Red Apple Industries Manufactures Institutional-Use Furniture

question 10

Essay

Red Apple Industries manufactures institutional-use furniture. Dept. A is responsible for welding the base of the desk to the chair assembly. The desks are then placed on an automatic conveyer to Dept. B, where the desktop is riveted to the chair. The desks continue on the conveyer to Dept. C for further assembly. Wanda, the manager of Dept. A, is responsible for moving 800 welded desks per hour to Dept. B. A faulty circuit in Dept. B causes a delay in processing in the department and prompts Rosie, the Dept. B manager, to ask Wanda to stop the conveyer. Wanda refuses, necessitating the removal of the welded desks from the conveyer until the riveting can resume. Rosie bills Wanda's department for the costs of this extra work. Wanda disputes the charge, citing her responsibility to convey 800 desks/hour to Dept. B.
Required:
How should the managers' dispute be resolved? How could it have been avoided?

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Definitions:

Cost

The amount of money required to purchase something or the expenditure incurred on the production of a good or service.

New Balance

The amount remaining in an account after all debits and credits have been accounted for during a specified period.

Mark-up

An increase in the original price of items meant to compensate for overhead expenditures and ensure profit.

Selling Price

The amount of money for which a product or service is sold to the consumer.