Productivity and Ethics Janice Interiors installs custom interiors for luxury mobile homes. Inits most recent negotiation with the union, the firm proposed to share productivity gains in directlabor equally with the union. In return, the union agreed not to demand wage increases. Most unionmembers, however, are skeptical about management’s honesty in calculating productivity measures.Nevertheless, union members voted to try the program. Kim Tomas, the management accountantresponsible for determining productivity measures, collected these data at the end of the current year:Current Year Prior YearNumber of installations 560 500Direct labor hours 115,000 99,000Steve Janice, the CEO, is very eager to demonstrate the firm’s good intentions by showing the laborunion a positive result. He suggests to Kim that some of the direct labor hours are actually indirect.For example, some of the labor hours are indirect because these hours cannot be allocated to specifictypes of work. Required In your calculations, use 4 significant digits after the decimal point.1. Compute the partial labor productivity for each year.2. Recompute the partial productivity for the current year assuming 8,000 hours are reclassified as indirect.3. Would it be ethical for Kim to modify her calculations?
Productivity and Ethics Janice Interiors installs custom interiors for luxury mobile homes. In
its most recent negotiation with the union, the firm proposed to share productivity gains in direct
labor equally with the union. In return, the union agreed not to demand wage increases. Most union
members, however, are skeptical about management’s honesty in calculating productivity measures.
Nevertheless, union members voted to try the program. Kim Tomas, the management accountant
responsible for determining productivity measures, collected these data at the end of the current year:
Current Year Prior Year
Number of installations 560 500
Direct labor hours 115,000 99,000
Steve Janice, the CEO, is very eager to demonstrate the firm’s good intentions by showing the labor
union a positive result. He suggests to Kim that some of the direct labor hours are actually indirect.
For example, some of the labor hours are indirect because these hours cannot be allocated to specific
types of work.
Required In your calculations, use 4 significant digits after the decimal point.
1. Compute the partial labor productivity for each year.
2. Recompute the partial productivity for the current year assuming 8,000 hours are reclassified as indirect.
3. Would it be ethical for Kim to modify her calculations?
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