Q4Who would be the stakeholders concerned? Sthembiso, a recent M.B.A. who is the only cost accountant at a manufacturing plant which is the largest employerin Illovo Valley, a town of about 20,000 peopleZama, the plant managerZama: "Sthembiso, come into my office for a few minutes. You know that the company brass wants to increasethe amount of automation in some of our factories. I just got word that this plant will be the first to beautomated."Sthembiso: "But the cost and accounting analyses we sent to headquarters last year showed that it wouldn't beprofitable to make changes like that in this plant. Why did they pick this one?"Zama: "Apparently, top management wants to try robots and all the high-tech gadgets at one factory, to see ifthey increase product quality and pay for themselves. They think that in the long run, stockholders will benefitfrom automation. Anyway, the decision has been made, and it's our job to make it work. We're going to have tosell the work force and the community on the decision."Sthembiso: "That won't be easy. Hundreds of people are going to lose their jobs. There isn't much else that theycan do around here, either."Zama: "Some of the factory people will be able to stay on, if they get some additional training. We can convincethe workers and the people in town that the decision was necessary, if we can show them accounting and costinformation to justify the decision. If they see good, sound reasoning for the action, they'll be less likely to resistand cause trouble. We need for them to maintain productivity and efficiency until the new equipment is here. Iwant you to work on a cost summary we can release to the employees and the town newspaper, showing whyautomation is a good idea."Sthembiso: "But the net present value and other analyses I did earlier showed this plant should stay the way itis."Zama. "When we were working on the analyses, you said yourself that the benefits of automation are hard toidentify and assign numbers to. You had to make several assumptions in order to do those analyses. If you changesome of your assumptions, you can make the numbers look better. Try a longer useful life for the new equipment,or change some of the projected cost information. As soon as you have the new numbers, bring them to me tolook at."

Sthembiso: "I understand what you're saying, but I'm not comfortable with altering the numbers to…

Answered: Who would be the stakeholders…

Business

Accounting

Who would be the stakeholders concerned?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 2EB: Salley is developing material and labor standards for her company. She finds that it costs $0.55 per...

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