National Furniture will initiate an aggressive cost-control system, to prevent costs from escalating throughout the company, particularly in the production process where preventing eroding profit margins will be a high priority.

Bob Wood Jr. has also hired ABC Consulting, an international consulting organization with whom he had established ties as a college intern.  Working closely with ABC Consultants, he will make great strides in implementing a cost containment program and a timetable to be implemented with it.  The table (Cost Containment) is a basic version of the expected timetable.

The self-directed, cost audit containment will be comprised of several programs to be used for internal cost control purposes.  Four of the programs are mentioned above.  The Cost Reduction Reward Program will be designed to enable employees to earn bonuses based on the projected cost savings of the suggestions they provide.

Bob Wood will also direct Kevin Flowchart to conduct periodic analyses of the management structure of the company to determine if any alternative organization of that structure would result in significant savings

The two Vice Presidents, Kevin Flowchart and Amy Spreadsheet, will conduct thorough reviews of the National Furniture insurance and outside services portfolio to allow for substantial savings by combining certain services and restructuring coverage.  Amy Spreadsheet has also dramatically reduced costs by developing an effective plan for purchasing raw materials and supplies that are used in production processes and front offices.  Monitoring these purchases has allowed the company to budget it’s expenses more efficiently.

The External Cost Audit portion of the Cost Containment Strategy program will be designed to review and implement specific suggestions of the ABC Consulting Company.

The Production Cost Audit portion of the Cost Containment Strategy is the area in which the most substantial savings can be realized.  Upon the recommendation of ABC Consulting, the company will conduct a vigorous study of the potential for cost savings in the production input area to follow-up on ABC' s studies.

Finally, a current study has also confirmed ABC's analysis that the company should make a substantial investment in new machinery.  This modern machinery will increase the company’s net assets over the long-term enabling a purchase of more equipment to support increased sales.