Hey Man

Case I: Monroe Clock Company (A)

The Monroe Clock Company was started in 1985 by Jim Monroe, the company’s president. The Monroe Clock Company was later sold in 1998 to the Piedmont Appliance Corporation. After a robbery at the president of the company’s house, a new outdoor lighting timer was being discussed by Jim, the company’s sales Manager, Frank Tyler, and the company’s controller, Tom Grant. This case provided a brief overview of the main objective to the new timer – cutting production costs.

Jim asked his controller, Tom Grant, to put some costs together for the new product. Tom found that the new timing device was the company’s highest volume product with a cost of $11.60. Frank, the company’s sales manager was very hesitant to launch the new product because the timer would have to be sold through wholesalers and manufacturer’s representatives.

After Frank reviewing Tom’s numbers, he made his own calculations to find the selling price of the timer. He found they would have to sell it at $19.98, which was way too high. Frank figured they could sell 50,000 timers and a factory price of $8.00. Jim disagreed right away claiming that once you start cutting overhead costs you’ll begin seeing high volume and low profit. The case ended off with Jim saying they weren’t too sure what the costs of the new timer would be neither in the long or short run so it could be very dangerous.

In my opinion Jim is right. The Monroe Clock Company has always operated as a very private and original company that has never operated through wholesalers and manufacturer representatives, the usually sold to a relatively small number of large industrial companies. I think the company should continue operating within those industrial customers and not bother opening itself up to wholesalers and fabrication reps charging large overhead costs.