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Read the following Mini Case situation and answer both the questions given at the end of Case As a new member of the board of directors for a local bank, Jack Nelson was being introduced to all the employees in the home office. When he was introduced to Ruth Johnson, he was curious about her work and asked her what the machine she was using did? Johnson replied that she really did not know what the machine was called or what it did. She explained that she had only been working there for two months. She did, however, know precisely how to operate the machine. According to her supervisor, she was an excellent employee. At one of the branch offices, the supervisor in charge spoke to Nelson confidentially, telling him that something was wrong but she didnt know what. For one thing, she explained, employee turnover was too high, and no sooner had one employee been put on the job than another one resigned. With customers to see and loans to be made, she continued she had little time to work with the new employees as they came and went. All branch supervisors hired their own employees without communication with the home office or other branches. When an opening developed, the supervisor tried to find a suitable employee to replace the worker who had quit. After touring the 22 branches and finding similar problems in many of them, Nelson wondered what the home office should do or what action he should take. The banking firm was generally regarded as a well-run institution that had grown from 27 to 191 employees during the past eight years. The more he thought about the matter, the more puzzled Nelson became. He couldnt quite 0 put his finger on the problem, and he didnt know whether to report his findings to the president. Question: What is the Problem in this case situation? Evaluate the problem and suggest appropriate solution
a) Distinguish between a static buaget and a lexibie budge (2 MakS b) Fine Print Company uses flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows: Indirect labor Indirect materials Utilities $1.20 0.95 0.40 Fixed overhead costs per month are: supervision $5,400, depreciation $1,600 and property taxes $1,100. The company believes it will normally operate in a range of 5,000-8,000 direct labor hours per month. During June, 2018 the company worked 6,000 direct labor hours and the following overhead costs were incurred: Variable Costs Indirect labor Indirect materials Utilities $10,900 8,200 3,500 Fixed Costs Supervision Depreciation Property taxes $5,500 1,600 1,050 Prepare a monthly flexible manufacturing overhead budget for each increment of 1,000 direct labor hours over the relevant range for the year ending December 31 2018. Prepare a flexible budget performance report for June, 2018 a. b. gements efficiency in controlling manufacturing over-heac (8 Marks) costs in June, 2018 FIA6001 Page 3 of 3 EEKDAYS
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Answer #1
One of the most important problem the bank has is a decentralized recruitment process that causes more confusion because there is no control over people coming in and going out. The home office is never been informed about the employee recruitment.
Second problem is inadequate training facilities. It’s because the supervisor at the local branch do not have enough time to handle both the employee training and looking after the customers.
Finally, there is lack of communication between the local branches and the home office which further causes more confusion.
Mr. Nelson can centralize the recruitment and training process thus saving the burden of the local supervisors. This would also help the new recruits role ready.
He could set-up a communication link to share important information to the local branches and set-up periodical review session with the branch supervisors.
He can develop a portal where people can request for additional training or the company itself can choose people from different branches in order to be trained on the new machines and processes.
He should report to the president with his findings and suggestions in order put things into action because he is responsible for the entire operations although the supervisors are individually responsible. He shouldn’t wait for a magic to happen but get the help of the president in this matter as it needs the president’s approval for centralizing recruitment, training and reviews.
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