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hroughout North America. Because of pressure for lower selling prices, New City Muffler has had disappointing financial performance in recent years. Indeed, Conroy is aware of rumblings from corporate headquarters threatening to close the plant. One of Conroy's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Conroy was in- rigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Conroy ultimately spoke with Paula Mitchell, the plant manager. Mitchell indicated that a planned increase in productivity would educe variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Mitchell made a vague ference to increasing the speed of the assembly line. Conroy commented that speeding up the Esembly line could lead to labor problems because the speed of the line was set by union contract itchell responded that she was afraid that if the speedup were opened to negotiation, the unio puld make a big "stink" that could result in the plant being closed. She indicated that the speedu as the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, she d t believe employees would notice a 2% or 3% increase in speed. Mitchell concluded the meetin serving, "You need to emphasize the results we will accomplish next year, not the details of hc will accomplish those results. Top management does not want to be bored with details. If complish what we propose in the budget, we will be in for a big bonus."

hroughout North America. Because of pressure for lower selling prices, New City Muffler has had disappointing financial performance in recent years. Indeed, Conroy is aware of rumblings from corporate headquarters threatening to close the plant. One of Conroy's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Conroy was in- rigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Conroy ultimately spoke with Paula Mitchell, the plant manager. Mitchell indicated that a planned increase in productivity would educe variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Mitchell made a vague ference to increasing the speed of the assembly line. Conroy commented that speeding up the Esembly line could lead to labor problems because the speed of the line was set by union contract itchell responded that she was afraid that if the speedup were opened to negotiation, the unio puld make a big "stink" that could result in the plant being closed. She indicated that the speedu as the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, she d t believe employees would notice a 2% or 3% increase in speed. Mitchell concluded the meetin serving, "You need to emphasize the results we will accomplish next year, not the details of hc will accomplish those results. Top management does not want to be bored with details. If complish what we propose in the budget, we will be in for a big bonus."

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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-39. Ethics and Pressure to Improve Profit Plans Art Conroy is the assistant controller of New City Muffler, Inc., a subsidiary of New Cy Automotive, which manufactures tailpipes, mufflers, and catalytic converters at several plans hroushout North America. Because of pressure for lower selling prices, New City Muffler has had disappointing financial performance in recent years. Indeed, Conroy is aware of rumblings from corporate headquarters threatening to close the plant. One of Conroy's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Conroy was in- trigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Conroy ultimately spoke with Paula Mitchell, the plant manager. Mitchell indicated that a planned increase in productivity would reduce variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Mitchell made a vague reference to increasing the speed of the assembly line. Conroy commented that speeding up the assembly line could lead to labor problems because the speed of the line was set by union contract. Mitchell responded that she was afraid that if the speedup were opened to negotiation, the union would make a big "stink" that could result in the plant being closed. She indicated that the speedup was the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, she did not believe employees would notice a 2% or 3% increase in speed. Mitchell concluded the meeting observing, “You need to emphasize the results we will accomplish next year, not the details of how we will accomplish those results. Top management does not want to be bored with details. If we accomplish what we propose in the budget, we will be in for a big bonus." REQUIRED What advice do you have for Art Conroy?
Transcribed Image Text:-39. Ethics and Pressure to Improve Profit Plans Art Conroy is the assistant controller of New City Muffler, Inc., a subsidiary of New Cy Automotive, which manufactures tailpipes, mufflers, and catalytic converters at several plans hroushout North America. Because of pressure for lower selling prices, New City Muffler has had disappointing financial performance in recent years. Indeed, Conroy is aware of rumblings from corporate headquarters threatening to close the plant. One of Conroy's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Conroy was in- trigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Conroy ultimately spoke with Paula Mitchell, the plant manager. Mitchell indicated that a planned increase in productivity would reduce variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Mitchell made a vague reference to increasing the speed of the assembly line. Conroy commented that speeding up the assembly line could lead to labor problems because the speed of the line was set by union contract. Mitchell responded that she was afraid that if the speedup were opened to negotiation, the union would make a big "stink" that could result in the plant being closed. She indicated that the speedup was the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, she did not believe employees would notice a 2% or 3% increase in speed. Mitchell concluded the meeting observing, “You need to emphasize the results we will accomplish next year, not the details of how we will accomplish those results. Top management does not want to be bored with details. If we accomplish what we propose in the budget, we will be in for a big bonus." REQUIRED What advice do you have for Art Conroy?
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