Please submit answer to ATC. Due date is before the Test iii Assume you are the
ID: 2546966 • Letter: P
Question
Please submit answer to ATC. Due date is before the Test iii Assume you are the division controller for Auntle M's Cookte Company Auntie M has introduced a new chocolate chip cookie called and it is a success. As a result, the launch of this becam product manager responsible for the new cookie was promoted to division vice president and e your boss. A new product manager, Bishop, has been brought in to replace the promoted manager. Bishop notices that the Pull of Chips cookie uses a lot of chips, which increases the cost of the cookie. As a result, Bishop has ordered that the amount of chips used in the cookies be reduced by 10%. The manager believes that a 10% reduction in chips will not adversely affect sales, but will reduce costs, and hence improve margins. The increased margins would help Bishop meet profit targets for the period. You are looking over some cost of production reports segmented by cookie line. You notice that there is a drop in the materials costs for Full of Chips. On further investigation, you discover why the chip costs have declined (fewer chips). Both you and Bishop report to the division vice president, who was the original product manager for Full of Chips. You are trying to decide what to do, if anythingExplanation / Answer
The "Full of Chips" cookie line is a newly launched product and has become a success. As the name of the product signifies, it's unique selling point is the use of chocolate chips in abundance. The new production manager has reduced the use of chips by 10% to reduce the cost of raw materials. While 10% is not a very big number, however, reducing the amount of chips in a product whose USP is the being "full of chips" is a big decision.
It might not reduce the sales adversely on an immediate basis. However, it definitely affects the quality of the product. I will bring this fact to the notice of the new vice president. His prior experience as the production manager will help him decide if it is a wise decision to reduce the cost by compromising on the quality.