4 3 7 4 4 4 7 6 6 15 5 4 4 4 4 4 4 7 2 2 4 4 1 2 5 1 117 43 Applied Cost $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 160 $ 1000 $ 295.45 2.82 147. * All figures are disguised Assembly 42 38 75 30 28 32 58 64 58 250 32 32 34 36 36 39 40 60 10 11 39 41 11 12 42 2 1152 128 1280 4000 Applied Cost $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3.29 516.29 295.000.11 295.962.312.29 295.00 50.606.818.00 Scanning 32 24 40 16 16 16 32 34 30 130 14 19 20 22 20 21 20 26 5 5 20 20 5 5 19 1 612 28 640 1000 Applied Cost $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3.81 2.29 295.30 100.38 1.29 295.637.03 4.00 1.

32 20 86.00 10.185.57 1.00 $ 4.00 $ 9.00 $ 753.000.00 $ 6.25 2191 893.072.584.000.39 $ 315.693.61 75 86.00 $ 6.32 21 431.61 71 345.00 $ 12.09 $ 22.79 592.75 Idle Time $ 125.57 81 690.20 8.789.742.554.Output 8 8 16 4 4 4 8 8 8 32 4 8 4 4 4 4 8 8 1 2 4 4 2 1 4 1 163 37 200 2000 Applied Cost $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1.79 1.57 1.000.800.26 $ 23.97 65 431.000.57 2.185.600.00 $ 7.00 $ 8.57 1.837.19 $ 2.000.31 $ 4.61 74 86.00 Quality Control 7 8 8 4 4 6 5 6 8 30 4 7 3 5 4 4 7 9 1 1 3 5 1 1 5 1 147 13 160 500 Applied Cost $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total 604.000.00 $ 8.15 592.000.00 $ 17.000.229.00 $ 53.093.600.185.79 592.32 21 258.00 $ 4.000.00 $ 6.353.000.000.79 148.807.000.54 $ 8.97 70 431.28 $ 12.79 296.00 $ 13.432.404.00 $ 9.30 592.200.00 2440 68.513.000.824.79 592.185.83 $ 8.29 72 604.57 146 345.93 118 690.30 $ 9.721.000.206.000.824.185.000.00 $ 2.362.150.00 $ 12.185.00 $ 12.589.86 $ 7.39 148.69 $ 12.03 $ 50.77 $ 11.25 93 690.29 68 345.400.00 $ 2.850.000.39 592.827.20 296.68 $ 2.76 $ 20.724.000.000.64 $ 20.00 $ 12.25 70 258.000.38 $ 9.61 110 517.000.79 592.359.29 56 517.451.535.28 $ 23.000.71 $ 8.32 6 10.32 19 86.90 110 86.00 $ 8.13 $ 1.00 $ 6.47 $ 9.000.57 110 2.57 592.79 592.68 $ 9.511.20 592.29 59 604.79 1.17 $ 11.00 $ 8.79 1.45 $ 11.00 $ 8.106.371.65 457 345.57 1.29 58 345.083.25 79 776.00 1.185.93 62 431.00 50.79 592.185.57 148.57 4.842.852.800.75 249 $ 11.24 $ $ 115.99 $ 10.75 Cost + Material Selling Price $ 16.54 $ 11.00 $ 11.00 Profit .00 $ 12.

19) -122.464.083.840.68) -10.83) -0.637.899.700.24 36.56% $ (1.832.31) -1451 $ (1.91 38.14 12.511.10% $ (353.68) -2554 $ (1.192.415.87% $ (753.94% $ (72.50% $ (1.33% $ (1.486.300.36 36.91% $ 1.86% $ 5.30) -71.640.162.73 13.03) 417 $ (1.16% $ 4.278.000.74 44.404.31 28.62 19.31) -8.17% $ (2.13) -101.CM CM% $ (6.89% $ 770.56% $ 3.25% $ 7.24% $ (21.71) -17.39% $ (3.38% $ (206.47% $ 5.24) $ 41.83% $ (2.739.252.23 42.000.56% $ 1.000.00% $ (1.19) $ (8.30) -1153 $ (1.72 43.451.98% $ 2.53 8.500.85% $ 7.03) -7.00) $ 19.11% $ 975.01 12.427.210.68) -23.27% $ 4.72 23.54) -18.957.554.55 37.19% $ 8.099.96% $ 10.46 24.275.17) 647 $ (1.175.17) -9.68) .73 -4132 $ (2.

003.64 73.38 Scanning 3 9 10 3 25 $ 301.82 Assembly 4 16 14 3 37 .78 289.Exhibit 10: Rework hours* Rework due to change in specifications by customer JOB# 61001 61002 61301 61502 61801 61901 Total Job Preparation 0 0 2 1 0 1 4 $ $ $ $ $ $ 147.82 73.15 $ 803.56 722.54 $ 100.38 $ 100.07 $ 501.59 578.78 Quality Control initiated rework of house errors JOB# 61301 61402 61403 61603 Total Job Preparation 1 0 0 1 2 * All figures are disguised $ $ $ $ 73.15 $ 903.59 433.15 1.63 216.156.04 1.92 $ 401.46 $ 1.04 $ $ $ $ 289.606.15 Assembly 10 6 10 8 3 4 41 $ $ $ $ $ $ 722.84 $ 301.82 Scanning 16 8 5 4 1 1 35 $ 1.82 73.07 216.011.

32 $ 172.20 1 $148.79 4 $592.32 $ - Total 10 29 27 8 74 $1.702 $ 14 $1.188 $ 258.841 $ 172.240 $10.fications by customer Output 4 $592.529 $3.20 0 $ 12 Output 1 2 2 1 6 $148.794 $ 172.065 .39 $296.97 21 $2.79 2 $296.20 $296.454 99 $ 86.899 $3.64 $ 86.398 $1.39 1 $148.463 $ 6 $17.64 21 $2.64 32 $3.20 Quality Control 2 3 2 0 0 0 7 Quality Control 1 2 1 0 4 Cost + Total Material $5.465 $ 5 $1.39 $148.

483.245.90 $10.689.000 $ 8.245.000 13000 $ 1.491.13% 95.48 $11.18 .07 $ 12. Job Preparation $8.38 $ 72.000 $ 5.122.491.62 $ 24.14 $ 61.811.249.000 $64.32 73.34 $64.00% 81.88% $ 8.311.76 $ 9.156.000 $ 4.90 $92.242.33 $ 2.28 $ 1.000 $ 2.26 $ 148.50% 91.639.80 $29.500 * All figures are disguised Labor Hours Idle Actual OH Applied 160 640 1280 200 160 43 28 128 37 13 117 612 1152 163 147 $ 73.000 $14.000 $10.18 $ 5.637.80 $ 1.810.29 Underapplied by $ 3.63% 90.000 $500 $ 1.82 $ 100.000 $10.174.000 $ 1. ft.435.639.14 $ 83.20 $ 86.34 1000 4000 2000 Quality Control Idle $11.811 1000 Scanning Assembly Output $32.311.* Exhibit 11: Selected Financial Information for June 1996 Description Wages Depreciation Rent Others Total Overhead Floor Space in sq.48 $13.000 $500 $ 2.48 500 6.000 $25.

00 $ 50.000.000.00 $ 15.21 .000.Total $125.000.00 $ 30.00 $225.000.00 $ 20.000.21311 15000 2440 $ 92.00 92.

500 $1. Customer initiated rework Correction of house error $2.600 $4.500 500 1.800 $1.800 3.500 1.200 13.500 $2.700 1.400 3.500 1.000 $2.100 $3.000 *All figures are disguised 3 Includes materials for rework.600 $2.000 1.000 $2.000 2100 2.000 1.000 $1.100 $4.300 600 1.500 $8.800 1.500 1.800 $3.Exhibit 12: Materials expense in June 1996* Job# 61001 61002 61003 61101 61102 61201 61202 61203 61204 61301 61401 61402 61403 61404 61405 61501 61502 61601 61602 61603 61701 61702 61801 61901 61902 62001 Total Total Materials expense3 $5.500 3.900 $2.900 2.600 3.300 $600 $1.100 1.100 2000 2200 3.300 $3.500 $3.000 1.700 2.200 $14.000 $8.700 $2.600 1.100 3.400 $3.100 $2.000 1.300 $3.200 $200 .400 3.000 1.200 $5.500 $1.100 $2.100 $3.500 4.200 200 $75.000 $1.300 3.