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Millions of Dollars Were Wasted on the Development of a New

question 107

Essay

Millions of dollars were wasted on the development of a new machine-made potato chip, at Fancy Chips Ltd. As a result, the Board of Directors of the food-processing firm fired the CEO who had proposed and championed the product's development. The new CEO's first task is to find out why this monumental waste of money had occurred and how it can be prevented in the future. Provide three possible explanations why this escalation of commitment occurred at Fancy Chips Ltd.


Definitions:

Raw Materials

Basic substances in their natural, modified, or semi-processed state used as inputs to a manufacturing process for conversion into finished goods.

Journal Entries

Records of financial transactions in the accounting system, indicating the accounts affected and the debit and credit amounts.

Indirect Materials

Materials used in the production process that cannot be easily traced to specific products, such as lubricants and cleaning supplies.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

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