Gray & Greene
Gray & Greene Company is a relatively small private company with annual sales of $25,000,000, on a total asset base of $18,000,000. The company manufactures specialized parts for larger corporations in the automobile, energy, and home products industries. For instance, the company produces the control switch for automobile power seats, a fuel gage monitor for gasoline pumps, and a thermostat switch for appliances such as refrigerators and air conditioners. The company employs about 80 people and generally runs two and sometimes three production shifts five days a week. A maintenance crew works on Saturdays to keep machines in working order.
Mike Gray the company CEO is a second-generation owner of the company. He took over as head of the company after his father retired in 19×5. Mike is a firm believer in specialty work. Since his company specializes and has expertise in certain types of products, Mike feels they should contract out to specialists for other areas of need. The company does not have a finance officer or personnel officer. Mike hired a personnel agency for all hiring and pension programs, and an accounting firm to maintain accounting records. Mike and Bob Greene, the COO, still have final authority and decision making power over the major personnel and accounting related activities and have worked well in this relationship for a number of years. By leaving much of this administrative type work to specialized agencies, Mike and Bob have been able to concentrate their efforts into product development and production of their unique products.
Customers have been very pleased with the quality of the product produced by Gray & Greene as well as the reliability of delivery and performance. There products have always been very cost competitive, and the company never lacks for business.
Mike has an administrative assistant, Gloria Wong, who oversees the accounting activities and works as an intermediary between the accounting…