Suppose a manager faces a question regarding how to handle a defective piece of equipment that his company sold. Telling the customer would cost him a substantial amount of money. At the same time, if the equipment fails, it could lead to serious injury of the customer. The manager is going to choose between three options presented by colleagues:

Option 1: Keep quiet about the defect.
Option 2: Talk to others and see what they would have done in the same situation.
Option 3: Disclose the defect and suggest alternatives because it is the honest thing to do.

Option 3: Disclose the defect and suggest alternatives because it is the honest thing to do.

Explanation:

The fact that the equipment was sold by you to a customer and it becomes defective, professional courtesy has to come into play where you reach out to the said customer, let them know of the development, and suggest alternatives that would help the customer better. This would even build better trust and establish customer loyalty.

3.: Disclose the defect and suggest alternatives because it is the honest thing to do.

Explanation: If the manager chooses option 1 which is to keep quiet about the defect, the customer will discover it in the near future and probably sue the company for the products defect. Talking to others to hear what the have to say and suggest May only compound to too many ideas and suggestions that May end up causing more harm than God. So the best option is to be honest about the defect of the product and offer suggestions about similar equipment to the customer. It is left for the customer to make his/her decision.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total

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