Chapter 16, Problem 4MIA

Summary Introduction

Case summary: Company T started work in 2003 and specialized in making cars, batteries, and solar panels. The company came up with models costing less than $35,000 which affected the finances and the company suffered losses. The credit rating of the company also went down. The company’s owner and CEO EM stated that manufacturing of model 3 caused many problems as the model had a high defect rate. Company T cannot maintain the production line for the high arising demand. Company T’s production line suffered due to too much automation, as EM decided for many features to be automated. The idea of automation made production even slower. The idea of EM to add robots became more expensive for companies that employees as high professionals were required to program robots. The models failed in markets due to many problems and even were a lot expensive to the company. However, EM disagreed with the critics and said that they will be earning profit in the coming times. EM agreed that using robots was his mistake and he started working as a nano-manager. The direct oversight of EM helped him manage the production line of Model 3. He temporarily stopped the production line of Model 3 and committed to increasing the production. The company added a production shift, hired workers. Critics said that this is definitely not a good idea and will add more pressure on the finances of the company. Considering all the expenses the company made in expenses, the question is whether the EM will run out of cash or not.

To explain:The type of audit that is being used by the CEO of Company T.