Kaiser Company Just Hired Its Fourth Production Manager in Three

question 183

Essay

Kaiser Company just hired its fourth production manager in three years. All three previous managers had quit because they could not get the company above the break-even point, even though sales had increased somewhat each year. The company was operating at about 60 % of plant capacity. The flatware industry was growing, so increased sales were not out of the question.
I. R. Thinking took the job as manager of the production division with a very attractive salary package. After interviewing for the position, he proposed a salary and bonus package that would give him a very small salary but a large bonus if he took the operating income (using absorption costing) above the breakeven point during his very first year.
Required:
What do you think Mr. Thinking had in mind for increasing the company's operating income?

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Definitions:

Perforation

A medical condition in which a hole or tear occurs in the wall of any part of the gastrointestinal tract or other bodily organs.

Endoscope

A flexible tube with a light and camera attached, used to examine the interior of a bodily organ or space.

Natural Opening

A passage by which substances or objects can enter or exit an organ or body part naturally.

Artificial Opening

A surgically created opening in the body for the discharge of bodily wastes or other purposes.