Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

White Financial Services Corporation is engaged in mortgage origination and investment servicing activities with annual revenues of more than $90 million. Roberta White, CEO, recently

White Financial Services Corporation is engaged in mortgage origination and investment servicing activities with annual revenues of more than $90 million. Roberta White, CEO, recently has discovered that errors are costing the company over $800,000 per year. Jeremy Aiken, Vice President of Sales, dismisses the significance of the errors. Since the cost of errors is less than 1.0% of revenues, he believes the company should ignore the errors and concentrate instead on generating additional revenues. The consulting firm that made the discovery proposed to establish operating procedures for White that would build quality checks into operations. The interviewing, writing, and training activities associated with this project are expected to cost $450,000. Once the procedure is in place, the consultant believes, all errors will be eliminated. Jeremy argues that no system can be error-free and that the procedure is most likely to eliminate 80 percent of the errors. James White, Vice President of Customer Services, suggests that the company can hire 10 additional workers at an average salary of $30,000 (including fringe benefits) to double-check the work of people in sensitive areas.

Required:

What do you think White Financial Services Company should do? Support your answer with a logical analysis of the three alternatives (hire the consulting firm, hire additional workers, or do nothing about the errors and concentrate on additional revenues).

Step by Step Solution

3.47 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

After analyzing the three alternatives I believe White Financial Services Company should hire the consulting firm to establish operating procedures fo... 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

Operations And Supply Chain Management

Authors: David A. Collier; James Evans

3rd Edition

0357901649, 9780357901649

More Books

Students also viewed these Accounting questions

Question

What are your goals for this interview today?

Answered: 1 week ago