The Board of Directors should do the following:
1. Compute FASTPACK’s 2014 operating income using absorption costing.
2. Determine whether FASTPACK should adopt the advertising campaign.
3. Determine how many rolls of tape FASTPACK should produce in 2015.
4. Evaluate McDaniel’s performance based on his decisions and the information he provided the Board.
5. Evaluate the contract’s bonus provision. Is the Board satisfied with this provision? If so, explain why. If not, recommend how it should be changed. After McDaniel has given the Board his memo and income statement and after the Board has had a chance to evaluate McDaniel’s performance, McDaniel and the Board should meet. The purpose of the meeting is to decide whether it is in their mutual interest for McDaniel to remain with FASTPACK and, if so, the terms of the contract FASTPACK will offer McDaniel.