Profit & Loss Report

Study Case in Nypro, Inc

By
Adite Choudhary (31)
Nilam Dhurve
Shilpee Haldar (51)
Chandrashekhar

Company
Nypro was a large custom injection
molding company with sales of over $
200 million in 1995.

In 20 years it had grown from a single

plant in Massachusetts to 18
production facilities located
throughout the world.

Its strategy was to partner with major

precision plastic users in the medical
and computer/communication
industries.
It offered modern, clean-room, highquality, globally available plastic
parts.

History and Performance

Total Sales in Nypro Inc
200
180
160
140
120

Gordon Lankton
Joining Nypro in
1962 as general
manager and coowner. Driven by an
entrepreneurial
spirit and a global
vision. Introduced
daily P&L report that
used until 30 years.

100
80
60
40
20
0

1970

1975

1980

1985

1994

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

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.

The Process

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)

The Dilemma

Nypros 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
Nypros internal reporting system
obsolete. He suspected they might
even measure the wrong thing.

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 should be 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)

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

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

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

Thank You