Question
Can We Cut These Costs? The management team of Puzzle Me is looking at the production cost reports for July and discussing opportunities for improvement.
Can We Cut These Costs? The management team of Puzzle Me is looking at the production cost reports for July and discussing opportunities for improvement. The production manager thinks the production process is very efficient, and there is little room for cost savings in conversion costs. The purchasing manager tells the team that he was recently approached by a supplier with an excellent reputation for quality. This supplier submitted a bid for cardboard that was a little thinner but would allow the company to decrease direct costs by 5%. 1. What should the management team do? Why? Explain. 2. What would you do if you were purchasing manager? Production manager? 3. Should the team consider seeking bids from other suppliers?
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