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1. Ellis Quilting company makes blankets that it markets through a variety of departments stores. Problem: 13-23 Effects of order quality on special order decision
Ellis Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Ellis made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
Material cost ($25 per unit x 20,000) $ 500,000
Labor cost ($22 per unit x 20,000) 440,000
Manufacturing supplies ($2 x 20,000) 40,000
Batch-level costs (20 batches at $4,000 per batch) 80,000
Product-level costs 160,000
Facility-level costs 290,000
Total costs $1,510,000
Cost per unit = $1,510,000/20,000 = $75.50

1. Kent Motels has offered to buy a batch of 500 blankets for $56 each. Ellis’s normal selling price is $90 per unit. Based on the preceding quantitative data, should Ellis accept the special order? Support your answer with appropriate computations.
2. Would your answer to Requirements a change if Kent offered to buy a batch of 1,000 blankets for $56 per unity? Support your answer with appropriate computations.
3. Describe the qualitative factors that Ellis Quilting Company should consider before accepting a special order to sell blankets to Kent Motels.

Johnson and Johnson’s Tylenol Response Is the Gold Standard in Crisis Management

The 1982 the Tylenol poisonings was the case that put “crisis management” into the permanent management lexicon. The facts are legendary. In the fall of 1982, a murderer added 65 mg of cyanide to some Tylenol capsules while they were on store shelves. Seven people were killed, including three persons in one family. J&J, makers of Tylenol, quickly recalled and destroyed 31 million bottles at an expense of about $100 million. James Burke, the company CEO, made numerous appearances in TV ads and in news conferences notifying consumers of the actions the company was taking. Tamper-resistant packaging was quickly introduced, and the sales of Tylenol swiftly snapped back to near precrisis sales levels. The perpetrator of this crime was never found.

Many continue to hold the Tylenol case up as the classic response to a crisis. Experts argue that fessing up and taking quick corrective action is the best form of crisis management. A major lesson to come out of the Tylenol crisis is that companies can take action quickly and effectively and prosper in spite of extreme adversity that befalls them. Even today, 30 years later J&J’s response in the Tylenol scandal remains the gold standard in crisis management and is still taught in Universities across the world as an outstanding of effective crisis control.

1. Some say it was easy for J&J to take this action because the crisis did not originate within the company. Did this fact set the stage for the company’s quick recovery? Would things have been different had the company been at fault?

2. How is the Tylenol case similar to or different from Ford and Firestone’s linkage with dangerous tires or WorldCom, Tyco, Enron, and HealthSouth’s malfeasance resulting in company leaders being accused of scheming to enrich themselves at the injury of others?

3. Was J&J really being socially responsible or were they quickly acting in their own best financial interests? Does their motivation matter?

Discuss how your perspective of business has changed as a result of the knowledge gained from this course. As Bill Gates once said: My success, part of it certainly, is that I focused in on a few things.

Looking ahead, speculate what the pending issues in business will be 15 years from today.
Based upon your answer to the previous discussion, determine how these pending issues will affect you and what you can do to prepare.

Suppose p = 20 – 2q and MR=20-4q is the market demand function for a local monopoly. the marginal cost is 2 q. the local monopoly tries to maximize its profits by equating mc = mr and charging a uniform price. what will be the equilibrium price and output? A) $6.33, 3.33 units; b) $6.33, 5 units; c) $13.33, 3.33 units; d) $10, 5 units.

1. A leader’s role in building a compelling reason for organization change as one that engages all employees in the change effort. Describe one event where you have had a compelling reason to change and the impact that the compelling understanding had on you as a person. How did it help you engage and manage the required change?

2. Why is organizational change so complicated? Give an example of when a change initiative failed or was less than successful and explain why in relation to the stages of concern and the four frames.

What They Don’t Know Won’t Hurt Them

During my last two years in college, I worked for animal hospital in my hometown. In my time there, many animals passed away in their sleep or four unknown reasons. It was not uncommon. In the situation, our facility would offer the owners the service of an autopsy. An autopsy is a procedure in which the doctor would surgically open up the animal to check for any signs of what might have caused the animal’s death.

Mrs. Johnson, a client of ours, brought in her dog that had unfortunately passed away while she was at work. Her dog was only five years old, and the owners were not aware of any health problems. No one, including the doctor, could figure out what had caused the death of Mrs. Johnson’s dog. Mrs Johnson was asked if she would give her consent for the doctor to perform an autopsy on her dog, so maybe they would be able to answer the many questions surrounding his death.

Mrs. Johnson did not want this procedure to be done; she just wanted our facility to take care of her dog’s remains. The office manager at the animal hospital told the doctor she should let the vet students, who were doing their rotations at our hospital, go ahead and perform an autopsy as a learning experiment. The office manager mentioned that the owner would never know because we were in charge of the disposal, so it wouldn’t be a problem.


1. Is it ethical for the doctor to allow the vet students to perform the autopsy?

2. Should the fact that the owner would never know if the autopsy was performed affect the doctor’s decision?

3. What would you do in this situation? Why?