Question

The case narrative below will be used to answer the following question:

College Products

College Products is a division of a large manufacturing company. The company makes a variety of collegiate branded products, sold on campuses worldwide. Most employees are paid on an hourly basis. Employees receive yearly reviews to evaluate performance and to determine an appropriate pay increase. College’s payroll is processed by the corporate payroll department from input documents prepared by College. The following HR and payroll procedures are related to the hourly payroll employees at College.

Department supervisors initiate requests for additional employees by filling out a three-part employee requisition form. After a requisition is completed, the department supervisor signs it, files a copy by date, and gives the remaining two copies to the production supervisor. The production supervisor reviews and signs the copies and gives them to the HR manager. The HR manager reviews the request with the division controller. They both sign the requisition. The pay rate for the job also is determined at that time and included on the requisition. If the requisition is approved, the HR manager initiates hiring procedures by placing advertisements in local papers and announcing the opening internally. The HR manager and the supervisor interview the applicants together. They then evaluate the applicants and make a selection. The HR manager and the employee fill out the two-part wage and deduction form. The HR manager files a copy of the wage and deduction form and the personnel requisition by employee name. The remaining copies of each form are given to the division accountant.

The HR manager selects and reviews the records from the personnel file for employees who are due for their annual review. The HR manager puts some basic employee information on a three-part review form and gives it to the appropriate supervisor for evaluation. The supervisor completes and signs the form, files a copy, and gives the remaining copies to the production supervisor, who reviews and signs the evaluation. The production supervisor returns it to the HR manager. The HR manager reviews it with the controller. They assign a new rate and sign the review form, which is given to the division accountant.

The division accountant uses the new employee information and the employee review form to prepare payroll action notices. The accountant signs the payroll action notices and files them with the other related forms by date. Each week, a clerk in the corporate payroll department retrieves the payroll forms from the division accountant, checks the signature on all payroll action notices, and processes the payroll. The forms, checks, and reports are sent back to the division accountant. The division accountant refiles the forms and gives the checks to the production supervisor, who in turn distributes them to the employees.

Source: Cengage, LA, Dull, RB, & Gelinas, UJ 2014, Accounting Information Systems, Cengage Learning Australia, Melbourne.

Question. Alan Harrison has been recently appointed as the CEO of “College Products”. Three days after his appointment, he met with all middle managers and announced that College Products has to adopt a cost leadership strategy. All managers (including the HR manager) have been asked to come up with a plan in their department to adopt this strategy. In approximately 300 words suggest two changes that can be implemented in the above case study to align the process with cost leadership strategy.

Answer 1

Cost leadership strategy:

1. Hiring process of new employee:

Current Process:

Department supervisors -- Production Supervisor--HR discuss with division controller.

The above process is too lengthy why not Department supervisior directly communicate its demand of new employee to HR and then HR review the same and discuss with division controller and take decision accordingly because most of the employee in the company used to recieve hourly wage so through reducing the above chain we can eliminate the role of production supervisor through which we can reduce our cost.

2. Evaluation of perforfance and determination of appropriate pay increase:

Current Process:

HR--Supervisor--Production supervisor--HR discuss with controller:

The above process is also too lengthy why not Department supervisior directly communicate wih production supervisor and then HR review the same and discuss with division controller and take decision accordingly because most of the employee in the company used to recieve hourly wage so through reducing the above chain we can eliminate the role of supervisor through which we can reduce our cost.

3. The division accountant uses the new employee information and the employee review form to prepare payroll action notices.

Current process:

Accountant--Corporate payroll department --Accountant--supervisor--pay

The above process is also too lengthy why not Corporate payroll department directly distribute the check to supervisor , why they again return it to the accountant as accountant has already aware about and he himself prepare it, so what is the need to send it back to accountant first and then sent it to supervisor.

If we follow the above procedure then through this we can save our cost.