Team Instructions: Divide the class into teams of three or four ...

[deesands]

Team Instructions: Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class.
 
  Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem. Each team should turn in only one copy of the problem for grading. All team members will receive the same grade.
 
  Doug Depp is your manager at Chutes, Inc which sells parachutes. Management's next year's bonus is based on the current year's net income. In an effort to increase his bonus, Doug decides to buy the pull-cord used in making the company's parachutes from a less reputable supplier. The supplier's prices are lower, but the pull-cords are less reliable in successfully opening the parachute. Discuss with your team members the pros and cons of buying the cheaper pull-cord. As a team, decide what the president of the company could do in the future to avoid having the company face this type of scenario.
  What will be an ideal response?

Question 2

Businesses who have several bank accounts, petty cash, and cash on hand, would maintain a separate ledgeraccount for each type of cash.
 a. True
  b. False
 
   Indicate whether the statement is true or false

[firehawk60]

Answer to Question 1

The pros: Cost of goods sold will be less thus net income will be greater. The price of the company's stock may rise. The cons: The reputation of the company could be harmed in the long-run especially if a customer were to be injured due to the failure of the parachute. The company could change its incentive plan. Currently a manager is focused solely on net income and not on the long-run reputation of the company. The president could use other measurements such as customer complaints and defect rates to determine bonuses for management.

Answer to Question 2

True

[deesands]

Excellent

[mohan]

TYSM