Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please create a Executive Summary for the following case: 500-750 word basically summurizing everything. Rock Cookware, Inc. produces and sells a line of ovenware (Ever

Please create a Executive Summary for the following case:

500-750 word basically summurizing everything.

image text in transcribed

image text in transcribed

image text in transcribed

Rock Cookware, Inc. produces and sells a line of ovenware (Ever Last Ovenware) that goes from oven (conventional or microwave) to the refrigerator without breaking. lts design is functional, yet attractivee enough to both cook and serve food. The ovenware items are sold through gourmet shops, such as William Sonoma, and major department stores, such as Macy's and Bloomingdale's Due to an economic downturn, sales through gourmet shops and department stores have lagged expectations for the past two years. This has kept the product manager of the Ever Last Ovenware from meeting his required target of producing a 25% return on sales of product. This return is measured by preparing an income statement containing the sales of this product less any expenses considered attributable to this product line. An attributable expense exists to benefit the product line. It is a cost that would be avoided if the product line were discontinued. Further, when calculating the required 25% return on sales, the product line profitability statement does not deduct any allocations for general and administrative costs. Exhibit 1 provides a product income statement for this line for the past 5 years In an effort to increase sales, design engineers modified the ovenware product slightly in 2006. They made it less expensive to produce (saving about 35 percent of variable production costs) but indistinguishable in looks and functionality from the original product. The modified product also resulted in increased product longevity of about ten percent. The product manager, excited about the modifications and cost savings, lowered the price by ten percent and presented the item at a national food industry show at the end of 2006. He proudly advertised the product as having exactly the same looks, safety features, and functionality of the original product. He offered the same product warranty of six months under normal use conditions. He then booked sales of 1,500,000 pieces to existing customers for first quarter delivery. Production commenced immediately to fill these first quarter orders During routine quality testing in production, personnel discovered a serious problem with the product. The ovenware, under a small range of extremely high cooking temperatures (450-500 degrees), would explode if set on a cold trivet or placed in the refrigerator. The explosion could potentially cause the person holding the ovenware to suffer serious cuts and substantial, permanent burns. Unfortunately, the seriousness of the problem was not known until after the production of the 1,500,000 pieces was nearly completed. Based on statistical testing, it appeared that the flaw only occurs about.25 percent of the time (one quarter of a percent)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Project Finance In Construction

Authors: Tony Merna, Yang Chu, Faisal F. Al-Thani

1st Edition

1444334778, 978-1444334777

More Books

Students also viewed these Finance questions

Question

Define procedural justice. How does that relate to unions?

Answered: 1 week ago