part 1

• Operation of a standard cost accounting system

  1. Establish standards for unit direct materials and unit direct labor costs

  2. Establish allowable variances from these standards

  3. Periodically compare actual unit direct materials and direct labor costs with these standards

  4. Flag variances that exceed the allowable ranges for the attention of production management
• Problem stating


  The formulation of a comprehensive and valid statement of the problem
• Elements of the final statement of the problem

  • The objectives to be achieved by the solution to the problem
  • The problem's scope, intensity, time dimensions, and location
  • The human elements involved in the problem
  • The support system and tracking systems related to the problem solution
  • The institutional process for managing the problem
• The statement may clearly separate the symptoms from the underlying causes of the problem, identify relevant constraints, and reveal key relationships among the factors involved in the problem situation
• Possible pitfalls in identifying the problem

  • Mistaking symptoms for the underlying problem
  • Accepting without question the opinions of others concerning the problem
  • Assuming that the problem is a person rather than the behavior or non-behavior of people
  • Assuming that the person who reports the problem is the cause of the problem
  • Overlooking the multi-causality of problem
• All the underlying causes of the problem should be isolated and clearly stated, as this may help uncover key interrelationships among the causal factors
• problem stating


  This may represent an expanded and polished version of the initial statement
• The nature of objectives depends upon the type of problems, as well as the system or process involved
• Typical objectives pertaining to systems and processes in business entities

  • Performance
  • Efficiency
  • Economy
  • Control
  • Security
  • Availability of information
• Scope of the problem


  A clear statement of this should suggest the extent of the needed response or solution to the problem
• If the scope is discovered to be immense and to extend to a variety of activities, it may be desirable to break the engagement into a series of smaller problem areas
• Intensity of the problem


  The degree of difficulty or adverse effects they bring to interested parties
• The level of intensity may determine the relative urgency and importance of initiating a particular problem-solving process
• Time dimensions of the problem

  1. How long has the problem existed?

  2. How much longer is the problem likely to continue if left unsolved?

  3. How often is the problem likely to occur in the future?
• Location or focus of the problem


  The geographic point or points where the problem occurs
• Pinpointing the location is necessary to provide a complete description of the problem
• While in most problem situations the location can be easily determined, in some extreme situations the location may require laborious retracings of tangled paths
• scope of the problem


  It might also point to the need for repackaging the consulting engagement.
• desired outcome


  generally the objective of the problem-solving process and should be permanently expressed in the problem definition statement in terms of clear-cut expectations or benefits
• objectives


  It may be expressed quantitatively with designated time horizon
• To improve deliveries of goods so that by the end of the year, 99.5% of all deliveries are made on time
• Human-related elements to be identified and assessed in the statement of the problem

  • Attitude of involved managers and employees
  • Personal traits of involved managers and employees including intelligence, motivation, leadership, quality, dependability, trustworthiness and interpersonal skills
  • Training of involved managers and employees
  • Tenure of involved managers and employees
• Another human-related element that may often appear in the problem statement is the prevailing political climate
• An assessment of the prevailing political climate should be included as well as an assessment of the priorities that have been established by the policy-makers
• Elements that comprise a support system should be identified in the problem statement together with an analysis of their functional or dysfunctional effects upon the problem
• What the problem statement should reveal about the tracking system

  • How the problem was brought to light
  • Whether the problem was detected by a tracking system so designed for the purpose, or by another means (if not detected by the tracking system so designed for the purpose, why the tracking system failed)
  • Whether tracking systems other than the one designed for the purpose should have detected the problem
  • Whether tracking systems are available to monitor the situation reliably, as well as to measure the degree of improvement in the process or system due to an implemented solution
• Institutional Process for Managing the Problem

  1. Problems in an organization are defined

  2. Problems in an organization are processed

  3. Problems in an organization are delegated

  4. Problems in an organization are solved
• Institutional process


  • May be informal in nature, with the management tasks being assigned quickly and with little written evidence
  • May be quite formal, involving a chain of command and such written evidence as elaborate charts and graphs
  • The degree of informality or formality in the institutional process may extend outside the organization structure to encompass customers, lenders, suppliers, and consultants
• Fact


  • Help the consultant in sorting out client symptoms from client problems as well as in structuring and organizing the problems
  • Form the foundation for prospective solutions
  • Direct the consultant to the solution ultimately rendered
  • Serve such important functions
• The consultant must be resourceful in fact gathering and skillful in fact analysis
• Fact-Gathering Techniques

  1. Interviews

  2. Questionnaires

  3. Observation

  4. Document gathering

  5. Charting
• Types of Charting

  • Organization chart
  • Data flow diagram
  • System outflow
  • Detail flowchart
  • Decision table
• At the beginning of an engagement, a consultant's important task is to separate the symptoms experienced by a client from the underlying problems
• It is the problem rather than the symptoms that need close attention and treatment
• A wealth of internal and external fact sources are available to help the consultant to zero in on a client's problem
• institutional process


  Problems in an organization are managed through an
• Decision-level analysis


  Depicts the varied interrelationships among the decisions made throughout the segments and levels of organization
• Decision-level analysis


  • Useful in demonstrating to client management the variety and kinds of decisions that the organization must make
  • Begins with interviews of key client managers
  • Consultant focuses on resources, since resource allocation and usage are the concern of most decisions
  • Initial concern is to categorize the major tangible and intangible resources of the organization
  • Identifies the resources required at each decision level of the organization
  • Ascertains the specific items of information, as well as their sources, needed to make decisions concerning these resource requirements
• Input/Output analysis

  Analyzes a problem situation in terms of its inputs and outputs
• Input/Output analysis does not include anything concerning the process (ie, how the input is converted to output), the data requirements, the information flows, or the related decisions