Question

Kyle Manning, the president of Adamson Plastic Company, is a famous cost cutter in the plastics industry. Two years ago, he accepted an offer from Adamson’s board of directors to help the company cut costs quickly. In fact, Mr. Manning’s compensation package included a year-end bonus tied to the percentage of cost decrease over the preceding year. On February 12, 2015, Mr. Manning received comparative financial information for the two preceding years. He was especially interested in the results of his cost-cutting measures on quality control. The quality report shown below was extracted from the company’s financial information.

Required
a. Explain the strategy that Mr. Manning initiated to control Adamson’s costs.
b. Indicate whether the strategy was successful or unsuccessful in reducing quality costs.


c. Explain how the strategy will likely affect the company’s business in the longterm.


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  • CreatedFebruary 07, 2014
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