The old Intel CPU processor used integers in their arithmetic calculations. Intel introduced Pentium chips with build in software for floating non integers arithmetic. The difference was 0. 006 %. The question should be complying with authority literature. I personally think Intel sales managers were excited to quickly diffuse the new innovation (Intel chips) to the market. Intel did not use efficient criteria to communicate benefits of the new product. It is obvious the first step in research is to identify the problem. But after identifications we should explore he solution to the problem to avoid cost, and losing customer loyalty.
Reverse engineering should have effective role in analyzing and improving the product to avoid losing its value (Wearier, Pearson & Church, 2010). Decisive Constraints Intel felt constrained to control the flaw in the chips. They ignored to claim the default to avoid the financial effect The accounting constraint of materiality would indicate that this item could be recorded as an expense (more expedient) since it is not material enough to influence the decision of a reasonably prudent creditor or investor(Weekend, 2009). Intel is always constrained by agreements/ contracts with their lenders to pay from retained earnings.
Dividend is usually distributed to the owners in term profits. Intel may be constrained by the requirements of other obligations of generally accepted accounting principles (GAP). Estimations and Assumptions to the Research Question Accountants need to estimate the magnitude of the problem. Intel should use the management function such as planning, controlling and directing the solution toward the problem. It is a quantities analysis that needs measurement, facts, and common ensue. The accountant always suggests mathematical models based on statistics such as confident level, mean, variance, and correlation ration R-square (Wesleyan, 2009).
Intel might consider contingent theory to estimate a certain event of error. It is probability of occurrence. The FAST 5; accounting for contingencies is defined as an existing event/situation or group/set of events involving some kind of uncertainty which may result in a gain or loss. This will be resolved when future circumstances/ event fail to take place/occur. Resolution may result in loss of an asset (Financial Accounting Standards Board, 1975). In experimental research the size of the sample must be large to find the power of the data analyses.
When reverse engineering department test the product, it is essential to perform blind analysis to minimized bias of the result. Assumptions-?if the client is following proper electronic commerce practices and has implemented proper controls, it can be assumed that its activities are reliable. Interpretation or Inference-?since this assurance service falls under the domain of consulting services, the practitioner would follow consulting standards in inducting the review and reporting on the reliability of the activities (Wearier, Pearson & Church, 2010).
Implications or consequences-?if activities are not reliable, the practitioner will so state in the report (Financial Accounting Standards Board, 1975). Intel Management Recommendations I recommend Intel management to tackle the problem and offer free service for defective or flaw chip. Management should stop the advertisement campaign and spend it on material improvement. It is vital to recognize the loss current financing offices. Since this loss is a contingent loss, disclose it in the financial statements.
A loss contingency should be accrued by a charge to income if (1) it is probable that a loss has been incurred and (2) the amount of the loss can be reasonable estimated. I recommend an efficient accounting system to audit the process These principles are cost effectiveness, usefulness, and flexibility. Cost effectiveness simply means that the benefits received must outweigh the costs. Usefulness refers to the fact that the system must provide the users with timely, accurate, and understandable information. If we have two plans A, and B to fix the problem, we should show how profitability will change with each option.
We might reduce the variable cost and compare it to the current fixed cost. The recommendation is beneficial if investment center is currently generating an ROI of certain percentage based on current assets or in operating assets and a controllable margin. In exhibit graph 4, data showed 5 % in its stocks over a period of two weeks. This is statically a significant value where (P <0. 05). P value showed 95 % difference in the data, and a significant variability in profit reduction (Weirich, Pearson & Churyk, 2010). Intel's Pentium processors lost its value from the market due to unmanaged methods to solve the error in the ship.
The longer product errors exist in the marketplace, the more likely the market the value of the firm ultimately declines, and it would be less customer’s demand (Wesleyan, 2009). Customers became reluctant to maintain product’s loyalty. There is a vital question how Intel effectively distributes its resources and maintains new product portfolio management. Portfolio method is the foundation to protect the new product from diverse risk. Executives, and research development department have to keep their continuous commitment to satisfy their customer needs by constantly revised the function of the Intel chips.
Customers want the ships to work 100% perfectly with no error. If the product has 2. 5% of error, this will result in more cost for Intel. There will be fierce competitions between Intel and other competitors for example customers may start preferring national semiconductor chips in Silicon valley, California. Decision makers for Intel must target their audience, reduce costs, and improve return on investment. If every consumer chooses to return their flawed chips, Intel Corporation will lose approximately 500 million dollars to replace the defective chips. During the operation system we should align the product to our goal r objective.
The process contains phases of planning, implementing, controlling/ evaluation, and targeting. Planning may have two options, for example Plan A, and Plan B. If Plan A fails, then accountant assigns Plan B. Each stage can be evaluated in term of measures. Evaluation and control is the final stage before the new product target the market. Engineering and research development department must assure the accuracy of the product by performing multiple testing and make the new product robust. It is an innovation that transforms ideas into growth. Scientific research is based on development, and validation stage.