Slydell Industries produces a variety of consumer goods including lamps, home office desks, and storage cabinets. Many products sold by the company are purchased disassembled, and then assembled by the customer. To assist the customer with assembly, Slydell provides a free hotline staffed 24 hours daily and provides an assembly manual with each item sold. The firm produces the assembly manuals in-house and maintains very tight control over the production costs of the manuals. For the latest year, the company spent $9,000,000 writing, publishing, and packaging assembly manuals for its products. The manager tasked with managing the production of assembly manuals was speaking with the CEO and noted that "our actual production cost of $9,000,000 for assembly manuals was $700,000 under budget. I am very proud of my employees and their efforts to control costs for the company." The CEO pondered the statement for a moment and then responded, "According to survey results that reached my desk only this morning, 65 percent of our customers use the hotline for assistance with product assembly; only 7 percent ever open their manual."
a. In light of the survey results, did the company effectively control costs of assembly manuals? Explain.
b. In the long term, why must cost control efforts be viewed through the eyes of the customer rather than through the accounting system only?