Disk Company Was Very Profitable for the First Ten Years

question 115

Essay

Disk Company was very profitable for the first ten years of its existence, but the company has fallen on hard times with the growth of compact disks.In 2017 Jean Adams was appointed head of the Product Research Department.She began a number of product development projects.Although the department has developed several good ideas that led to the introduction of several promising products, Ms.Adams was criticized for poor cost control.The financial performance reports of the department under Ms.Adams leadership were consistently unfavourable.Management was quite concerned about cost control because profits for the company were low and the cash budget indicated that additional borrowing would be required during the next year.Because of her inability to control costs, Ms.Adams was relieved of her responsibilities in 2018 and Fran Jones became head of the department.Ms.Jones promised to improve performance of Product Research and scaled back the developmental activities to obtain favourable financial performance.By the end of 2018 Ms.Jones was showing a favourable financial variance.Required:
If the Product Research Department is classified as a responsibility centre, what unique problems are associated with evaluating its financial performance?

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Definitions:

CINAHL

The Cumulative Index to Nursing and Allied Health Literature, a database providing access to nursing and allied health information.

Evidence-Based Practice

The integration of clinical expertise, patient values, and the best research evidence into the decision-making process for patient care.

Scientific Evidence

Information obtained through systematic observation, experimentation, and analysis, used to validate findings and support claims in scientific research.

Evidence-Based Practice

A healthcare approach integrating clinical experience with the best available research evidence and patient values.