Problem 1 – 11 Employee Empowerment PUSINTEK

Duffy Tool and Stamping has formed “excellence teams” made up of

production line employees. These teams have been given the charge to
improve production processes and enhance employee safety. They
follow a very structured problem-solving methodology and have
managed to make numerous improvements in production as well as
safety. During a six-year period, pretax profits increased each year.
Duffy’s management largely credits the excellence teams for the cost
reductions and increased profits.

Another company...
Another company, Grand Rapids Spring and Wire Products, has formed PUSINTEK
minicompanies within its factory. The objective of minicompanies is to
have each employee assume ownership of his or her work. Each
minicompany has its own suppliers and customers (all within the
factory). Furthermore, each minicompany is assigned its own support
people: accountants, engineers, marketing people, and so on. The
individuals within the minicompany are given responsibility for
developing and maintaining good relations with their suppliers and
customers, identifying problems, and developing and implementing
solutions to those problems. The focus of each minicompany is on
quality, cost, delivery, safety, and morale. The company has successfully
created a quality culture, achieved a reputation for being a competitive,
world-class manufacturer, and has become a “learning” organization
Required…
Required PUSINTEK

1. What are the objectives of excellence teams and minicompanies?

Did the companies achieve these objectives?
2. Do you think that employee empowerment is a good idea? Explain
your answer. If yes, do you see any disadvantages? Explain.
3. What role, if any, does management accounting information have in
employee empowerment?
4. What do you suppose is meant by the phrase “quality culture”?
What is meant by a learning organization?

Answer…
Answer Number 1 PUSINTEK

1. What are the objectives of excellence teams and minicompanies? Did the
companies achieve these objectives?
Basically the objectives of excellence teams and minicompanies are getting
employee on production line involved directly in to the management so that
improvement in production and safety.
The companies, indeed, take advantage from the experienced operating workers.
The operating workers, based on their experiences and knowledges in using tools or
equipment in production line and their experience at work environment could give
many improvement to the companies. The excellence teams and minicompanies
seemed achieve their objectives. The excellence team give direct improvement
during a six-year period , the company could increase pre tax profit in each year. The
minicompanies could implement a good work culture so that the company achieved
a reputation for being a competitive, world-class manufacturer, and has become a
“learning” organization.

Answer Number 2…
Answer Number 2 PUSINTEK

2. Do you think that employee empowerment is a good idea? Explain your

answer. If yes, do you see any disadvantages? Explain.
Employee empowerement is good idea if well implemented. The objective of
employee empowerment is providing valuable input in terms of plans, ideas, and
problem solving since that the employees closest to the work. And I believe that the
experienced employees understand in how to maximize the efficiency of using raw
material and how using the tools/equipment and moreover, they could give ideas
that never be thought by the management. In other side, this is a good way to give
experienced employee a chance to prove that the experienced employee is worth to
be promoted.
But we think that employee empowerment could make any disadvantages, for
example the employee will dare to ask for higher wage or he will make any
suggestion/advice based on his hatred rather than logic. For example, when the
employee is given a right to choose the inappropriate personnel to be dropped out,
he likely will choose people that he doesn’t like personally rather than choose by
competency.
We think that employee empowerement is best practiced when the management
know the limitation in giving an access/right to the employee.

Answer Number 3…
Answer Number 3 PUSINTEK

3. What role, if any, does management accounting information have in

employee empowerment?
The management accounting has a controlling role in this event. The
employee could implement his ideas and the management accounting role is
evaluating the progress of the implementation, providing feedback of the
implementation, and taking-action if correction needed.

Answer Number 4…
Answer Number 4 PUSINTEK

4. What do you suppose is meant by the phrase “quality culture”?

What is meant by a learning organization?
The quality culture means that the company commit and implement the
high-standard of producing high quality product and services. And this culture
is not only implemented by high level management but also the lowest rank
of the employee in the company. And this culture doesn’t end when the
management is changed or all of the employees are replaced but this culture
is still existed and doesn’t vanish.
Problem 1 – 12 The Managerial Process PUSINTEK

Each of the following scenarios requires the use of accounting information to

carry out one or more of the following managerial activities: planning,
controlling (including performance evaluation), or decision making. Identify
the managerial activity or activities that are applicable for each scenario, and
indicate the role of accounting information in the activity
• Laboratory Manager: An HMO approached me recently and offered us its
business on an entire range of blood tests. It provided a price list of the
amount it is willing to pay for each test. In many cases, the prices are below
what we normally charge. I need to know our costs of the individual tests
to assess the feasibility of accepting its offer and perhaps suggest some
price adjustments on some of the tests.
Decision Making, Role : Serving particular information needed by management about
the cost of various tests and some price adjustments.

Operating Manager…
• Operating Manager: This report indicates that we have 30 percent more
defects than originally targeted. An investigation into the cause has PUSINTEK

revealed the problem. We were using a lower-quality material than

expected, and the waste has been higher than normal. By switching to the
quality level originally specified, we can reduce the defects to the planned
level.
Controlling and Planning, Role : Evaluating the root cause of the actual defect rate
and giving advice/suggestion to suppress the defect rate.
• Divisional Manager: Our market share has increased because of higher-
quality products. Current projections indicate that we should sell 25
percent more units than last year. I want a projection of the effect this
increase in sales will have on profits. I also want to know our expected cash
receipts and cash expenditures on a month-by-month basis. I have a feeling
that some short-term borrowing may be necessary.
Planning : Role Giving particular information about cash receipts and cash
expenditures on a month-by-month basis so that the management will make
decision based on the exact data rather than using feeling.

Plant Manager…
• Plant Manager: Foreign competitors are producing goods with lower costs and delivering them
more rapidly than we can to customers in our markets. We need to decrease the cycle time and
increase the efficiency of our manufacturing process. There are two proposals that should help us PUSINTEK
accomplish these goals, both of which involve investing in computer-aided manufacturing. I need
to know the future cash flows associated with each system and the effect each system has on unit
costs and cycle time.
 Decision Making, Role giving a comparative data about the future cash flow and the effect of each system on
unit costs and cycle time, so the management can make a correct decision.

• Manager: At the last board meeting, we established an objective of earning a 25 percent return
on sales. I need to know how many units of our product we need to sell to meet this objective.
Once I have the estimated sales in units, we need to outline a promotional campaign that will
take us where we want to be. However, in order to compute the targeted sales in units, I need to
know the expected unit price and a lot of cost information.
 Planning, Role Providing the projection of the expected unit price and a lot of cost information so the
company could achieve its objective, earning 25 percent returns on sales.

• Manager: Perhaps the Harrison Medical Clinic should not offer a full range of medical services.
Some services seem to be having a difficult time showing any kind of profit. I am particularly
concerned about the mental health service. It has not shown a profit since the clinic opened. I
want to know what costs can be avoided if I drop the service. I also want some assessment of the
impact on the other services we offer. Some of our patients may choose this clinic because we
offer a full range of services.
 Decision Making, Role Providing information to the management about the impact of dropping the
unprofitable service and the cost that can be avoided if the service is dropped.