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Profitability Versus Responsibility

Phillip Regan, CEO of Relief Dynamics, Inc., a large defense contracting firm, is considering ways to improve the company's financial position after several years of sharply declining profitability. One way to do this is to reduce or completely eliminate Relief Dynamic's commitment to present and future retirees who have full medical and dental benefits coverage. Despite financial problems, the company is still committed to providing excellent pension benefits.

Address the following:

- Discuss what accounting factors Regan should consider before making his decision to cut post retirement health benefits.

- Discuss what other non-financial factors should be considered in the decision.

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Discussion 1
Cutting the post retirement health benefits to present and future retirees means an adjustment to the company's projected benefits obligations. This adjustment is probably a reduction ...

Solution Summary

This solution discusses accounting factors and non-financial factors Regan should consider before making a decision.