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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 27
Behavioral Impact of Cost Information
Bill Christensen, the production manager, was grumbling about the new quality cost system the plant controller wanted to put into place. "If we start trying to track every bit of spoiled material, we'll never get any work done. Everybody knows when they ruin something. Why bother to keep track? This is a waste of time. Besides, this isn't the first time scrap reduction has been emphasized. You tell my workers to reduce scrap, and I'll guarantee it will go away, but not in the way you would like."
Required:
1. Why do you suppose that the controller wants a written record of spoiled material? If "everybody knows" what the spoilage rate is, what benefits can come from keeping a written record?
2. Now consider Bill Christensen's position. In what way(s) could he be correct? What did he mean by his remark concerning scrap reduction? Can this be avoided? Explain.
Bill Christensen, the production manager, was grumbling about the new quality cost system the plant controller wanted to put into place. "If we start trying to track every bit of spoiled material, we'll never get any work done. Everybody knows when they ruin something. Why bother to keep track? This is a waste of time. Besides, this isn't the first time scrap reduction has been emphasized. You tell my workers to reduce scrap, and I'll guarantee it will go away, but not in the way you would like."
Required:
1. Why do you suppose that the controller wants a written record of spoiled material? If "everybody knows" what the spoilage rate is, what benefits can come from keeping a written record?
2. Now consider Bill Christensen's position. In what way(s) could he be correct? What did he mean by his remark concerning scrap reduction? Can this be avoided? Explain.
Explanation
Verified
Verified
List the benefits by keeping the spoilag...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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