Pollenti Company Has Just Merged with Another Industrial Firm Whose

question 27

True/False

Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below:
• A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement.
• Shoddy business practices are resulting in excessive warranty costs $15,000 more than normal due mainly to material failure.
• Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement.
• Inefficient workplace design is costing $5,000 in unnecessary rework costs.
• Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000.
Based on an analysis of costs and benefits, a quality improvement plan would not be recommended.

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Definitions:

S-1

A filing with the SEC used by companies planning on going public to register their securities.

S-4

A form filed with the U.S. Securities and Exchange Commission (SEC) related to mergers and acquisitions, containing significant information about the transaction.

S-8

S-8 is a form filed with the SEC used by publicly traded companies to register securities that will be offered to employees through an employee benefit plan.

Form 8-K

A report filed by publicly traded companies to announce major events that shareholders should know about, including acquisitions, disposals, and changes in control.