Question
AMBOY SPECIALTY FOODS: A CHEESY' VARIANCE INVESTIGATION PART 1 In 1940, a retired U.S. Marine Colonel established Amboy Specialty Foods to provide canned cheese
AMBOY SPECIALTY FOODS: A CHEESY' VARIANCE INVESTIGATION PART 1 In 1940, a retired U.S. Marine Colonel established Amboy Specialty Foods to provide canned cheese sauce as meal rations for the United States military. Amboy reported operating income every year since the company was established, until this year. Following tradition, Chris Shaw, a recently retired Marine Colonel, was appointed to lead Amboy. But now, the Colonel, or Sir as Amboy employees called him, was concerned. The possibility of Amboy reporting a loss for the first time ever was very real. If he couldn't figure out what was driving the first quarter loss, Colonel Shaw would forever be known in the tight knit community of retired Marines as the one who failed at Amboy. Failure was not an option during the Colonel's military career, and he was not going to fail at Amboy. The Colonel scheduled an early Friday morning meeting with Terry, Amboy's new controller, to address the situation. The Order "Come in Terry. You're late! You were supposed to be here at 8AM", the Colonel commented tersely. "I'm sorry. I got caught in traffic," Terry apologized. "My time is valuable, and I expect for you to be in on time. No exceptions. Understood?" Terry replied like a soldier under the Colonel's command, "Yes, Sir." The Colonel began, I am certain you are aware that the company reported a net loss for the first three months of the year. I doubt you are aware that in 75 years of operation, Amboy has never reported a fiscal year loss. Not once!" "I was not aware of that, Sir. I do know that we made a change to the cheese sauce recipe this quarter and that the new recipe uses more block cheese, Terry replied, silently considering the possibility that the new recipe was behind the current quarter loss and wondering what was
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