None Your VP of HR has requested that you consider increasing thenumber of contingent employees from 20% currently to 40%. Thiswill considerably lower your labor costs. However, you also know thatthe total of 500 production employees you have at your plant, younever drop the headcount below 350, even in the slow season. If youreduce the fixed workforce to 60%, you are concerned that you willlose critical skillsets and this could result in productivity losses,accidents, quality problems, etc. Instead you propose that you onlyincrease the contingent labor by:(a) 200 workers(b) 50 workers(c) 150 workers(d) 100 workers

Approach to solving the question:Freeform Detailed explanation: I chose option (d) to increase the…

Answered: Your VP of HR has requested that you…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1PB: Variety Artisans has a bottleneck in their production that occurs within the engraving department....

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A cost analyst showed the company president a graph that portrayed the firm’s utility cost as semivariable. The president criticized the graph by saying, “This fixed-cost component doesn’t look right to me. If we shut down the plant for six months, we wouldn’t incur half of these costs.” How should the cost analyst respond?
Variety Artisans has a bottleneck in their production that occurs within the engraving department. Arjun Naipul, the COO, is considering hiring an extra worker, whose salary will be $45,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,500 more units per year. Currently, the selling price per unit is $18 and the cost per unit is $5.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.
Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price standards. But now, she found out that it was because of a huge purchase of raw materials. It would take months to use that inventory, and there was hardly space to store it. In the meantime, space had to be found for the other materials supplies that would be ordered and processed on a regular basis. Additionally, it was a lot of capital to tie up in inventorymoney that could have been used to help finance the cash needs of the new product just coming online. Her interview with Tom was frustrating. He was defensive, arguing that he thought she wanted those standards met and that the means were not that important. He also pointed out that quantity purchases were the only way to meet the price standards. Otherwise, an unfavorable variance would have been realized. Required: 1. CONCEPTUAL CONNECTION Why did Tom Rich purchase the large quantity of raw materials? Do you think that this behavior was the objective of the price standard? If not, what is the objective(s)? 2. CONCEPTUAL CONNECTION Suppose that Tom is right and that the only way to meet the price standards is through the use of quantity discounts. Also, assume that using quantity discounts is not a desirable practice for this company. What would you do to solve this dilemma? 3. CONCEPTUAL CONNECTION Should Tom be fired? Explain.
Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,000 more units per year. Currently, the selling price per unit is $25 and the cost per unit is $7.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.
Charted Travel & Tours (CTT) is studying whether to outsource its human resources (HR) activities. Salaried professionals who earn GH¢195,000 would be terminated; in contrast, administrative assistants who earn GH¢60,000 would be transferred elsewhere in the organisation. Miscellaneous departmental overhead (e.g. supplies, copy charges, overnight delivery) is expected to decrease by GH¢15,000, and GH¢17,500 of corporate overhead cost, previously allocated to HR, would be picked up by other departments. If CTT can secure needed HR services locally for GH¢205,000, should CCT outsource? And how much would CCT benefit (or lose) by outsourcing?
David Kelley is considering the implementation of an incentive wage plan to increase productivity in his small manufacturing plant. The plant is nonunion, and employees have been compensated with only an hourly-rate plan. Julie Phelps, Vice President–Manufacturing, is concerned that the move to an incentive compensation plan will cause direct laborers to speed up production and, thus, compromise quality. Step 1 - With that information in mind, discuss the following questions. Your posting should be at least 500 words* in length. This means you should elaborate on your answers, not simply answer each question with one or two words. You should also reference information already learned in our studies. How might Kelley accomplish his goals while alleviating Phelps’ concerns? Does the compensation have to be all hourly rate or all incentives? Can incentive compensation also apply to service businesses?
Setting materials, labor, and overhead standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a profitable price and employees could be overworked. The ethical challenge is to set a high but reasonable standard. Assume that as a manager you are asked to set the standard materials price and quantity for the new 1,000 CKB Mega-Max chip, a technically advanced product. To properly set the price and quantity standards, you assemble a team of specialists to provide input. Required Identify four types of specialists that you would assemble to provide information to help set the materials price and quantity standards. Briefly explain why you chose each individual.
A company currently using an inspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has defective content on an average of 0.04. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 50 units per hour. The hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into the product assembly and will have to be replaced later at a cost of $10 each when they are detected in final product testing. (Answer in Appendix D)a. Should this inspection position be eliminated?b. What is the cost to inspect each unit?c. Is there a benefit (or loss) from the current inspection process? How much?
As part of his cost-reduction efforts, Fletch is interested in reducing labor costs. He asks you to evaluate the financial impact of a proposal involving an alternative labor contract for manual finishing labor (MAN-5). Under the proposed contract, the company would guarantee a 40-hour workweek for these employees. The hourly wage under the guaranteed 40-hour workweek would be $14 instead of $15. Based on the number of MAN-5 employees that the company plans to employ, this means that the company is committed to paying its MAN-5 employees for 1,600 hours each month, even if there is not enough work to keep them busy. If the number of MAN-5 labor hours per month is higher than 1,600 hours, MAN-5 employees will receive time-and-a-half overtime pay. MACH-2 labor hours will not be impacted. To fulfil Fletch’s request, first, insert a new worksheet at the end of the Excel template and set up a new direct labor budget (only for MAN-5). Then, answer the following questions: a. Calculate the…
At the end of a long day of training, Steven and Carol are visiting over one last cup of coffee. The final segment of the training session, yet to come, is a refresher on support department cost allocation methods. Steven is thinking of skipping out early, since his company firmly believes in only one of these methods. Steven: I'm telling you, Carol, the reciprocal method is the only way to go. It's by far the most accurate, and even though it takes a little bit of set-up in Excel (or something similar), the additional accuracy is worth it. Carol: Carol knew that this session was on the schedule for today's training, so she brought her own direct method cost allocations along. She quickly pulled them out of her bag and showed Steven the following. Costs A's time (in hours) provided to B's time (in hours) provided to Costs Really? At our company we have always used the direct method. We find that it's much easier to explain this approach to our operating managers, and everyone…

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