Question

12-28. The Dinteman Company (Document Analysis)
The Dinteman Company is an industrial machinery and equipment manufacturer with several production departments. The company employs automated and heavy equipment in its production departments. Consequently, Dinteman has a large repair and maintenance department (R&M department) for servicing this equipment.

The operating efficiency of the R&M department has deteriorated over the past 2 years. For example, repair and maintenance costs seem to be climbing more rapidly than other department costs. The assistant controller has reviewed the operations of the R&M department and has concluded that the administrative procedures used since the early days of the department are outmoded due in part to the growth of the company. In the opinion of the assistant controller, the two major causes for the deterioration are an antiquated scheduling system for repair and maintenance work, and the actual cost to distribute the R&M department’s costs to the production departments. The actual costs of the R&M department are allocated monthly to the production departments on the basis of the number of service calls made during each month.

The assistant controller has proposed that a formal work order system be implemented for the R&M department. With the new system, the production departments will submit a service request to the R&M department for the repairs and/or maintenance to be completed, including a suggested time for having the work done. The supervisor of the R&M department will prepare a cost estimate on the service request for the work required (labor and materials) and estimate the amount of time for completing the work on the service request. The R&M supervisor will return the request to the production department that initiated the request. Once the production department approves the work by returning a copy of the service request, the R&M supervisor will prepare a repair and maintenance work order and schedule the job. This work order provides the repair worker with the details of the work to be done and is used to record the actual repair and maintenance hours worked and the materials and supplies used.

Production departments will be charged for actual labor hours worked at a predetermined standard rate for the type of work required. Parts and supplies are charged to the production departments at cost. The assistant controller believes that only two documents will be required in this new system—a Repair/Maintenance Service Request initiated by the production departments and a Repair/Maintenance Work Order initiated by the R&M department.

Requirements

For the Repair/Maintenance Work Order document:
Identify the data items of importance to the repair and maintenance department and the production department that should be incorporated into the work order.
Indicate how many copies of the work order would be required, and explain how each copy would be distributed.
Identify the data items of importance to the repair and maintenance department and the production department that should be incorporated into the work order.
Indicate how many copies of the work order would be required, and explain how each copy would be distributed.

Answer 1

Q.1 Identify the data items of importance to the repair and maintenance department and the production department that should be incorporated into the work order.

Ans :

- Reference number of Repair & Maintenance Service Request

- Date of work order issue

- Name of Department on which work order issued (i.e. Repair & Maintenance Department), Contact detail of person who has been assigned Repairing task from Repair & Maintenance department

- Name of Department originating the request & Contact person raising repair request for further information/ clarification

- Nature of Repair to be carried out

- Estimated date of completion of repair

- Estimated type of material, Quantity of material, standard rate of material & Cost of Material which will be required for repair work

- Estimated Labor hour, Pre-determined standard rate & cost of labour required for repair work

- Total value of Work Order

Q.2 Indicate how many copies of the work order would be required, and explain how each copy would be distributed.

Ans. 4 Copy as under :

- One copy for Repair & Maintenance department who is issuing work order

- One copy for requesting department who will receive repair maintenance

- One copy for accounting and finance team for their record

- One copy for store department so that they can arrange for required materials