As a production manager for Canco Company, Andrea has been challenged since early 2020 with not only keeping skilled workers on payroll but also with coping with Covid pandemic low production levels which affected profit figures. It has been a challenging period for both Canco and Andrea as a loss of $250,000 CAD was reported last year. Andrea’s initial concern last year was to keep the figures at breakeven levels as bills must be paid as well as employees’ salaries. As a reputable production manager for the last fifteen years whose primary job was in making high quality products to keep customers satisfied and keeping employees motivated, Covid-19 made everything more and more challenging for Andrea and Canco’s ongoing business.

It is November 2021, almost end of fiscal year for Canco, and Andrea is wondering what will happen to her department if production levels continue to drastically decrease and whether she’ll be able to keep her full-time job that pays her $125,000 per year plus extended benefits. In this regard, Andrea decided to push production schedule to maximum capacity in 2022 so that her staff stays on payroll but most importantly to keep her high skilled long-term employees motivated.

You had been hired, in December 2021, as a chief accountant since the previous one retired and you were so excited to start working for a reputable Canadian company such as Canco. During your first week at work, you had a company tour when, to your surprise, you met Andrea, your high school friend. You both were so delighted to see each other and promised to meet soon to catch up on old times. You remember Andrea as a very smart student in high school who loved physics and a long-distance runner, which helped her earn a scholarship at UBC-Physics Department.

A couple weeks later, Andrea invited you for a cup of coffee and explained the whole situation at her division, and her plan to boost production in 2022 to keep her staff and herself employed regardless of customers’ demand for Canco’s products. You know that her plan is not fair to the company’s shareholders, and you decided to write her a memo.

Required:

Write a business memo to Andrea to explain the advantages and disadvantages of her decision. Keep in mind that you are hired to prepare and communicate accurate financial figures to those users who need them and provide your insights into the company’s short- and long-term goals.

Your memo should be based on Decision Making Framework that has five crucial parts:

Identify the problem

Assess the situation

Determine the relevant data (financial and non-financial)

Generate alternatives (minimum 3 alternatives with advantages & disadvantages for each alternative)

Make recommendation