Question

In conducting interviews and observing factory operations to implement an activity-based costing system, you determine that several activities are unnecessary or redundant. For example, warehouse personnel was inspecting purchased components as they were received at the loading dock. Later that day, the components were inspected again on the shop floor before being installed in the final product. Both of these activities caused costs to be incurred but were not adding value to the product. If you include this observation in your report, one or more employees who perform inspections will likely lose their jobs. Page 804

Required

1. As a plant employee, what is your responsibility to report your findings to superiors?
2. Should you attempt to determine if the redundancy is justified? Explain.
3. What is your responsibility to the employees whose jobs will likely be lost because of your report?
4. What facts should you consider before making your decision to report or not??

Answer 1

1)  As a plant employee, what is your responsibility to report your findings to superiors?

As a plant employee, it is important to analyze and report any redundancies in the processes at the factory. This is important to achieve efficiency and hence profitability in factory operations.

2)  Should you attempt to determine if the redundancy is justified?

As a responsible employee at the factory, it is definitely justified to attempt to determine if the redundancy is justified. However, this can be better done in collaboration with the designated process engineering/improvement team at the factory, so that the findings can be formalized and presented in an effective way.

3)  What is your responsibility to the employees whose jobs will likely be lost because of your report?

For the employees whose jobs will be likely lost, one needs to identify any suitable areas where their skills can be better leveraged. This will help in finding suitable and more sustainable roles in line with their skill set, while preventing them from the adversities of joblessness.

4)  What facts should you consider before making your decision to report or not??

Before considering the decision to report or not, we should make sure that the steps carried out in the two activities are mostly overlapping. If the types of quality checks being carried out are different, we should possibly analyse if we can actually live without the two activities before reporting it. It might be more appropriate to recommend more analysis in this case rather than reporting straightaway.