You are the division controller for Margies Cookie Company. Margies has introduced a new chocolate chip cookie called Full of
As a result, Wilkin 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 Wilkin 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 Wilkin 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 anything.
Discuss the options you might consider.
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Question Posted: November 30, 2012 02:10:36