What Is Caribbean Studies and Why Is It Important to Study It

Caribbean studies is a very fascinating subject for anyone to study but in order for one to know what exactly Caribbean Studies entails, we must know what is the basis of its existence, the Caribbean. The Caribbean is a region consisting of the Caribbean Sea, the islands (most of which enclose the sea) and the surrounding coasts. The region is located east of Central America, the southeast of North America and north of South America. This region comprises more than 7000 islands, islets, reefs and cays. The ‘West Indies’, the name used very regular today was given to it by Christopher Columbus when landing in Hispaniola in 1492, believed he had reached the Indies (in Asia). This arrival shaped the very existence of the Caribbean and most particular its people today. Knowing the history of the Caribbean region goes a long way toward understanding its people. Each island has a unique cultural identity shaped by the European colonialists, the African heritage of slaves, and the enduring legacies of the native Indian tribes. This rich history and its lasting influence is set against a backdrop of crystal clear waters and perpetual sunshine. Just knowing the history is just the tip of the iceberg. To understand the diversity of each island, their distinctive physical, political and socioeconomic challenges must be examined as well as their geography, common historical experiences, participation in the global community, not forgetting the diverse ethnic and racial groups and the continuing struggle for survival and sovereignty. This is why Caribbean Studies is important. Almost all the islands except for the very small ones are self-governed so they all exist on their own ,so why do we study them all? According to the geographical arrangement and most importantly, the settlements that were made after Columbus, the Caribbean islands were seen as one big unit that would provide liquidity for Europe. Each island shares a commonness of how they were colonized, how they fought to become independent and how they are sustaining themselves to compete with the international market. For a people to know where they are going, they must know where they came from, who they are now in order to shape their future. Many different events took place in the islands that changed the islands and their people. It is seen throughout history that the Caribbean people fought for whatever the wanted from the Indigenous people to African slaves for freedom to the Black citizens for independence of colonial rule. The independence of Haiti in 1804, mobilized the other countries in and around the Caribbean to fight for freedom. In Grenada, through Sir Eric Matthew Gary, she got her independence after long debates. Independence enabled the islands to be self-relying to make decisions on their owns so that the people today can choose what they do on a daily basis. Because of what happened many years ago, we can enjoy these benefits. This is why Caribbean Studies is important.

Individuals That Indulge In Sociopathic, Criminal, And Antisocial Behaviorâ€Nature Or Nurture Essay

The controversy between nature and nurture as related to the human behavior can be dated back to the 13th century and from that time there has been continued debate regarding the source of human personality. The debate is based on issue of whether the human personality develops from inheritance (nature) or from the environment in which human beings are raised (nurture). Due to the above controversy there has been a lot of research carried out and this has resulted to the belief held by most people today that the human personality is influenced by both the nature and nurture. This belief has been known as ‘interactionism’ and scholars in most of the fields believe in the concept. Adoption, Twin and family Studies A great debate between researchers has come up regarding the outcomes of families, adoption and birth of twins. Some researchers argue that there is a genetic basis to criminal behavior while others argue that there is no enough evidence in the cases of adoption, twin births and family status to show that genes play a crucial role in the development of antisocial or criminal traits. Twin studies are conducted to compare the rates of criminal behavior among identical twins and fraternal twins so as to study the role played by genes and environmental influences on the behavior of an individual. According to Joseph, 2001, there is a high degree of heritability in the behavior of fraternal and identical twins. This study was very important because it assessed the issue of different environments among twins because the twins were raised under different environments. The research concluded that hereditary factors play a less significant role in development of antisocial and criminal behaviors (Joseph, 2001; 179-218). Adoption studies have also been carried out to study the relationship between adoptive kids and their foster and biological parents because the studies separate nature and nurture. The relationship between environmental and genetic influences on antisocial behavior has also been studied by family studies although the results have been the least accepted compared to the others because of the high level of difficulty in separating nurture and nature in the family. Neurochemicals in Sociopathic, Criminal and Antisocial Behavior  According to Elliot, 2000 neurochemichals play a significant role in activating behavior patterns in a definite area of the brain. Research has been carried out to determine the role played by neurochemicals in influencing antisocial and criminal behaviors and it has been found out that there is a genetic component in the development of antisocial and criminal behavior. Recently there has been study of personality disorders in individuals who seem to develop criminal or antisocial behaviors and these have also been seen to influence human behavior (Elliot, 2000; pp. 9-21). Environmental influences Researchers have agreed that genes have a significant influence on the antisocial or criminal behavior of an individual. However, researchers have also agreed that there is need to assess the environmental component as this may also influence development of criminal and antisocial behaviors in human beings. The family environment is very important to the development of a child and if there are problems within the family then it is obvious that the child will suffer the consequences. Researchers have argued that the environment within a family influences the behavior of the child and the major risk factors within a family are family structure, poverty, level of education within the family and the parenting practices (Schmitz, 2003; 835-840). Families that have weak bonds and poor communications within the family are known to have a higher likelihood of children developing antisocial and criminal behavior. It is then obvious to conclude that those families that are not financially stable, those who have more children and those families where it is difficult to punish kids consistently will create an environment likely to create antisocial or criminal behavior among the kids. Children who were neglected or abused during their younger days are 0. 5 times more likely to develop antisocial or criminal behavior as compared to those kids who received care and were not abuse (Holmes et al, 2001; pp. 183-192). Another finding in the research on the influences of environmental and genetic findings on the development of antisocial or criminal behavior is age. Research has shown that both in children and adults, the environment is the major significant factor that influences their criminal and antisocial behaviors. Heritability has been seen to influence the behavior of adults more than the environment. Adults have the ability to choose the environment that they want to stay unlike kids and adolescents and this accounts for the high influence of environment on the behavior of kids and adolescents as compared to adults. Another factor that influences the development of sociopathic, criminal and antisocial behavior mostly in adolescents is peer group influence. The major reason as to why peer influences affects the antisocial and criminal behavior can be seen in the violent behavior common in young children which extends to their peers in the same school or neighborhood. This kind of a relationship is likely to be carried over to the adolescence stage and in some instances to the adult stage. The peers create an environment in which they tend to influence each other on matters concerning behavior and if their behavior is antisocial behavior the peer end up influencing others to adopt the behavior (Holmes et al, 2001; 183-195). So as to explain the way in which environment can influence the behavior of an individuals researchers use social learning theory. This means that a child will observe sociopathic, criminal or antisocial behavior from the parents or siblings although in some cases both the parents and the siblings. As a result of observing the aggressive behavior the kids believe that the behavior is normal and that there is no mistake in behaving just like the parents (Miles & Carey, 1997; pp. 207-217). Gene-Environment interactions Researchers have realized that there are theories related to genetic and environmental influences that show a clear interaction between the two factors and one major theory is the normal stimulation theory of criminality. This theory suggests an interaction between a group of factors that are combined of the genes and the environment; this factors lead to development of criminality among individuals. The theory argues that the individuals acquire a nervous system that does not respond to low levels of stimulation and therefore the individual has to find the right stimulation so as to increase their arousal and the stimulation includes activities that lead to antisocial, sociopathic or criminal behaviors (Miles & Carey, 1997; pp. 207-217). Conclusion There has not been enough evidence to strongly conclude that genes play a more significant role in shaping the behavior of those individual who indulge in sociopathic, criminal and antisocial behavior as compared to the environmental factors. The studies that have been carried out have shown that there is a high degree difficulty in trying to separate nature and nurture and therefore there is need to carry out research to clearly define the influence of environmental and genetic factors on the behavior of individuals. At this point it is wise to conclude that both the environmental and genetic factors play significant roles in shaping the behavior of individuals.

Princess Bride Analysis

Heroes are brave, determined, courageous, and selfless people whop embark on a journey in order to fulfill a goal for the better good, every heroes journey is different. Some heroes fight dragons to save the castle and some like Westley steal the princess in order to protect her, Westley goes on a long journey where he faces many enemies and challenges but, he continues his journey to rescue his one true love.In The Princess Bride a novel by William Goldman, the character Westley is a hero because, he experiences all 6 stages of the heroic archetype structure including being called to action, crossing threshold, the road of tests, meeting the helpers, trip to the underworld, and the quest. The first stage of the archetypal structure is the call to action, Westley call to action is when he discovers his true love Buttercup has been kidnapped.Westley jumps into action and was â€Å" sailing like lightning towards the cliffs,†(Goldman 114) in order to catch Buttercup's Kidnappers and save her. He knows he must save his true love or his life will be nothing so he embarks on his journey to get Buttercup back so they can be together, This is cal to action because as soon as he hears his true love is in distress he goes to save her immeaditley. Another stage of the heroic achetype is crossing the threshold, which Is what Westley does when he climbs the Cliffs of Insanity.After reaching the cliffs Westley began to climb up them trailing behind the kidnappers he â€Å" seemed to almost be flying. Already he had cut their lead a hundred feet†(Goldman 115). This is crossing the threshold because this is the point in Westley's journey where there is no turning back he will either succeed or fail on his journey. One of the biggest archetypal stages is the road of tests, every heroes road of tests varies some have many and some have few, in Westley's case he has multiple tests throughout his journey.After reaching the top of the Cliffs of Insanity where Inigo i s waiting for him, Inigo lets Westley catch his breath then â€Å"they touched swords†(Goldman 146) and began their fencing duel that ends up with with Westley tying â€Å"Inigo's hands around a tree and (leaves) him there† (Glodman 152). Wetsley also battles Fezzick in a wrestling match and when Westley wins he leaves Fezzik unconcious, he then goes on to a battle of witts against Vizzini where Westley wins and leaves Vizzini dead on the ground. Througout his journey he faces a couple more tests but he overcomes all and continues with his journey.A major part in a hero's journey is their trip to the underworld, after the trip to the underworld the hero comes back stronger, better, and more mature; Westleys trip to the underworld is very traumatic because Westley actually dies. Inigo and Fezzik hear the scream that came from the Zoo of Death they investigate and they find â€Å"Westley (lying) dead by the machine† (Goldman 286) that killed him, but after a trip to Miracle Max he takes the magical pill and Fezzik finds Westley alive and exclaims â€Å"'you're alive!'†(Goldman 329).When Westley comes back to life he has broken heart and is also paralyzed, but that does not stop him and his sidekicks they push on and break into the castle. A crucial part in every heros journey is the archetypal stage where the hero meets his mentor or helper which can be anybody who helps along the journey such as a sidekick, during Westley's journey he finds two helpers who both began as his enemies.Westleys two helpers are Inigo and Fezzik they both do whatever is needed of them but ultimately they save Westleys life when he dies, and help him break into the castle and rescue his true love. After they discover Westleys dead body in the Zoo of Death Inigo tells Fezzik â€Å"' Come, come along. Bring the body'†(Goldman 307) they then take his body to Miracle Max who gives Inigo and Fezzik the magical pill to bring Westley back to life. Inigo and Fezzik then head back with still dead Westley and â€Å"Fezzik had been carrying the corpse the whole way†(Goldman 326).Without Westley's helpers he would have remained dead never to be reunited with his true love. The final Stage in the hero's journey is the quest, in Wetley's case this is after he comes back to life and he gets help from Inigo and Fezzik to break in the castle to rescue Buttercup from the evil Prince Humperdink. After gaining entrance to the castle and finding his true love Buttercup they escape the castle together with Inigo and Fezzik and they were riding â€Å"four great horses[†¦ ] toward (the) Florin Channel†(Goldman356) and lived happily ever after.This is the quest because his original goal was to save his true love Buttercup and while it all did not go as planned they ended up together and free. In The Princess Bride Westley has all the characteristics of a great hero and he follows the heroic archetypal. He goes to rescue his true love from kindnappers, he climbs the Cliffs of Insanity, he battles the kidnappers, he dies and comes back to life, he has helpers that saved his life and assist him on his quest, he breaks into the castle and rescues his true love Buttercup, and they all live happily ever after.

Contsrains, Risks, and Ways Mitigating Them Essay

Contsrains, Risks, and Ways Mitigating Them - Essay Example Adoption of the I.T structures will lead to another setback due to the need to train the present employees on ways to handle the new technology. Notably, there will be the loss of time and funds. However, the setback can be relieved by adopting in-shift training sessions that will ensure that employees do not miss their allocated roles. Additionally, the strategy will also reduce the finances incurred in the procedure. Another constraint will include the employee response to the training sessions. Workers have different behavioral perceptions; hence, creating a difference in the rate of adoption of the training sessions. Nevertheless, the hinder can be reduced by having strategic approach styles in the training sessions. Risks include having less output despite inputs in training. Employees may not increase their output even after the training sessions. However, the risk can be mitigated by first employing a positive employee culture and increase the rate of employee satisfaction. Recruiting 50 new graduates for Autokinto. The process may face constraints such as costs in the hiring process due to salaries and other motivating approaches. The constraint can be reduced by ensuring the recruiting of producing graduates that will ensure more maximization of profits to cater for the salary costs. Additionally, establishing graduates with relevant qualities may also be a pending risk. The chance that the risk can be reduced by ensuring a vibrant recruiting panel that will identify specific qualities.

Umpqua bank Essay Example | Topics and Well Written Essays - 1000 words

Umpqua bank - Essay Example This paper will discuss the culture at Umpqua in relation to Steins theories of organizational culture. The bank as it sat when Davis took over was starting into its midlife. It had grown and was popular but it was also fighting the possibility of a buyout. Their culture of a small town friendly bank was already ingrained and now they needed to move on. As they said, their present culture was stretched. They needed someone to come with a new plan, make the changes needed and move the culture forward rapidly and that is exactly what Davis did. This new CEO had a vision and was in no way afraid to tell everyone about it, bringing many on board right away. Then to assure that others could see his vision, he sent staff out to popular shopping areas and ask them to look around and figure out what was popular about them. He started calling the bank a store and the thought process about the bank began to change all together. Without them even realizing it, he had put together his change team and the ideas that came out were theirs which was even better. He brought in designers to help the change team figure out how best to put together areas that would meet the needs of their customers. They began to see the things that were most important about customer service such as getting people who could not serve the customer out of sight and cross-training everyone else so they could move the customer through quicker. Schein asks first, "Why change" This is exactly the question that Davis put to the staff and then he ask them if changing the outside was good enough. Did the inside not also need to change The second question is "What does the future need to look like" By this time, Umpqua was on a roll. They had a unique name and a unique concept and now they wanted a building design that met all those needs and that is what they got. The building itself was like no other bank building had ever been. It included all kinds of services for customers including use of the internet and financial counseling. All of the things included created a win-win situation for the customers and the bank. Assessing the present state according to Schein (2009) is important so the change team can evaluate where the present state is as compared to where the new state needs to go. This is often one of the most difficult tasks for a change team to manage due to the fact that the present state according to Schein (2009) is often difficult for them to see. They decided that the only way to get what they wanted was to spend their time 100% making the customer happy and they were only doing that 1/2 of the time now. To solve this problem they put together training sessions for all new managers and for anyone inside the business who felt they might want to move up eventually and trained them in what the new culture was, how it worked and how to please the customer 100% of the time. They also sent these people out to other stores that they felt were doing very well and were within the cultural dynamics that they wanted so they could see firsthand how it was supposed to work. They talked about t he "wow factor" and roll played how the customer should be treated and it would feel to them if they were a part of that service. Shein (2009) often says that the administrative staff must be fully onboard to assure a culture change

5ELW Employment Law Assignment Example | Topics and Well Written Essays - 3000 words

5ELW Employment Law - Assignment Example sation should have taken to comply with UK law and procedure as well as recommend the most appropriate course of action that can be taken after the dismissal. According to UK Employment Law, the circumstances surrounding a dismissal will determine whether is fair or unfair and the procedure employers must follow when dismissing employees depends on the date of the dismissal (BIS, 2013). To comply with the UK law, the employer should follow the procedures stipulated by the Advisory, Conciliation and Arbitration Service (Acas) Code of Practice on disciplinary and grievance procedures. In Paul’s case, although the employer may have had justified grounds to dismiss him, the procedures were not followed from various perspectives. Most significantly, he was not given notice or allowed a disciplinary hearing. The requirements for fair dismissal include the capability (or lack of) the employee to work, their conduct, redundancy and circumstances that prevent them from conducting their job legally, such as the loss of a driving license by a driver. To comply with the UK law and specifically the Acas Code, the employer and the employee must have acted consistently whereby necessary investigations needed to be carried out to establish the case’s facts. Legally, he could have been dismissed without notice if he was in his first month of employment, if his contract indicated so or if he had conducted himself in a manner that undermined the confidence and trust of the employer. However, Paul had worked at the department store for four years on a full-time basis yet he was instantaneously dismissed, which means the employer did not comply with UK law. It is necessary that the dismissal decision and procedure are fair even in cases where the employer has a justifiable reason for the dismissal. To comply, the first step should have been sending a letter that pointed out the problem and an indication of the consideration for dismissal or disciplinary action (Citizens Advice,

The Management of Innovation Essay Example | Topics and Well Written Essays - 3000 words

The Management of Innovation - Essay Example .. the act that endows resources with a new capacity to create wealth† (Drucker, 2011). Considering the growing importance for innovation, this paper aims at identifying three organisations from a single industry and to study and analyse the innovation attempts by these companies. Chosen Industry and Companies: The industry chosen here is the IT and Computing Industry. The chosen companies here for this study include a) IBM, b) Microsoft and c) Google. The main reason to choose this industry is the every changing market for these products and services. Also, IBM, Google and Microsoft are multinational companies with a wide presence across the globe hence these are the best companies to be studied for their attempts and approaches towards innovation. Industry Analysis: Several studies have confirmed over the past few years that innovation is becoming an important aspect of the businesses. Almost 90% of the businesses treat innovation as a priority and this has led to a significa nt increase in the innovation and the need and importance of innovation (Shukla, 2009). It has clearly been noted that innovation has a major impact on the strategic planning in the industry and is also a major factor in wealth creation as well. The information technology industry as a whole is an ever changing environment. According to Peter Drucker, a company which is unable to innovate in the current age of necessitating innovation then the company can face decline and extinction. The information technology industry is one where the companies need to be able to be innovative to be able to compete in the markets. A recent issue in the IT industry was where Microsoft has been faced with a high pressure due to the new Apps created by Google. Microsoft owns as much as 33% of the total markets and the company caters to a majority of the market (Vellante, 2010). Studies have also shown that the determinants of innovation and productivity are mainly competition. The IT industry has a hi gh level of competition and everyday one business or another seem to innovate something new, products, services or even new business systems. As very well identified by Peter Drucker, innovation is generally based a few main factors. Each of these has been discussed in brief in relation to the IT industry. Firstly, every company in the IT industry has faced several unexpected successes and failures. These as explained by Drucker is one of the few reasons and also an opportunity for companies to adopt innovation. Secondly, as seen the IT industry is one which has a constantly changing market, demographics and also market structure. Hence when a company is a part of this industry it is crucial that innovation is focused upon. Also, with the current knowledge and information based world, customers are looking for the best and latest options and prefer to have more innovative options rather than the old products and services with no improvements (Luebke, 2010). Hence a company participa ting in the IT industry requires innovating not only to meet these new knowledge needs but also to be able to develop and sustain itself in the industry against the competition. Hence considering these factors and elements, it is crucial to be innovative and to device innovative products and serv

Criminal behavior and behavior disorders Research Paper

Criminal behavior and behavior disorders - Research Paper Example What people eat and take into their bodies may control their behaviors. In some instances, excessive amounts of harmful substances such as food dyes and artificial colors and flavors seem to provoke hostile, impulsive, and otherwise antisocial behaviors. Vitamin deficiency and dependency can also have an effect on behavior; studies show that a major problem proportion of all schizophrenics and children with learning and behavioral disorders are dependent on vitamins B3 and B6. Another suspected nutritional influence on behavior is a diet high in sugar and carbohydrates. Diets high in sugar and carbohydrate have been linked to violence, high aggression, and associated with attention span deficiencies. Research shows that among adolescent males, iron deficiency is directly associated with aggressive behavior. Furthermore, one study found that iron deficiency was nearly twice as prevalent in a group of incarcerated adolescents as among their non- incarcerated peers. Research has also li nked hypoglycemia to outbursts of antisocial behavior and violence. These bio-criminologists, who believe that food and crime are associated, think that if diet can be improved then the frequency or violent behavior would be reduced. Biosocial theorists also have been looking at the link between hormonal levels and violent behavior. Hormones exert a strong influence on behavior testosterone, and other androgens, are probably the most important hormones in criminology. Testosterone has been related to aggressive criminal behavior in a number of studies, almost as many as those linking crime to the female menstrual cycle. It is believed that high levels of testosterone reduce a persons social integration, making them more of a loner, and freeing them up to deviate from societys norms. Female menstrual cycles have been linked to irritability, aggression, and a patterned increase in hostility. Recent studies have linked dangerous

Identify an organisation Essay Example | Topics and Well Written Essays - 3000 words

Identify an organisation - Essay Example As a result, ExxonMobil has benefit from suitable competitive advantages, in addition to market leadership. ExxonMobil is organized on a geographical level besides having an effective leadership and focus on the firm’s objectives. The organization of ExxonMobil is dependent on business services and geographical location. The firm has functional groups that are categorized into three crucial operating divisions. The three groups are the upstream, downstream and chemicals division (Coll, 2012). The upstream management level or division of the firm dominates the firm’s cash flow. This division accounts for 70 percent of ExxonMobil’s revenues. The upstream division is responsible for business activities such as oil exploration, extraction, shipping and wholesaling. These operations have their headquarters at Texas. The downstream operations oversee business activities such as marketing, refining and retailing. These operations are dependent on the firm’s Virgi nia operations. The chemical division oversees business activities that involve the production and use of chemicals in the operations of the firm. This division has its headquarters in Texas. ExxonMobil has over 82,000 employees located in different locations globally. These employees support the activities of the three organizational levels by ensuring that the organization achieves stability in operations. It is worth stating that ExxonMobil has different brands such as Exxon, Esso and Mobil. The firm also owns subsidiaries such as Imperial Oil Limited and SeaRiver Maritime (Coll, 2012). ExxonMobil’s upstream division has operations such as â€Å"ExxonMobil Upstream Ventures, ExxonMobil Exploration Company, ExxonMobil Development Company, ExxonMobil Production Company, ExxonMobil Gas and Power Marketing Company and ExxonMobil Upstream Research Company† (ExxonMobil, 2013). Downstream operations are achieved by the activities of â€Å"Sea River Maritime, Lubricant & S pecialties Marketing Company, ExxonMobil Refining and Supply Company, ExxonMobil Research and Engineering Company, ExxonMobil Fuels and International Marine Transportation† (ExxonMobil, 2013). Operations of the chemical division are achieved through the activities of ExxonMobil Chemical Company. Flat or Tall Organization According to the organizational structure used by ExxonMobil, and the firm’s website, ExxonMobil is a flat organization. This means that the firm provides effective communication and interactive platforms (Bhairaw & Manoj, 2012). At ExxonMobil, every employee, regardless of level, status or job description can approach anyone at the firm and ask questions or share perspectives. ExxonMobil has an informative atmosphere. The flat organizational structure is based on ExxonMobil’s hierarchical structure. This structure was important because it helped the group access one of the firm’s representatives. The representative helped in filling out t he survey form. Tall organizational structures rely on traditional corporate structures that have mid-base and upper management levels. Tall organizational structures feature complex hierarchies that lead to long management chains (Bhairaw & Manoj, 2012). As the organization expands, the management levels increase. Managers form numerous ranks that control reduced numbers of employees or areas of the organization. Flat organizational structures have minimum management levels

Nelson Mandela Essay Example | Topics and Well Written Essays - 1500 words

Nelson Mandela - Essay Example These conditions kept on prevailing until in 1911 the Mines and Works Act stated that the Black workers could not be engaged as cheap semi-skilled laborers and this prohibited Black workers from seeking skilled work. In 1914 the National Party (NP) under General Hertzog made the law that the right to vote belonged to White and was not extended to Blacks. In coming years Blacks were deprived of the right to own their lands. The years went by and Blacks were subjected to discrimination by the Whites. Encyclopedia of Britannica describes apartheid as, policy that governed relations between South Africas white minority and nonwhite majority and sanctioned racial segregation and political and economic discrimination against nonwhites. It was in 1948 when the apartheid law was introduced which prohibited marriage of White and Non-White marriages and sanctioned White only jobs. The population was classified into White, Black and Colored. The Blacks had to carry pass books all the time containing their fingerprints, photos and information to access Non Black areas. There was discrimination in education, medical care and public services, and Blacks were always considered inferior to Whites. In 1951 the Bantu Authorities act established homelands for Blacks, their own lands were divided into separate homelands in which they had to live and in order to travel to another homeland they needed a passport, thus in other words they became alien to their own country. Whosoever did not abide by the law were subjected to injustices. Severe penalties were enforced on people and they were put in prison where brutal torture killed them. The statistics below show the result of apartheid law policies; It was through these hard times when a man rose up from between to combat these terrible practices of apartheid. Nelson Mandela was born on 28th July 1918, and dedicated his life to

Air traffic control Essay Example for Free

Air traffic control Essay Situation 1: Adapted from WAFBLA â€Å"Everyone Else Does It! † Ethics Project You have been struggling in your Engineering Models class. The content does not come easily, so you have put in countless hours to understand and do the assignments. There is another student who breezes through the assignments, getting high marks for the work he turns in. You know for a fact that he has used his college-aged cousin to do some of the assignments for him. You don’t know how many assignments were turned in this way, but you are certain that he, in fact, did not do all the work. Your frustration increases over the last assignment that you worked overtime on, but did poorly. Of course, this other student scored well on the same assignment. You drop the teacher an anonymous note about the implied cheating on the part of this other student. Questions: 1) What do you believe are the ethical issues related to this situation? Not being prepared to turn in the assignment. Trying to use someone elses work as your own. | 2) Write an argument supporting the actions taken. Be sure to tie your response to one of the ethical frameworks discussed. This is the rights approach as you are telling the teacher that another student is not turning in his actual work. This will make the challenge of the assignment fair for everyone. | 3) Write an argument against the actions taken. Be sure to tie your response to one of the ethical frameworks discussed. You should just let the other student do what he wants to and tell him that he won’t be able to get help when he does the exam. | 4) Were you in this situation, what would your response be? Why? I would also tell the teacher that he is cheating so that it would be fair for everyone who turns in their homework. | Situation 2: Occidental Engineering Author: Michael McFarland, S. J. Wayne Davidson is a software engineer in the aerospace division of Occidental Engineering, a large engineering firm. For the past two years he has been working as a test engineer for Operation Safe Skies, a project to build a prototype of the next generation air traffic control system. This project, which is funded by a contract from the Federal Aviation Agency (FAA), is a very important one for Occidental. With all the cutbacks in defense spending, the aerospace division has been losing business. The Safe Skies project has provided much needed business, and could lead to a much larger contract if successful. Mindful of its strategic importance, the company had bid very aggressively for the original contract. In fact they had low-balled it, bidding less than it would take to do the work properly. They felt that was the only way they could beat out their competitors, who were just as hungry for the work. Because of their somewhat shaky financial position, the company was not willing to take a loss on the project, so the project has been underfunded and understaffed. Nevertheless those working on the project have made a heroic effort, working eighteen hour days seven days a week to meet the deadline, because they know how much it means to the company, not to mention their own jobs. They are now very close to success. A version of the prototype has been completed and turned over to Wayne for testing. He has run extensive simulations on it and found that it works as it should except for one little problem: when there are too many aircraft in the system, it will sometimes lose track of one or more of them. The forgotten aircraft will simply disappear from the screen, there will be no trace of it anywhere, and it will be ignored by all of the collision avoidance and other safety tests. Wayne has been working with the software designers to identify the cause of the problem, and they have traced it to a subtle error in memory allocation and reuse. They are confident that they can fix it, but it will take a month or more to do the redesign, coding and testing. Wayne meets with his boss, Deborah Shepherd, the project manager, to discuss the implications. She tells him that what he is asking for is impossible. The contract requires that the company deliver a fully certified, working version of the software in three days for system integration and test. The government has developed a new, get-tough policy on missed deadlines and cost overruns, and Occidental is afraid that if they miss this deadline, the government will make an example of them. They would be subject to fines and the loss of the remainder of the prototype contract; and they might not be allowed to bid on the contract for the full system. This would have a devastating effect on the aerospace division, resulting in thousands of lost jobs. They consider whether they can do a quick patch to the software before turning it over, but Wayne adamantly refuses to release any code that has not been tested thoroughly. There is always a chance that the patch would interact with some other part of the program to create a new bug. Then well have to deliver the software as is, Deborah says. I cant jeopardize this project or the jobs of my people by missing that deadline. We cant do that! exclaims Wayne. Thats like delivering a car with defective brakes. Dont worry, Deborah reassures him. We have contacts in the FAA, so we know their testing plans. They will do a lot of simulations to make sure the software works with the hardware and has all the functionality in the specs. Then they will do live tests, but only at a small airport, with a backup system active at all times. There is no way they will overload the system in any of this. After that they will have some change requests. Even if they dont, we can give them an updated version of the program. We can slip the bug fix in there. They will never see the problem. Even if they do, we can claim it was a random occurrence that would not necessarily show up in our tests. The important thing is no one is in any danger. Maybe they wont find the bug, but I know its there. I would be lying if I said the system passed all the necessary tests. I cant do that. Anyway, it would be illegal and unprofessional. You can certify that it is safe, because it is, the way they are going to use it. And so he does. In the end Wayne signs off on the software. It is delivered to the FAA and makes it through all the preliminary tests, including live tests at a small airport in the Midwest. As a result of these tests, the FAA requests some changes in the user interface, and when Occidental delivers the new software it includes a robust solution to the problem of the disappearing aircraft. No one outside of Deborahs group ever learns of the problem. In fact Occidentals success with the prototype leads to major contracts for air traffic control software, giving much-needed business to the aerospace division. This saves hundreds of jobs, and allows the company to add hundreds more. Wayne Davidson, however, takes early retirement once the prototype project is finished, in order to write a book on software testing. He feels that the book should have a chapter on ethics, but he can never bring himself to write it. Questions: 1) What do you believe are the ethical issues related to this situation? Lying about a completed project when it isn’t. | 2) Write an argument supporting the actions taken. Be sure to tie your response to one of the ethical frameworks discussed. There was no productive way to get all of the project done, so they had to give what they had. | 3) Write an argument against the actions taken. Be sure to tie your response to one of the ethical frameworks discussed. It wasn’t a good choice because they didn’t tell the company that the project wasn’t finished and handed them an incomplete project. | 4) Were you in this situation, what would your response be? Why? I would ask for more people to help so we could get the project done on the day its due and assign each person a different part to do. |

Organization Theory and behavior-power and authority Essay Example for Free

Organization Theory and behavior-power and authority Essay Achievement of organizational objective depends on organization structure which is dynamic. Organization structure defines the flow of power and authority geared toward a particular course of action directed by organization’s objective. For organization structure to help to organization objective it is dependent on the employees. Employees operation are guided by the organization supervisors, whose their role is defined in the organization structures. Supervisor operations are dependent of power and authority which help to ensure things in an organization are done in the right way as well as achieving organization goals and objective. In organization management power and authority are very important as they help the organization to be able to direct organization employee toward organizational goals. Power and authority are dependent on the leadership model in an organization. Organizational managers are the leaders who employees report to hence their performance is dependent on the leadership offered by the manager. Achievement of organizational goal shall only be possible if power and authority are employed effectively. Authority and power helps the management to be able to create a productive culture through social process to guide employees’ capacity towards attaining organization goals and objectives. Power and authority helps the leader â€Å"†¦to create, maintain and improve a culture so that people will achieve objective (purpose) and continue to do so over time†¦Leadership in an organizations is a more specific process of influence since it involves goal that have been specified and can be measured or at least evaluated achieved only through employment of power and authority)† (Macdonald, Burke Stewart (2006) pp 80). To influence employees toward organization goal, management can employ three ways according to Macdonald, Burke Stewart (2006). That is force, manipulation and persuasion. Use of force by the management involves employment of force as well as real application of physical force to compel employees to work. Concept of force requires power to as it call for imposing one person against other employees, often referred to as coercion. Manipulation takes form of social distortion which direct requires the subject to do as they are told without asking questions. Manipulation is different force in that there is no coercion and employees are convinced that they are doing the right thing. Persuasion in an organization attempt to influence the employee to act in a certain way geared towards achieving organizational objectives without force or manipulation. It is dependent on will of the employee and mutual trust. Employment of force manipulation in an organization is dependent on the power and authority bestowed to the various leader or supervisors in the organizational operations. In an organization, authority is provided for by the organizational structure. Organizational structure grants an outline formal distribution of authority in an organization. Authority in an organization is largely provided for by formalization meaning standardized as well as rule and regulations that govern employee operations. Formalization defines the discretion in which an employee can act in his/her duties. â€Å"In an organization with high degrees of formalization, job descriptions and policies provide clear direction. Where formalization is low, employees have a great deal of freedom in deciding how to conduct their work†. In an organization different department exhibit different degree of formalization which may be base on the qualification of the employee to the organization affairs or rank of the employee. Authority is related to power in that it legitimizes supervisors to be able to direct and control subordinates to the intended course of action. Authority helps the supervisor to make decision geared towards organizational objective. Organization has three form of authority namely line authority, staff authority as well as team authority all distributed in the organizational structure. Line authority refers to straight supervisory form superior to subordinate organized such that it flows from top to the bottom of organization structure. Organization structure gives the chain of command which is unbroken line of command defining the decision, making process within an organization. Chain of command defining the authority of different personality in an organization helps employees to know who they are answerable to. This helps to avoid problem of duplication organization activities which comes due to more than one person assigning duties. Line of authority which is the basis of chain of command is linked to line department which are directly connected to production and sales of the organizational products. Examples of line department are marketing and production responsible for performance of the employees and reward. Staff authority as compared to line authority is more pegged to authority to advice base on the expertise and involves advising line managers. Employees help the line departments in coming up with the advices to be used for decision making but they lack authority to make the last decision. Staff supervision through suggestions made by line department decides on what is to be carried in the line department, coordinate as well as provide technical assistance. Team authority is executed by work teams responsible for daily operations in an organization. It comprises of groups of operating employees responsible for coordination of the organization operations. Team based structure as define under team authority in an organization organizes separate functions based on the overall organizational objectives. Authority is dependent to power such that for a supervisor to be able to get things done in accordance to the objectives of the organization power is required. â€Å"Everyone has power in one form or another and it is by exercising this power that organization get thing accomplished. Supervisors who are capable of achieving their objective independently of others are said to possess strength†. To be able to include people in the plan as well as organizational activities, supervisor requires power to get organizational things accomplished. Therefore, power is capability to apply influence in the organizational ahead of authority. This is gotten from the position as established by the organizational structure. In an organization a legitimate power bestowed to various leaders in an organization is established by individual position according to organizational hierarchy. Other forms of power include coercive power, reward power, expert power, referent power as well as information power. Supervisors’ power toward course of action depends on influence in the organization giving authority which may be centralized or decentralized. Centralization means the decision making power is concentrated on top of the management while in decentralization form of decision making authority is in lower level of employees. Relation of authority and power is that authority is the legitimate power of a supervisor to be able to direct employee to a certain course of action in accordance to organization goals. In a nutshell authority is a form of power delegated from the organization main authorities to subordinate.

Analysis of the Money Market in India

Analysis of the Money Market in India Money market is an important segment of the financial market (system) as it provides avenue for equilibrating the short term (ranging from overnight upto an year) demand for and supply of funds. It also plays an important role in the transmission mechanism of monetary policy, as it acts as a medium through which the central bank can influence the short term liquidity and interest rates in the financial system. Till the mid 1980s the Indian money markets was characterized by scarcity of instruments, stringent regulations pertaining to participants and interest rates, lack of depth and liquidity. Another drawback in the Indian money market during this period was existence of a large number of lenders and only a few chronic borrowers. Infact the basic requirement of a liquid and deep market that the participants should rotate between borrowing and lending activity was missing. However RBI took many measures to deepen and widen the money market in accordance with the recommendations of the Committee to Review the Working of the Monetary System (Chairman: Professor Sukhamoy Chakravarty) [1985] and the Working Group on the Money Market (Chairman: Shri N. Vaghul) [1987]. These measures included the deregulation of money markets interest rates, introduction of new money markets instruments such as certificates of deposits (June 1989), commercial paper (Jan 1990) etc. Also the RBI gradually eased the barriers to entry and initiated measure to increase the number of participants in the Money Market. RBI in a ssociation with the public sector banks and financial institution had set up the Discount and Finance House of India Ltd. (DFHI) in April 1988 in order to impart liquidity to the financial instruments. Thus financial innovations in terms of money markets instruments, broadening of participants base and strengthening of institutional infrastructure were undertaking during the 1990s based on the Vaghul Committees framework. Further during the late 1990s the Narasimham committee (1998) recommended rationalization of the money market by ensuring participation of different classes of entities in various segments of money market. RBI has over the years taken many structural measures and instrument-specific measures like transformation of call money market into pure interbank market, bringing down the minimum maturity of the CDs to 7 days etc. to develop the money market in pursuance of the Narasimham committee recommendations. Also a fullfledged liquidity Adjustment Facility was introduced on June 5, 2000 which replaced the traditional refinance support on fixed terms. The LAF was operationalised with a view to alter short term liquidity conditions as per the market conditions. In wake to strengthen the payment system infrastructure the Clearing Corporation of India Ltd. (CCIL) was formed in 2001. Also the introduction of the Negotiated Dealing System (NDS) in February 2002 and implementation of the Real Time Gross Settlement (RTGS) system in March 2004 further improved the efficiency in the money market. Improve These policy initiatives undertaken over time have led to the growth and sophistication of Indian money market, making it relatively deep, liquid and vibrant. Also the activity in all the segments of the Indian money market has increased significantly, especially during last few years. Currently the major segments of the Indian money market are Call (overnight) and Short-notice (up to fourteen days) Money Market Treasury Bills Market. Repos Market Term Money Market Collateralised borrowing and lending obligation (CBLO) Commercial Paper (CP) Certificates of Deposit (CDs) Money Market Mutual Funds (MMMFs) Among these, call and short-notice money and Treasury Bills form the most important segments of the Indian money market. Let us discuss each of these in brief: Call/Notice Money market The call money market is one of the most important and active segment of the Indian Money Market. Over the years RBI has taken many measures for development of the call/term money market. During the 1990s measures were taken to widen the participation of the call money market to include primary satellite dealers corporate (through primary dealers) in addition to the existing participants like commercial banks co-operative banks, LIC, UTI, etc. However the Narasimham committee recommended the conversion of the call/notice money market in a pure inter-bank market on prudential considerations and with an objective to improve the monetary transmission mechanism. Thus in accordance with the Narasimham committee recommendations (1998), measures were taken to convert the call market into a pure inter bank market starting in 1999. Simultaneously steps were taken to develop a repo market outside the official window for providing a stable collateralised avenue for deployment of funds by the non-banks following their phased exit from the call money market. Also introduction of instruments such as Collateralised Borrowing and Lending Obligation further provided the banks and non banks with a funding alternative. Consequently the call money market was transformed into a pure inter bank market in August 2005. Reflecting the conscious decision on the part of the RBI to make the call/notice money market a pure inter bank, the average daily turnover, which stood at around Rs. 351.44 bn in FY02, almost halved to Rs. 141.70 bn in FY04. However it increased in the subsequent years and was Rs.217.25 bn during FY07. The operational efficiency in the call money market was improved with the establishment of the CCIL and operationalisation of NDS. Furthermore the RBI made it mandatory for the all the NDS members to report all the call/notice money market transaction carried out through NDS within 15 minutes of winding up of the transaction. This helped in increasing efficiency, transparency and improve price discovery in the money market. In order to further increase the transparency and facilitate better price discovery CCIL developed a screen based negotiated dealing quote-driven system for all dealings in the call/notice and the term money markets (NDSCALL). This system was made operational on September 18, 2006. Further the RBI has over the years carried out many reform measures such as adoption of Liquidity Adjustment Facilities (LAF) etc. in order to impart stability in the call money market. In the 1990s the call rates were generally stable barring a few episodes of volatility. Tight liquidity condition in the call money market, backed by high levels of statutory pre-emptions and withdrawal of all refinance facilities except the export credit, led to firming up of the call rates during the beginning of FY92. Infact the call rate touched a peak of 35% in May 1992. After that the call rates eased for some period and again firmed up to touch 35% in November 1995. This was partly a reflection of the turmoil in the foreign exchange market. Inorder to stabilize the market the RBI injected liquidity in the system through repos, increased refinance facilities and provided some respite by reducing the CRR. With RBI sucking out liquidity to ease foreign exchange market pressure the call rates, which had eased to single digit levels, again firmed up to 29% in January 1998. The adoption of the LAF in June 2000 has helped the call rates to ease. The call rate eased significantly to a low of 4.5 percent in September 2004, backed by improved liquidity conditions on account of increased capital inflows. However on account of IMD redemptions the call rates came under some pressure in December 2005. It increased to around 7% during Feb 2007 partly influenced by the tight monetary policy stance by the RBI to curb high inflation. With the initiation of the LAF and subsequent improvement in liquidity management a considerable degree of stability has been imparted in the call money market. Since then the volatility in call rates has reduced significantly. According to the RBI the mean rate has almost halved from around 11 per cent during April 1993-March 1996 to about 6 per cent during April 2000-March 2007. Volatility, measured by coefficient of variation (CV) of call rates, also halved from 0.6 to 0.3 over the same period. It is important to note here that the in the pre-reform period the statutory requirements like CRR and SLR and reserve maintenance period have been the main driver of the call rates. However in the recent years the developments in other market segments, mainly the foreign exchange and the government securities market accompanied by the Reserve Banks liquidity management operations have been the major factors influencing the call rates. This signifies increased market integration and improved liquidity management by the Reserve Bank. Term Money Market Term Money Market, which is market for short-term funds of maturity between 15 days to 1 year, is not very well developed in India. Till the late 1980s, the term money market was governed by stringent norms in terms of participants, regulated interest rates etc. However the RBI has taken many measures over the years to develop this market. The administered interest rate system was dismantled in 1989 following the recommendations of vaghul committee. Further in 1993 select financial institutions (IDBI, ICICI, IFCI, IIBI, SIDBI, EXIM Bank, NABARD, IDFC and NHB) were allowed to borrow from the term money market for 3-6 months maturity, however within a fixed limit set for each institution. Also Term money of original maturity between 15 days and 1 year was exempted from the CRR in August 2001. Although many measures were taken by the RBI to develop the term money market, the activity (as reflected in the daily turnover) in this segment of money market continues to remain low. The average daily turnover in the term money market has increased moderately from Rs.195 crore in FY02 to Rs.1,012 crore during FY07. The development of the term money market has been impeded by confluence of factors- (i) the inability of participants to build interest rate expectations over the medium term due to which there is a tendency on their part to lock themselves in the short-term; (ii) the distribution of liquidity is also skewed with public sector banks often having surplus funds and foreign banks being in deficit in respect of short-term resources. Since the deficit banks depend heavily on call/notice money, more often, surplus banks exhaust their exposure limits to them; (iii) corporates overwhelming preference for cash credit system rather than loan generally forces banks to deploy a large amount in the call/notice money market rather than in the term money market to meet sudden demand from corporates; (iv) the steady reduction in the minimum maturity period of term deposits offered by banks; and (v) the tendency on the part of banks to deploy their surplus funds in LAF auctions rather than in the term money market, reflecting risk-averse behaviour. Repos Market Repo is a money market instrument, which enables collateralised short-term borrowing and lending through sale/purchase operations in debt instruments. In this segment, mutual funds and some foreign banks are the major providers of funds, while some foreign banks, private sector banks and primary dealers are the major borrowers. Over the years RBI has taken many measures to reform the Repo market, which was highly regulated both in terms of participants and instruments till the late 1980s. Before April 1988 all government securities and PSU bonds were eligible for repo transactions. However with the alarmingly high growth in repos RBI became cautious and prohibited the participation of non-banks in the repo market. RBI permitted only interbank repos in all government securities between April 1988 and mid-June 1992 in order to avoid any undesirable developments on account of the large scale misuse of repos. The Janakiraman Committee, set up following the securities market irregularities of 1992, reported that despite of being prohibited virtually all wholesale participants of the money and not only banks widely used the repos. Also many other irregularities were in the repo markets were bought to the forefront, following which the repos were prohibited in all the securities barring the treasury bills. However in wake to revive the repo market and noting the usefulness of repos in development of money market, RBI gradually bought all Central Government dated securities, Treasury Bills and State Government securities under the purview of repo market. Furthermore, with the view to broaden the repo market PSU bonds and private corporate securities have been made eligible for repos in 1997-98. Further RBI introduced the delivery versus payment system during FY96, with an aim to facilitate the repo transactions and increase transparency in the repo market. Nonbank entities which maintained subsidiary general ledger (SGL) account were permitted to participate in the repo market. Since March 2003, the non-bank financial companies, mutual funds, housing finance companies and insurance companies not having SGL account were permitted to transact in the repo market through their gilt accounts maintained with the custodian. With the increase in use of repos as money market instrument the comprehensive uniform accounting guidelines as well as documentation policy were issued by the RBI in March 2003. In addition to this the DvP III mode of settlement in government securities (which involves settlement of securities and funds on a net basis) was operationalised in April 2004. This helped the introduction of rollover of repo transactions in government securities and offered greater flexibility to participants in managing their collaterals. The Liquidity Adjustment Facility (LAF), that was introduced from June 5, 2000, has also helped in development of the repo market. Further the gradual phasing out of nonbanks (August 2005) from the call money market, has provided further impetus to the repo market. This is evident from the sharp increase in the average daily turnover of repo transactions (other than the Reserve Bank) from Rs.11,311 crore during April 2001 to Rs. 42,252 crore in June 2006. Treasury Bills Market T-Bills are issued by the RBI on behalf of the Government of India and thus are actually a class of Government Securities. Presently T-Bills are issued in maturity periods of 91 days, 182 days and 364 days through an auction based system and form one of the most active segments of the Indian money market. However prior to the initiation of reforms, only the 91-day Treasury bills were sold through fixed coupon or tap system. Also ad hoc treasury bills were issued by the government in order to meet the temporary mismatch in revenue and expenditure. Although these were meant for temporary purpose they became attractive source of meeting the central government resource requirement as they were available at an interest rate pegged at 4.6% per annum since 1974. However due to administered nature of interest rate the 91-day treasury bills could not emerge as useful instruments in the money market. But with initiation of the reform measures in the late 1980s T-bills market has emerged as an important segment of the money market. The reform process in the t-bills market was initiated in November 1986 with the introduction of 182 days treasury bills. The formation of DFHI also helped in emergence of treasury bills market as important segment of the money market. Further impetus was provided to the development of the treasury bills market by the phasing out of the tap treasury bills and introduction of auctioning system in the 91-treasury. Another important reform in the treasury bills market was the abolition of the ad hoc treasury bills in April 1997. Further the introduction of 14-day intermediate treasury bills helped in improving the cash management of the government. Thus, Treasury bills of different tenors were introduced to consolidate the market for imparting liquidity, while yields were made market determined through auctions so that they could be used as benchmark for other short-term market instruments. Treasury Bills market has received special attention of RBI over the years as it is at the heart of the money market development. The amounts assigned for auctions are announced in advance since April 1998. Also the payments dates are synchronized on the following Friday after the auctions inorder to provide fungible stock of varying maturities and to activate the secondary market in Treasury Bills. The primary dealers provide their bid daily and offer discount rates so that the investors are able to acquire treasury bills even in between the auctions. Type of T-bills Introduced Discontinued 91 days Ad-hoc T-Bill Mid 1950s April, 1997 91 days T-Bill on Tap Mid 1950s March, 1997 182 days T-Bill on weekly auction November,1986 April, 1992 14 days T-Bill on weekly auction April, 1997 May, 2001 364 days T-Bill on fortnightly auction April, 1992 91 days T-Bill on weekly auction January,1993 182 days T-Bill on weekly auction Re-introduced in June, 1999 May, 2001 182 days T-Bill on weekly auction Re-introduced in April, 2005 The primary dealers provide their bid daily and offer discount rates so that the investors are able to acquire treasury bills even in between the auctions. Commercial Paper (CP): Commercial paper was introduced in India in January 1990, in accordance with the recommendations of the vaghul committee with an aim to provide additional avenues to the corporate to source short term funds. Commercial Paper (CP) is issued in the form of a promissory note sold directly by the issuers to investors, or else placed by the borrowers through agents such as merchant banks and security houses. Since CP is freely transferable, and highly liquid it provides the banks, financial institutions, insurance companies and others an attractive avenue to park their short term funds. Over the years RBI has gradually relaxed the norms relating to eligibility, maturity period etc. for issuing CPs. Initially, corporates were allowed to issue CP with a maturity between 3 to 6 months from the date of issue. However the minimum tenor of the CP was reduced in phased manner. Currently the minimum tenor of the CP is seven days (effective October 2004). Also the minimum amount to be invested by a single investor, which was Rs.1 crore at time of introduction of CP, has been gradually brought down to 5 lakhs. This norm was gradually relaxed so as to align the CPs with other money market instruments. These measures helped in the increasing activity in this segment of the money market. Initially the limit of CP issuance was carved out of the maximum permissible bank finance (MPBF) limit and consequently only to its cash credit part. However reducing proportion of cash credit in the MPBF was hindering the development of the CP market and hence issuance of CP was delinked from the cash credit limit in October 1997. Further with a view to enable issuers of the service sector to meet their needs of short-term working capital, CP was transformed into a stand alone product. Initially, the individuals, banks, companies, other corporate bodies registered or incorporated in India and unincorporated bodies were allowed to issue and held the CP. Further issuance of the CP to non-residents on a non-repatriation basis was allowed however these CPs were non transferable. Also the FIIs were permitted to invest in the CPs since October 2000, but within the limit set by SEBI. Further to improve the efficiency, rationalize standardize the various aspects of processing and reduce the transaction cost many measures such as dematerialization of CPs (effective June 30, 2001) were undertaken by the RBI. It issued draft guidelines on securitisation of standard assets on April 4, 2005, with an aim to further deepen the market. Consequently the issuing and Paying agents were required to report the issuance of the CP on NDS platform commencing from April 16, 2005. Over the years the major issuers of CP have been the leasing and finance companies. Discount rates on CPs have firmed up in line with the increases in policy rates during 2005-06 and 2006-07. It is advantageous for the corporate to raise funds through CPs during times of ample liquidity as the effective discount rates on CP tends to be lower than the banks lending rates. Also it is relatively profitable for banks to park their funds in the CPs during times of high liquidity as the interbank call rates tend to be lower than the CP rates. Thus the activity in the CP market reflects the liquidity condition in the money market. The average outstanding amount of CPs reduced from Rs. 22.80 bn during FY94 to Rs. 4.42 bn in FY96 on account of tight liquidity conditions in the money market. However the outstanding amount of CPs has increased in the recent years. It was Rs. 213.14 bn during FY07. However the secondary market for CPs continues to remain subdued as the investors prefer to hold the instrument till maturity as it gives them a higher risk adjusted return compared to other instruments in the money market. The secondary market of CPs is more profitable for the Mutual funds as they are charged higher stamp duty for issuing a CP as compared to the banks. Certificates of Deposits (CD) CD were introduced in the Indian money market in June 1989, with an view to widen the range of instruments in the money market and provide additional avenue and greater flexibility to the investors to park their short term surplus funds. During the pre reform period the CDs were governed by a number of regulations in terms of maturity, issuance amounts, maturity etc. However many guidelines pertaining to the CDs have been relaxed in the post reform period. The limit on issuance of the CD, which was earlier linked to the average fortnightly outstanding aggregate deposit, was abolished effective October 16, 1993. This was done with a view to enabling it as a market determined instrument. In order to align the CDs with other money market instruments the minimum maturity of the CDs has been reduced gradually to 7 days (April 2005). The minimum size of issuance was reduced from Rs 1 crore in 1989 to Rs. 1 lakh in June 2002. Also to provide flexibility and depth to the secondary market activity the restrictions pertaining to the minimum period for transferability were withdrawn over a period of time. With a view to improve transparency and promote secondary market activity the banks were instructed to issue CDs to the financial institutions only in dematerialized form, effective June 30, 2002. Since October 2002 the banks were allowed to issue floating rate CDs as a coupon bearing instrument in order to promote flexible pricing. The reduction in stamp duty on CDs, effective March 1, 2004 and withdrawal of the facility of premature closure of deposits in respect of CDs were other factors that boosted activity in the market, providing greater opportunity for secondary market trading. The activity in the CDs market is also depended on the liquidity conditions in the market as the CPs. Unlike the CPs the issuance of CDs increase in the time of tight liquidity conditions as the banks resort to issuance of CDs, often at premium, to meet their liquidity gap. For instance, the outstanding amount of CDs declined to Rs.949 crore during FY02 as compared to 1,199 crore, partly due to easy liquidity conditions on account of large capital inflows. However the average outstanding amount of CDs increased gradually during the subsequent periods. The average outstanding amount of CDs had increased to Rs.64,814 crore during FY07 as banks resorted to issuance of CDs in order to support the robust credit demand. The interest rates on CDs which had softened in the recent years in line with other money market instruments experienced some hardening during FY07. However banks offer higher interest rates on CDs as compared to other instruments and hence it is profitable for the subscriber to hold the CDs till maturity. This infact is one of the reasons for subdued secondary market for the CDs. Collateralised Borrowing and lending obligation: The CCIL operationalised CBLO as a money market instrument on Jan 20, 2003 with an aim to provide an alternative avenue to the market participants, especially those who were phased out of the call money market, to manage their short term liquidity. This innovative product developed by the CCIL facilitates anonymous order matching system for efficient price discovery. High transparency and real time basis of deals in the CBLO have assisted in enhancing efficiency of the money market. With the conversion of the call money market in a pure interbank market since August 2005 and setting of prudential limits on lending and borrowing by banks and PDs in the call money market, the activity has shifted to CBLO segment as can be seen in the below chart. The average daily turnover in the CBLO segment has registered an increase from Rs.515 crore in FY04 to Rs.32,390 crore during FY07. However the increase in turnover can be partly attributed to the increase in number of participants from 30 in July 2003 to 153 in March 2007. It is important to note here that the composition of market participants has also changed over the years. The mutual funds and insurance companies have emerged as the major lenders while the nationalized banks, PDs and non-financial companies as major borrowers during FY07. As borrowings in the CBLO segment are fully collateralised, the rates in this segment are expected to be comparable with the repo rates. The movements in the daily average rates in the overnight call, the repo and the CBLO markets for the period from January 2003 to March 2007 show that CBLO rates moved between the call and the repo rates up to November 2003 due to a limited number of participants. From November 2003, the CBLO rates have aligned with the repo rates on account of increase in the number of participants. Money Market Mutual Funds (MMMFs) With an aim of bringing the money market within the reach of individual investors the MMMF were introduced in India in April 1991. However a detailed scheme of MMMFs was declared by the RBI in April 1992, thereby allowing the schedule commercial banks and public financial institutions to set up MMMFs, subject to some terms and conditions. However to provide flexibility, liquidity and depth to the market these restrictions were relaxed over a period of time. For example the minimum lock in period for the units of MMMFs was brought down from 30 days to 15 days in May 1998. MMMFs were permitted to offer cheque writing facility in a tie-up with banks in 1999-2000 in order to provide added liquidity to unit holders. MMMFs, which were under the purview of RBI, were bought under SEBIs regulations Since March 7, 2000. Also it is important to note that now banks are permitted to set up MMMFs only in form of trust as a separate entity. Also the MMMFs were permitted to invest in rated corporate bonds and debentures with a residual maturity of one year.

Ritalin And Its Uses Essay -- essays research papers

Ritalin and Its Uses In recent years, more and more kids seem to be on a prescription drug called Ritalin(methylphenidate). This drug is being handed out more and more by doctors as a way of treating Attention Deficit Hyperactivity Disorder, a complex neurological impairnment that prevents kids from concentrating. According to the Drug Enforcement Agency, it rose fron 200 grams per 100,000 people to over 1400 grams per 100,000 people in the last fifteen years. The National Institute of Mental Health estimates that about one student in every classroom is believed to experience the disorder. The rate of Ritalin use in the United States is at least five times higher than in the rest of the world according to federal studies. Are doctors just catching this disabling affliction more often? Or does society just want a convenient way to solve a complicated problem. Ritalin is a central nervous system stimulant that is somewhat similar to amphetamines. It was created in 1955, classified as a controlled substance in 1971, and became the drug of choice for ADHD in 1981. It is also used in treating narcolepsy. It is thought to activate the brain stem arousal system and cortex, and, like cocaine, works on the neurotransmitter dopamine. It appears to increase the levels of dopamine in the frontal lobe where attention and impulsive actions are regulated. When taken in its intended form under a doctor's prescritption, it has moderate stimulant properties. There has been a great deal of concern about it's addictive qualities and adverse affects. ADHD is a relatively new disorder. It was introduced in 1980, where it was labeled ADD(attention deficit disorder). In the 1950's, children were simply labeled "hyperkinetic." The term "hyperactivity" was added in 1987, hence the name ADHD. Not all children have the hyperactivity, and thus are labeled to have ADD. ADD is not treated with Ritalin; antidepressants are more commonly used. One of the problems with the label ADHD is that just because a child may be overly hyper, doesn't mean the child is not paying attention. The problem is, the child is paying too much attention to too many things at the same time. ADHD is children's #1 childhood psychiatric disorder. The prevalence is three time... ...ere), irregular heartbeat and respiration(may be profound and life threatening), anxiety, restlessness, paranoia, hallucinations, delusions, excessive repetition of movements and meaningless tasks, and formicaton(sensation of bugs or worms crawling under the skin). It seems to be abused by high school kids and college students predominantly. Although the drug is too complex to manufacture illegally, and it doesn't create the euphoric effect that cocaine has, it seems to be an aid in studying for final exams. It allows students to stay up all night allowing them to cram much easier. It is important to remember that too many children in America are suffering from this ailment, and yet too many kids are getting pills instead of proper care. Although Ritalin currently seems to be an effective way in treating Attention Deficit Hyperactivity Disorder, we must not treat this disorder hastily. Our society must realize that prescription drugs can have just as many complications as street drugs. Befor writing out a prescription, or carelessly diagnosing ADHD, we must remember that these are kids we are dealing with. They put all their faith in us to help them, and not just to medicate them.

Internet Censorship Means No Freedom of Speech -- Argumentative Persua

Picture it: you pick up your phone to read your email. You're expecting a message from a friend, who is sending you some information on breast cancer, but when you check your inbox there is instead a message from the server. It says the message that was sent to you from the address of your friend has been intercepted because it contained indecent material that did not comply with FCC regulations of the Internet. You call your friend only to find that the police have come and taken her away, and she is now facing up to two years in prison and/or up to $100,000 in fines. The message sent by your friend contained the word "breast," which by current FCC standards is indecent, and thus not permitted to be transferred on the Internet. Due to this, your friend is now subject to criminal charges.   Ã‚  Ã‚  Ã‚   Sound ridiculous? Unreasonable? Perhaps even a bit scary? It is all three of these things, but further, it is impending reality. This situation is very possible, in the very near future. On February 8, 1996, President Clinton signed the Exon Bill, part of the Communications Decency Act; a bill which makes the possibility of this situation a frightening reality. This bill will allow the government to censor the Internet, by any means it deems necessary. Under the CDA the "seven dirty words", as well as anything the government considers sexually explicit or "indecent", will be banned from the Internet. The CDA, however, will not be enforceable until all appeals made against it by organizations such as the Citizens Internet Empowerment Coalition (CIEC), and the Center for Democracy and Technology (CDT), are resolved.      Ã‚  Ã‚  Ã‚   The Internet is a worldwide medium for communication and the transfer of information. It is also, theoretica... ...Internet. They also succeeded in doing this without government interference, or threatening our rights as Americans. Further, it does this in a way which keeps parents involved in their child's activities, and preserves the parental right to decide what their child is exposed to. It also ensures that the growth of the Internet is not stunted in any way.   Ã‚  Ã‚  Ã‚   If people are educated on this issue, then they will be aware of what is occurring in this conflict, so they will be ready to stand up for their rights. Anyone who is informed on the subject will not want to risk losing their rights or freedom. Further, if there are solutions which will protect children on the Internet that at the same time protect our freedom of speech and the growth of the Internet and all its information, thus appeasing both sides, it is only logical and reasonable that we follow them.

My Philosophy of Teaching :: Philosophy of Education

Philosophy of Education Deciding what you want to do for the rest of your life is a very important and hard decision. But for me, this decision was not hard at all because ever since I was a young child, I have always wanted to become a teacher. Many people find it amusing when I tell them of my aspirations of becoming a teacher, and they respond by saying that the only reason why I want to be a teacher is because my parents are both teachers. I respond to them by describing what teaching means to me and tell them what I could bring to the teaching professional to enhance it. To me, teaching is such a rewarding career because you have the ability to shape the minds of the future. But with this rewarding career also comes many responsibilities. As a teacher you must be able to realize all the needs of your students and be able to accommodate these needs. I think that this is one of the most important things that teachers must achieve. They should be able to teach not only to the smartest child in the classroom, but also to the slowest child in their classroom. Another very important part of being a teacher is the impression that you make on your students. For many children, their only role model is their teacher. So I believe that as a teacher you must strive to make a positive impact on your student’s lives. When children are young, they are not always taught what is right from wrong. They model the behavior in which they see. If a child sees you as a teacher being caring, loving, and respectful to others then they will in treat other s in the same way that you did. I know that many of my teachers had this impact on me, and I only hope that some day I can have that impact on a child. When looking at the different philosophies of education I realized that I do not want to just be a Progressivist, I also want to be a Behaviorist and an essentialist. This is due to the fact that I like different aspects of each philosophy, and I believe if I could tie them all together then I would have a successful classroom.

Operational Performance Measurement: Sales and Direct-Cost Variances

Chapter 14 Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures Case 14-1: Pet Groom and Clean Company Readings 14-1: â€Å"Standard Costing Is Alive and Well at Parker Brass† by D. Johnsen and P. Sopariwala, Management Accounting Quarterly (Winter 2000), pp. 12-20. The Brass Products Division of the Parker Hannifin Corporation is a world-class manufacturer of tube and brass fittings, valves, hose, and hose fittings. Despite the introduction of popular new costing systems, the Brass Product Division operates a well-functioning standard costing system.Discussion Questions: 1. What features in the firm's standard costing that make it a success? 2. In addition to variances seen in the textbook Parker Brass created several new variances. Describe these variances. Why are these variance added at Parker Brass? 14-2: â€Å"Redesigning Cost Systems: Is Standard Costing Obsolete? † by Carole B. Cheatham and Leo B . Cheatham, Accounting Horizons (December 1996), pp. 23-31. The article shows some new ways to analyze standard cost data, going beyond the traditional emphasis on production costs variances that focus on price and efficiency.Variances for product quality are developed and explained, as well as sales variances based on sales orders received and orders actually shipped. There is also a discussion of how to incorporate activity-based costing, and continuous standard improvement, including benchmarking and target costing. The main premise of the article is that standard cost systems are the most common cost systems in use, and while there are a number of limitations to these systems, a careful and creative effort can transform them into more useful cost systems. Discussion Questions: 1.What are the main criticisms of traditional standard cost systems? 2. What is meant by â€Å"push through† production? Is it preferred to â€Å"pull through† production, and why? 3. What ar e the best ways to make standard cost systems more dynamic? 4. Considering the suggestions make in this article, in contrast to the chapter presentation of standard costing, which ideas make the most sense to you and why? 14-3: Can Variance Analysis Make Media Marketing Managers More Accountable? by Ted Mitchell and Mike Thomas, Management Accounting Quarterly (Fall 2005), pp. 51-61.This article discusses, within the context of a marketing application, an alternative method for decomposing a total standard cost variance. The authors posit that in such applications the joint variance (that in conventional practice is assumed to be small) can be significant in amount and therefore invalidate conventional methods that include the joint price-cost variance as part of the price variance. However, the treatment proposed by the authors for the joint price-quantity variance differs from the â€Å"three-variance† solution found in some cost/managerial accounting texts. Discussion Ques tions: . Explain what is meant by the term â€Å"joint variance† as this term is used in standard cost systems used for control purposes. 2. Explain what the authors of this article mean when they describe their proposed approach for standard cost variance decomposition as a â€Å"geometric solution. † 3. Explain the term â€Å"Minimum Potential Performance Budget† model. How is this concept employed in the variance decomposition process recommended by the authors? 4. What are the primary advantages and primary disadvantages of the variance decomposition model recommended by the authors of this paper? 4-4: Helping Students See the ‘Big Picture of Variance Analysis by Neal VanZante, Management Accounting Quarterly, Vol. 8, No. 3 (Spring 2007), pp. 39-47. This paper presents two examples that can be used to reinforce concepts and procedures students learn in text Chapters 14 through 16. The first example, Fernandez Company, can be used as a comprehensive rev iew of all three chapters; the second example, Roger Company, can be used in conjunction with Chapter 14 if additional coverage of the joint price-quantity variance for direct materials (DM) is desired.The Fernandez Company example requires students to first calculate the total flexible budget variance (in operating income) for a period and then breakdown this variance into its constituent parts (selling price variance, various cost variances, etc. ). Discussion Questions: 1. What is meant by the total operating-income variance for a given accounting period? What alternative names are there to describe this variance. 2. What would be a first-level breakdown of the total variance described above in (1)? 3. How can the total flexible-budget variance be broken down (i. . , what are the constituent parts of this total variance)? 4. Explain the total sales volume variance for a period. How can this total variance be decomposed? 5. Explain the meaning of the joint price-quantity variance that is the basis for the discussion in the Roger Company case. 14-5: Are ABC and RCA Accounting Systems Compatible with Lean Management? by Larry Grasso, Management Accounting Quarterly, Vol. 7, No. 1 (Fall 2005), pp. 12-27. This paper provides a critical analysis of several alternative cost systems to traditional cost accounting systems.It then evaluates these alternatives in terms of how they might support, or not, companies that adopt a lean philosophy. An example of nonfinancial performance indicators that support a lean philosophy is offered in Tables 1 and 2. This discussion in the article of the historical development of management accounting systems reinforces in the minds of students the evolving nature of cost system design: as the environment changes, so should management accounting systems. (Note: this reading could also be used in conjunction with Chapter 15 of the text. ) Discussion Questions: . Describe what is meant by the term lean manufacturing. 2. According to th e author of this article, what are the primary uses (or roles) of management accounting data within organizations today? 3. According to the author of this article, what are the primary implications of adopting a lean philosophy in terms of the design of management accounting systems? 4. Explain the importance of the examples provided in Tables 1 and 2 of this article. 14-1 Pet Groom & Clean (PG) David Green is considering his operating statement for 2010, which is displayed in the table below.David is the manager of store number 88, where he began as one of the staff 6 years ago, and through hard work has risen to become manager of the store. The operating report shows his budgeted performance for the year and the actual results, showing a net improvement of 9% over budget–$405. While his results are positive, the small improvement over the budget does not qualify David for the bonus program which awards a $3,000 bonus for store managers who improve their performance over th at of the budget by 20% or more. David manages one store in a 110 store chain of pet grooming stores owned by Pet Groom & Clean Company (PG&C).As for other PG stores, his store is open Monday through Saturday each week; the only service provided at the store is a service in which a pet, dog or cat, is groomed and cleaned, typically while the customer waits. The budgeted price for the service at the beginning of 2010 was $25. Budgeted variable costs were $2 for materials and $9 labor cost per service, as well as other variable costs of $1. 50 per service. Materials are purchased by local store managers, and all staff are hired and supervised by the local store managers.Other budgeted and actual information for 2010 are shown in the table below. David is an ambitious and hard working manager, who has applied himself to the job and has looked for different ways to attract customers and to reduce costs. For example, he noticed that most of the company’s customers brought their pe ts in on Friday, Saturday, and Monday, and the number of customers was significantly lower on Tuesday through Thursday. In fact, David budgeted that 80% of total demand for 2010 would be in the Friday-Monday period, and only 20% would be in the Tuesday-Thursday period.So at the start of 2010 David began a promotion that reduced prices on Tuesday through Wednesday to $18 in an effort to draw in more business during these three days. Also, noting the strong demand in the Friday-Monday period, David decided to increase the price during those days from $25 to $30. An experienced manager, David was able to manage labor costs so that staff were not idle, even on slow days; David scheduled the number of staff to meet the expected demand on each day, and because of his experience (and because his store encouraged appointments), his forecast of demand was usually quite accurate.Thus, labor cost is fairly treated as a variable cost for David’s store. Labor costs consists of 3 staff who are budgeted to work 2,500 hours per year at a budgeted pay rate of $12 per hour, thus the total budgeted labor costs of $ 90,000 (= 3 x $12 x 2,500). Through his careful scheduling of staff, and his effective management style, Dave was able to save labor time so that each of the three employees worked only 2,250 hours in 2010.Other expenses include training expenses –each staff employee is expected to have at least 6 hours of training at the PG&C headquarters during the year; the local store is charged $250 per hour for this training. The local store manager determines the amount of training time for each staff. Other expense also includes advertising expense, which is controlled by the local managers; PG&C recommends that advertising should be about 1% of total sales. Service development is the cost of studying new products for use in he stores and for the study of potential new ways to improve the services provided at PG&C stores. Service development is charged to each st ore based on the allocation rule of 10% of store sales. Accounting, insurance costs, taxes, and management overhead (which includes store rent and manager’s pay) are paid at the home office of PG&C and are allocated based upon a formula which combines store size, store sales, and the age of the store. Employee benefits accrue to staff at the rate of 20% of total pay. These benefit payments are contributed to a 401(k)-type retirement plan for each employee.The result of David’s promotional price for the Tuesday-Thursday period was successful, as total sales increased from 10,000 to 10,500 and the Tuesday-Thursday sales increased from 20% to 30% of total sales. Required: From David Green’s perspective, develop an analysis which explains your performance for the year ended December 31, 2010. [pic] 14-1: STANDARD COSTING IS ALIVE AND WELL AT PARKER BRASS by David Johnsen and Parvez Sopariwala Many people have condemned standard costing, saying it is irrelevant to th e current just-in-time based, fast-paced business environment.Yet surveys consistently show that most industrial companies in the United States and abroad1 still use it. Apparently, these companies have successfully adapted their standard costing systems to their particular business environments. In addition, many academics have contributed ideas on how the standard costing system could be and has been made more responsive to the needs of companies operating in this new economy. 2 The Brass Products Division at Parker Hannifin Corporation (hereafter, Parker Brass), a world-class manufacturer of tube and brass fittings, valves, hose and hose fittings, is one of the tandard costing success stories. It operates a well-functioning standard costing system of which we will show you some highlights. WHAT’S SPECIAL ABOUT THE STANDARD COSTING SYSTEM AT PARKER BRASS? Parker Brass uses its standard costing system and variance analyses as important business tools to target problem areas so it can develop solutions for continuous improvement. Here are some examples of these standard costing-related tools: (Disaggregated product line information. Parker Brass has been divided into Focus Business Units (FBUs) along product lines.Earnings statements are developed for each FBU, and variances are shown as a percentage of sales. If production variances exceed 5% of sales, the FBU managers are required to provide an explanation for the variances and to put together a plan of action to correct the detected problems. To help the process, a plant accountant has been assigned to each FBU. As a result of these steps, each unit is able to take a much more proactive approach to variance analysis. ( Timely product cost information.In the past, variances were reported only at month-end, but often a particular job already would have been off the shop floor for three or more weeks. Hence, when management questioned the variances, it was too late to review the job. Now exception repor ts are generated the day after a job is closed (in other words, the day after the last part has been manufactured). Any jobs with variances greater than $1,000 are displayed on this report. These reports are distributed to the managers, planners or schedulers, and plant accountants, which permits people to ask questions while the job is still fresh in everyone’s mind. Timely corrective action. Because each job is costed (in other words, transferred out of Work-in-Process and into Finished Goods) 10 days after the job has closed, there is adequate time for necessary corrective action. For example, investigating a large material quantity variance might reveal that certain defective finished parts were not included in the final tally of finished parts. Such timely information would allow management to decide whether to rework these parts or to increase the size of the next job.This kind of corrective action was not possible when variances were provided at the end of each month. (An effective control system. Summary reports are run weekly, beginning the second week of each month, to show each variance in total dollars as well as each variance by product line and each batch within the product line. In addition, at the end of each month, the database is updated with all variance-related information. As a result, FBU managers can review variances by part number, by job, or by high dollar volume. (Employee training and empowerment.Meetings are held with the hourly employees to explain variances and earnings statements for their FBU, thereby creating a more positive atmosphere in which the FBU team can work. These meetings help employees understand that management decisions are based on the numbers discussed and that if erroneous data are put into the system, then erroneous decisions may be made. For example, a machine may not be running efficiently. An operator may clock off of the job so that his or her efficiency does not look bad. Because the machine’ s efficiency is not adversely impacted, no FIGURE 1 | |PANEL A: THE FACTS | |Standard production in 1 hour (units) |50 | |Standard batch quantity (units) |2,000 | |Standard hours needed for 2,000 units |40 | |Standard time needed for 1 setup (hours) |4 | |Standard labor rate per hour |$10 | |Actual quantity produced (units) |1,200 | |Actual setup hours for 1 setup |4 | |Actual productive labor hours to make 1,200 units |24 | |Actual labor cost for 28 hours at $10 per hour |$280 | | | |PANEL B: WORKINGS | | Setups |Production |Total | |Standard time per unit: | | | | |Standard setup time ( hours) |4 | | | |Standard production time (hours) | |40 | | |Standard batch size (units) |2,000 |2,000 | | |Hence, standard time per unit (hours) |0. 002 |0. 020 |0. 022 | | | | | | |Standard time charged for 1,200 units: | | | | |Standard time per unit (hours) |0. 002 |0. 020 |0. 22 | |# of units actually produced |1,200 |1,200 |1,200 | |Standard time charged (hours) |2. 40 |24. 00 |26. 40 | | | | PANEL C: SOLUTION | |If SRQV is determined, the journal entry would be: | | | |Work in process [(26. 40)($10)] |$264 | | |SRQV [(4. 00 – 2. 0)($10)] |$16 | | | Accrued payroll | |$280 | |If SRQV is not determined, the journal entry would be: | | | |Work in process [(26. 40)($10)] |$264 | | |LEV [{28. 00 – (1 . 200)(0. 022)}{$10}] |$16 | | | Accrued payroll | |$280 | maintenance is done to that machine, and the inefficiency continues. In addition, because the operator is not charging his/her cost to a job, the cost is being included in indirect labor, and manufacturing costs increase.If the operator had reported the hours correctly, management would have questioned the problem, and the machine would have been fixed or replaced based on how severe the problems were. WHAT NEW VARIANCES HAS PARKER BRASS DESIGNED? In addition to the aforementioned innovations that Parker Brass has made to adapt its standard costing system to its particular business environment, the company has created the following new variances: (The standard-run quantity variance to explain situations where the size of a lot is less than the optimal batch quantity. (The material substitution variance to evaluate the feasibility of alternative raw materials. ( The method variance to assess situations where different machines can be used for the same job. THE STANDARD RUN QUANTITY VARIANCEThe standard run quantity variance (SRQV) represents the amount of setup cost that was not recovered because the batch size was smaller than the earlier determined optimal batch size. Because setup costs are included in the standard labor hours for a standard batch quantity is likely to create an unfavorable labor efficiency variance (LEV). Unless, |FIGURE 2 | |PANEL A: THE FACTS | |Standard price per pound of material Ml |$10 | |Standard price per pound of material M2 |$11 | |Standard material quantity (Ml & M2) to make 100 units (lbs. |2 | |Actual quantity produced (units) |2,000 | |Actual pounds o f M2 purchased and used |43 | | | |PANEL B: WORKINGS | |Standard quantity to produce 2,000 units: | | |Standard material quantity to make 100 units (lbs. ) |2 | |Actual quantity produced (units) |2. 00 | |Hence, standard quantity to produce 2,000 units |40 | | | |PANEL C: SOLUTION | |If MSV is determined, the journal entry would be: | | | |Work in process [(40. 00)($10)] |$400 | | |MEV [(43. 00 – 40. 00)($11)] |$33 | | |MSV [(40. 00)($11 – $10)] |$40 | | | Material—M2 [(43. 0)($11)1 | |$473 | | | | | |If MSV is not determined, the journal entry might be: | | | |Work in process [(40. 00)($11)] |$440 | | |MEV [(43. 00 – 40. 00)($11)] |$33 | | | Material—M2 [(43. 00)($11)] | |$473 | owever, the impact of actual production inefficiencies is separated from setup-related inefficiencies, the LEV reflects the combined impact of these two causes of inefficiencies and is not really useful for taking the necessary corrective action. See Figure 1 for an illust ration of this issue. Panel A shows that standard batch quantity is 2,000 units, the standard production during one hour is 50 units, and, hence, 40 standard hours are needed to produce 2,000 units. In addition, it takes four standard and actual hours to set up one batch. Panel B reveals that standard hours for setup and production labor are 0. 002 and 0. 020 per unit, respectively, for a total of 0. 022 per unit.In addition, because actual quantity produced is 1,200 units, the total standard hours chargeable to these 1,200 units is 26. 40 [(0. 002 + 0. 020)(1,200)]. Finally, Panel C shows the recommended journal entry whereby an SRQV is created. This SRQV represents the unrecovered setup costs because 1,200 units were manufactured instead of the standard batch quantity of 2,000 units. Thus, because the company expected to spend $40 [(4 hours)($10 per hour)] on each setup, the setup cost relating to the 800 (2,000 – 1,200) units not produced, or $16 U, is considered an unfavo rable SRQV or the cost of producing small lots. On the other hand, using traditional standard costing, this amount of $16 U would most likely have been categorized as an LEV.Yet there really is no LEV,3 and the variance of $16 U attributed to labor efficiency is merely the unabsorbed portion of the setup cost attributable to the 800 units that were not produced. The advantages of extracting the standard run quantity variance are many. First, the SRQV ordinarily would be included in the LEV and could provide a misleading impression of labor’s efficiency. Second, because just-in-time practices recommend smaller lots and minimal finished goods inventory the SRQV is essentially the cost of adopting JIT Third, to the extent that setup cost and the cost of carrying inventory are competing undesirables, a determination of the cost of small lots could be used in the trade-off analysis against the cost of holding and carrying inventories.Finally, to the extent that this variance can b e separated for each customer, it would reveal how much of a loss was suffered by allowing that customer to purchase in small lots. Such information could be used in future bids. If a customer’s schedule required a smaller lot, then that customer’s job cost could be enhanced appropriately. THE MATERIAL SUBSTITUTION VARIANCE The material substitution variance (MSV) assumes perfect or near perfect substitutability of raw materials and measures the loss or gain in material costs when a different raw material is substituted for the material designated in the job sheet. Substitutions may be made for many reasons. For example, the designated material may not be available or may not be vailable in small-enough quantities, or the company may want to use up material it purchased for a product that it has since discontinued. The usefulness of MSV is discussed in Figure 2. Panel A shows that both materials, M1 and M2, can be used to manufacture a product, and it is assumed that t wo pounds is the standard input per unit for both materials. Material M1 is the material designated in the job sheet, but material M2 can be substituted for M1. The standard cost of M2 ($11 per lb. ) is higher than that for M1 ($10 per lb. ), and M2 is used because M1 is currently not available and a valued customer needs a rush job. 4 Panel B reveals that the standard quantity needed to manufacture 2,000 units is 40 lbs.For the purposes of this illustration, we assume that material price variance (MPV) is detected when material is purchased (in other words, the material account is maintained at standard cost). Hence, Panel C reveals the recommended journal entry whereby MSV is created. The MSV represents the benefit obtained by substituting a more expensive material (M2) for the less expensive material (M1) and hence represents the loss through substitution. The MSV is $40 U because (1) 40 lbs. is the standard quantity of M1 and M2 needed to manufacture 2,000 units, and (2) M2 cost s $1 more per lb. than M1. In addition, the material efficiency variance (MEV) is $33 U because 43 lbs. instead of the standard quantity of 40 lbs. ere used to manufacture 2,000 units. In contrast, the traditional standard costing system might ignore the substitution, and the job might be charged with the standard cost of using 40 lbs. of M2. In that scenario, the job would cost $40 more and could have an impact on customer profitability analysis even though the customer did not request the substitution. Now Parker Brass is evaluating an extension that would be to relax the simplifying assumption that both materials require the same standard input. See Figure 3. It adopts the facts from Figure 2 except that 1. 9 lbs. of material M2 are required for 100 units instead of 2 lbs. for both materials in Figure 2.In this situation, we have two MSVs, one for the price impact called â€Å"MSV-Price† and the other for the efficiency impact, called â€Å"MSV-Efficiency. † Panel C shows the recommended journal entry whereby two MSV variances are created. First, MSV-Price is unfavorable because M2, a more expensive material, is being substituted for M1. As a result, MSV-Price is $40 U as material M2 costs $1 more per lb. than material M1. On the other hand, as you might expect, the MSV-Efficiency is favorable because only 1. 9 lbs. of M2 are required to make 100 units as compared to 2 lbs. required for M1. Thus, MSV-Efficiency is $22 F because each batch of 100 units requires 38 lbs. of M2 against 40 lbs. of M1. The net result of the MSV variances is $18 U [(38 lbs. )($11) – (40 lbs. ($10)], suggesting that, barring any other complications, the substitution of M2 for M1 is not likely to be profitable under existing circumstances. Finally, the MEV using material M2 is $55 U, reflecting the fact that 43 lbs. of material M2 actually were used whereas only 38 lbs. of material M2 should have been used. This variance could have been caused by the fact that M 2 was a new material and required initial learning and other nonrecurring costs. In such a case, the standard quantity of 38 lbs. for 2,000 units may not need to be changed. On the other hand, the MEV variance may have been caused because of the inherent difficulty in working with material M2. In such a case, the standard of 38 lbs. for 2,000 units may need to be amended.In contrast, as was shown in Panel C of Figure 2, the journal entry that is likely to be made using traditional standard costing would completely ignore the impact of material substitution and would likely inflate the cost of this particular job. The advantages of extracting the MSV are as follows. First, determining MSV lets the company assign the MSV cost to a customer whose rush job may have required using a more expensive material like M2. On the other hand, the MSV could be written off if the substitution were made to benefit the company. Also, creating an MSV and breaking it up into its price and efficiency co mponents allows the company to evaluate whether the substitution of M2 for M1 is a profitable one.While all these calculations can also be performed off the accounting system, creating the MSV makes the process a part of the system so a history of such evaluations is available for future reference. METHOD VARIANCE A method variance occurs when more than one machine can be used to manufacture a product. 5 For example, a plant may have newer machines that it normally would expect to use to manufacture a product, so its standards would be based on such new machines. Yet the same plant may also keep, as backups, older and less efficient machines that also could manufacture the same product but would require more inputs in the form of machine and/or labor hours. For this example, we assume that labor hours and machine hours have a 1:1 relationship. 6 As FIGURE 3 | |PANEL A: THE FACTS | |Standard price per pound of material M1 |$10 | |Standard price per pound of material M2 |$11 | |Standa rd material quantity of M1 to make 100 units (lbs. ) |2 | |Standard material quantity of M2 to make 100 units (lbs. ) |1. | |Actual quantity produced (units) |2,000 | |Actual pounds of M2 used |43 | | | |PANEL B: WORKINGS | | |Material M1 |Material M2 | |Standard quantity to produce 2,000 units: | | | |Standard material quantity for 100 units (lbs. ) |2 |1. | |Actual quantity produced (units) |2,000 |2,000 | |Hence, standard quantity to produce 2. 000 units |40 |38 | | | |PANEL C: SOLUTION | |If MSV is determined, the journal entry would be: | | | |Work in process [(40. 00)($10)] |$400 | | |MEV [(43. 00 – 38. 00)($11)] |$ 55 | | |MSV-Price [(40. 0)($11 – $10)] |$ 40 | | |MSV-Efficiency [(40. 00 – 38. 00)($11)] | |$ 22 | |Material—M2 [(43. 00)($11) | |$473 | | | | | |If MSV is not determined, the journal entry might be: | | | |Work in process [(38. 0)($11)] |$418 | | |MEV [(43. 00 – 38. 00)($11)] |$55 | | |Material—M2 [(43. 00)($11 )] | |$473 | a result, the method variance becomes pertinent because the traditional LEV from operating the older machines could potentially include the following two impacts. First, an older machine may need additional labor hours to perform the same task, and the additional hours would be reflected in the LEV. Second, the LEV would include the workers’ efficiency or lack thereof on the older machine.We evaluate the usefulness of the method variance in Figure 4. Panel A shows that both machines, A and B, can be used to manufacture a product. Machine A is the more efficient machine and the one used for setting the standard time. Machine B is the backup. Panel B shows that the standard machine hours needed to produce 1,800 units are 30 on machine A and 36 on machine B, which can be compared to the 35 hours actually used to manufacture 1,800 units on machine B. Panel C of Figure 4 reveals the recommended journal entry whereby a method variance is created. This method variance represents the loss incurred by substituting the backup machine B for machine A.Because machine B’s standard of 36 labor hours is greater than machine A’s standard of 30 hours, there is an unfavorable method variance of $120. On the other hand, because machine B took 35 hours to manufacture 1,800 units instead of its standard of 36 machine hours, there is a favorable LEV of $20. As you can see, while there was a loss incurred by using machine B instead of machine A, the actual usage of machine B was efficient. In contrast, assuming the traditional costing system recognizes that machine B was used, it is likely to charge the job $720 [(36 hours) x ($20 per hour)] instead of the $600 [(30 hours) x ($20 per hour)] that would have been charged if machine A had been used. Here are the advantages of extracting the method variance.First, the impact of the method variance ordinarily would be included in the LEV and would provide a misleading impression of labor’s productivity. Sec ond, the method variance could be used to isolate the additional cost that was incurred during the year by operating machine M2. This could permit a trade-off between purchasing a new machine |FIGURE 4 | |PANEL A: THE FACTS | |Machine A: standard time needed for one unit (minutes) |1. 0 | |Machine B: standard time needed for one unit (minutes) |1. | |Labor rate per hour |$20 | |Actual quantity produced (units) |1,800 | |Actual labor hours used to make 1,800 units using machine B |35 | |Actual labor cost |$700 | | | |PANEL B: WORKINGS | | |Machine A |Machine B | |Standard hours needed for 1. 800 units on: | | | |Standard time needed for one unit (minutes) |1. 0 |1. | |Actual quantity produced (units) |1,800 |1,800 | |Hence, the standard hours needed |30 |36 | | | |PANEL C: SOLUTION | |If method variance is determined, the journal entry would be: | | | |Work in process [(30. 00)($20)] |$600 | | |Method variance [(36. 00 – 30. 00)($20)] |$120 | | |LEV [(36. 00 – 35. 0)($2 0)] | |$ 20 | |Accrued Payroll | |$700 | | | | | |If method variance is not determined, the journal entry might be: | |Work in process [(36. 00)($20)] |$720 | | |LEV [(36. 00 – 35. 0)($20)] | |$ 20 | |Accrued Payroll | |$700 | and continuing to maintain the older machine, especially if tight delivery schedules are not the norm. Finally, the product cost would still be based on the standards for the more efficient new machine, and the job would not be charged a higher cost merely because a less efficient machine was used. That means a job that was completed on the older machine would not be penalized. 7 RELEVANT, NOT IRRELEVANT As you can see from the Parker Brass examples, standard costing has not become irrelevant in the new rapid-paced business environment.Parker Brass not only has managed to modify its standard costing system to achieve disaggregated and timely cost information for timely corrective action, but it has also designed additional variances to determine how set up time relating to small batches should be absorbed, whether an alternative raw material is economically feasible, and how a product’s cost might reflect the use of alternate production facilities. 1Studies reporting on the widespread use of standard costing in the U. S. , the U. K. , Ireland, Japan, and Sweden are summarized by Horngren, Foster, and Datar on page 225 of the 9th edition of their cost accounting text published by Prentice-Hall in 1997. 2C. Cheatham, â€Å"Updating Standard Cost Systems,† Journal of Accountancy, December 1990, pp. 57-60; C. Cheatham, â€Å"Reporting the Effects of Excess Inventories,† Journal of Accountancy, November 1989, pp. 131-140; C. Cheatham and L. R.Cheatham, â€Å"Redesigning Cost Systems: Is Standard Costing Obsolete,† Accounting Horizons, December 1996, pp. 23-31; H. Harrell, â€Å"Materials Variance Analysis and JIT: A New Approach,† Management Accounting, May 1992, pp. 33-38. 3The standard production hou rs needed for 1,200 units were 24 [(1,200) x (0. 020)], whereas the actual labor hours used have been intentionally set at 24. In addition, the standard and actual labor hours for one setup have been intentionally set at four. 4An alternative scenario could have the cost per pound of M2 ($9 per lb. ) being lower than that for M1 ($10 per lb. ) because M2 is used to manufacture other products as well and the company obtains quantity discounts for large purchases of M2. To a limited extent, the rationale behind the method variance is similar to that for the material substitution variance (MSV) discussed earlier. 6That is, the machine does not work independent of the worker. Hence, the labor hours spent on the machine are the same as the number of hours the machine was operated. 7A similar reasoning is applied in situations wherein the routing for the manufacture of a product is amended during the year, possibly because the customer wants an additional processing step. In such a case, the resulting process variance could be charged to the customer. 14-2: Redesigning Cost Systems: Is Standard Costing Obsolete? By Carole B. Cheatham and Leo B. Cheatham, Professors at Northeast Louisana University.SYNOPSIS: Since the early 1980s standard cost systems (SCSs) have been under attack as not providing the information needed for advanced manufacturers. In spite of its critics, SCSs are still the system of choice in some 86 percent of U. S. manufacturing firms. This paper discusses the criticisms of SCSs that (1) the variances are obsolete, (2) there is not provision for continuous improvement, and (3) use of the variances for responsibility accounting result in internal conflict rather than cooperation. Updates for SCSs in the form of redesigned variances, suggestions for dynamic standards, and refocused responsibility and reporting systems are presented. The compatibility of SCSs and its main competitor as a cost system, activity-based costing (ABC), is examined.The auth ors discuss when it is appropriate to use ABC or SCS or some combination of the two. Since Eli Goldratt’s (1983) charge that cost accounting is the number one enemy of productivity in the early 1980s, traditional cost systems have been under attack. Although Goldratt subsequently softened his stand to say that cost rather than accounting was the culprit (Jayson 1987), others were quick to jump on the bandwagon to condemn the cost systems in use. New systems were proposed of which the most popular was activity-based costing (ABC). In spite of all the criticism, a 1988 survey shows 86 percent of U. S. manufacturers using standard cost systems (Cornick et al. 988). A survey by Schiff (1993) indicates that 36 percent of companies use activity-based costing, but only 25 percent of those use it to replace their traditional cost system. It would seem that only about 9 percent (25 percent of the 36 percent) of companies are using ABC as their main system while the vast majority use a standard cost system (SCS). This is not to say that traditional SCSs could not benefit from being updated. However, accountants in industry (as well as academia) seem unaware that a redesigned SCS can provide the information they need, and that updating their present system is an easier process than adopting a new system.The SCS is one vehicle of articulation among managerial, financial and operations accounting, and it is a control system while the candidates for its replacement typically are only cost accumulation systems. In this article the major criticisms of SCSs are examined along with ways that the weaknesses can be remedied or ameliorated. The criticisms relate to the use of specific variances, the lack of provision for continuous improvement, and the fact that administration of the system results in internal competition rather than cooperation. The appropriate use of ABC systems in conjunction with SCSs is also discussed. UPDATING THE VARIANCES IN AN SCSConcerning the var iables analyzed in an SCS, most criticisms center on the overemphasis on price and efficiency to the exclusion of quality. Other criticisms center on the use of the volume variance to measure utilization of capacity while ignoring overproduction and unnecessary buildups of inventory. In making such charges, critics fail to realize variance analysis is not â€Å"locked-in† to a particular set of variables. Standards are only benchmarks of what performance should be. The particular variables used can be changed as the need arises. The following discussion focuses on concerns of the new manufacturing environment—raw material ordering and inventory levels, quality, production levels, finished goods inventory levels and completion of sales orders.Variances Pertaining to Raw Materials The set of variances in Figure 1 centers on the function of raw material ordering and inventory levels (Harrell 1992). The Raw Material Ordering Variance gives information about the effectivene ss of suppliers. It contrasts the raw materials ordered with the raw materials delivered (purchased). Any variation may be considered unfavorable because the goal is to have orders delivered as placed. Too much delivered will result in unnecessary buildups of raw material stocks. Too little delivered is unfavorable because production delays may result. The Price Variance in Figure 1 is the traditional price variance computed on materials purchased.This variance has been criticized on the grounds that over-emphasis on price leads purchasing managers to ignore quality. However, price is a legitimate concern that should not be overlooked. This system also uses a Quality Variance (presented in a following section). If low quality materials are purchased in order to gain a low price, this will result in an unfavorable Quality Variance. Variances Pertaining to Material Inventories and Efficient Use The set of variances in Figure 2 focuses on raw material inventory levels and quantity or e fficiency of material use. The Raw Materials Inventory Variance (Harrell 1992) shows either more material purchased than used (an inventory buildup) or more material used than purchased (an inventory decrease).With the JIT philosophy, purchasing more than used causes an unfavorable variance, while decreasing previous buildups causes a favorable variance. The Efficiency Variance in Figure 2 is based on the difference between the actual pounds of material used and the standard amount for total production. The traditional Efficiency or Quantity Variance is the difference between the actual pounds of material used and the standard amount for good production. The traditional variance is actually as combination of quality and efficiency factors. As can be seen in the next section, quality is better treated in a separate variance. Variances Pertaining to Production Levels and QualityThe next set of variances (Figure 3) turns from input analysis to output analysis and relates to production levels and quality. All cost factors are included in the â€Å"standard cost per unit† including labor and overhead. The Quality Variance is the standard cost of units produced that did not meet specifications (the difference between total units produced and good units produced). In traditional variance analysis, this variance is buried in the efficiency variances of the various inputs. Ignoring labor and overhead, suppose a company used two pounds of material per finished unit at a standard cost of $1. 00 per pound. Further assume they used 4,900 pounds in the production of 2,500 total units, of which 100 were defective.Traditional variance analysis would show an unfavorable Efficiency Variance of $100 computed on the difference between the standard cost of the 4,800 pounds that should have been used to produce the 2,400 good units and the 4,900 pounds actually used. A better breakdown of the traditional variance shows a favorable Efficiency Variance of $100 and an unfavorab le Quality Variance of $200. The Production Department did use only 4,800 pounds to produce 2,500 units that should have taken 5,000 pounds. The fact that some of these units were defective should appear as a Quality Variance, as it does in this analysis. The Quality Variance is $200 unfavorable representing $2. 00 per unit invested in 100 defective units.This analysis also yields a Production Variance based on the difference between the standard cost of good units produced and the scheduled amount of production. The goal in advanced manufacturing environments is to produce exactly what is needed for sales orders (scheduled production). A variance from scheduled production either way is unfavorable because too much production results in unnecessary buildups of inventory while too little results in sales orders not filled. As is the case with the Raw Material Inventory variance, the critical factor is the cost of the capital invested in excess inventories. It is desirable to highligh t this cost in responsibility reports by applying a cost of capital figure. o the excess (Cheatham 1989). For simplicity’s sake, the above illustrations of input analysis pertain to materials. Labor and volume-related variable overhead can be analyzed in a similar manner. Since there is no difference between labor purchased and labor used in production, the labor input variances would include the traditional Rate Variance and the updated Efficiency Variance. Other than showing a budget variance for the various elements of fixed overhead, there is no point in further analysis in terms of a Volume Variance. The updated Production Variance serves the same purpose in a far better fashion. VARIANCES PERTAINING TO SALES ANALYSISThere are various ways to analyze sales. One method is to use price, mix and volume variances. A further analysis is to break down the volume variance into market size and market share variances. The analysis in Figure 4 is presented because it articulates w ell with the output analysis for production. The sales variances indicate customer service as well as the cost of lost sales. The variances use budgeted contribution margin as a measure of opportunity cost. The Finished Goods Variance indicates the opportunity cost associated with orders completed but not shipped. A delay in shipment causes a loss because of subsequent delay in receiving payment.The Sales Order Variance represents the opportunity cost associated with sales orders that could not be filled during the time period for whatever reason—lack of capacity, scheduling problems, etc. The above discussion presents a variety of variances that are not used in a traditional standard cost system. The variances can be used for control purposes alone or can be integrated into the financial accounting records (Cheatham and Cheatham 1993). The system is not intended to be a generic solution for any company’s needs. It is intended to demonstrate that, with a little creativ ity, it is possible to redesign SCSs to measure variables that are important to a particular company in today’s manufacturing environment. UPDATING THE SCS FOR CONTINUOUS IMPROVEMENTIn a manufacturing environment in which continuous improvement is a goal of most companies, the charge has been made that SCSs do not encourage positive change. However, static standards based on engineering studies or historical data are not an essential part of an SCS. Standards can be adjusted to be dynamic, or changing, by any of several methods. Using Prior Periods’ Results as Standards One way to have dynamic standards is to use last period’s results as standards. This idea has been advocated in the past as a way for small business to have the benefits of standards without the expense of engineering studies (Lawler and Livingstone 1986; Cheatham 1987).The objection can be made that last period’s results may not make very good standards if last period was unrepresentative for whatever reason. If this is the case, last period’s results can be modified. Another variation on using past performances as standards is the use of a base period. Comparisons can be made with the base period and all subsequent periods, if desired. Boer (1991, 40) describes a system of using a base year as a â€Å"pseudo flexible budget† from which unit costs are developed. He comments that the system â€Å"encourages continuous improvement and never implies that a level of performance is adequate. Instead, it encourages managers to improve continuously. † Still another variation on using prior periods’ results as standards is the use of best performance-to-date (BP).BP is a rigorous standard for self-improvement because it motivates workers as well as managers to exceed all past performance. Using Benchmarking Although past performance costs may be used in a variety of ways to formulate dynamic standards, any such system has an inward focus. Benchma rking looks outside the firm to the performance of industry leaders or competitors. Benchmarking typically is applied to performance measures rather than standard costs. However, using the performance of industry leaders as a standard provides motivation to become world-class in much the same fashion. The primary barrier to use of benchmarking standards is, of course, lack of information. Edward S.Finein (1990), former vice president and chief engineer of Xerox, lists the following sources of information when using benchmarking for performance measures: (1) external reports and trade publications; (2) professional associations; (3) market research and surveys; (4) industry experts; (5) consultants’ studies; (6) company visits; and (7) competitive labs. In the absence of hard information, an approach may be taken to estimate the performance of industry leaders. Trying to meet the supposed standards of industry leaders (or other competitors) can have results that are useful as long as the company is striving toward beneficial goals. Using Moving Costs Reductions Still another way to have dynamic standards is through use of predetermined cost reductions. Horngren et al. 1994) describe a system of what they call a â€Å"continuous improvement standard cost† or a â€Å"moving cost reduction standard cost. † This system reduces the standard cost by a predetermined percentage each time period, such as a one percent reduction in standard cost per month computed by setting the new standard at 99 percent of the previous month’s standard. The question that their system raises is how to determine the amount of the cost reduction. One possibility is the use of cost improvement curves. Cost improvement curves are a new variation of the old learning curve idea. Learning curves were based on reduction of direct labor costs due to learning by the workers.With a large percentage of product conversion being brought about by automated equipment rather than laborers, potential cost reductions relate to the experience factor for the organization as a whole which may be measured by cost improvement curves. Pattison and Teplitz (1989) calculate the new rate of learning for an organization that replaces labor with automated equipment as: Ratenew = Rateold + (1 – Rateold) * L * R where Rateold is the rate of learning for the old system, L is the proportion of learning attributed solely to direct labor stated as a percentage, and R is the proportion of direct labor being replaced. The formula actually reduces the learning rate applicable to labor only, the assumption being that workers can learn but not machinery.An updated version of the formula is needed which encompasses factors such as managers’, supervisors’ and engineers’ experience. The Japanese stress the formula 2V=2/3C, or if volume is doubled, the cost should be two-thirds of what it was originally. This formula equates to a 67 percent learning cur ve which represents a high degree of learning. However, their attitude is that learning does not just happen—it should be made to happen. Using Target Costs Another idea borrowed from the Japanese is the use of target costs based on the market. Target costs are used in Japan primarily for new products that are still in the design stage. The idea is to set a cost that is low enough to permit a selling price that is viable on the market.The price is the starting point for calculating costs, and the various costs are backed out from the price. Typically, the target cost is very low. Hiromoto (1988) describes the use of target costs at the Daihatsu Motor Company. First, a product development order is issued. Then an â€Å"allowable cost† per car is calculated by taking the difference between the target selling price and the profit margin. Then each department calculates an â€Å"accumulated cost† based on the standard cost achievable with current technology. Finally , a target cost is set somewhere between the allowable and accumulated cost. All this takes place before the product is designed.The design stage typically takes three years. When the product is finally in production, the target cost is gradually tightened on a monthly basis. Later the actual cost of the previous period is used to drive costs down further. Market-based target costs have a strong appeal on a basis for standard costs because they focus on the customer rather than on internal engineering capabilities. However, using target costs is easiest with new products because as much as 90 percent of product costs are set in the design stage (Berliner and Brimson 1988). The way a product is designed determines the way it has to be manufactured and sets the stage for further cost reductions.Standard costs do not have to be static. Dynamic standards can be formulated using a variety of methods including past performance, industry leader’s performance, or target costs based o n predetermined reductions or the market. Market-based target costs have the most intuitive appeal because the focus is on the future and on the customer. However, they may work better for new products rather than for established products. UPDATING MANAGEMENT RESPONSIBILITY AND REPORTING Besides revamping the SCS to better reflect today’s concerns in terms of variables to be measured and continuous improvement, there needs to be improved reporting of variances.Old reporting systems tended to foster internal competition and arguments about whose department was to blame for unfavorable variances. There needs to be an attitude of cooperation among workers, managers and departments. Revised lines of responsibility used with new plant layouts are improving some of the competitive attitudes that once prevailed in manufacturing organizations. Plants that used to feature â€Å"push through† production with large masses of raw materials and semi-finished product moving from one process to another are changing to work cells or similar arrangements. The work cell arrangement features equipment that can process a product from start to finish. Workers in the work cell typically can operate all or several types of machinery.This leaner â€Å"pull through† approach allows a sales order to be rapidly processed within the work cell which decreases cycle time and holds work in process and finished goods inventories to a minimum. The work cell arrangement allows a team of workers to be responsible for the entire product and reduces the likelihood that defects will be passed along to the next department. Along with the work cell arrangement many companies are decentralizing functions such as engineering and making these personnel responsible for a particular work area or product line. With the decentralization, there is more focused responsibility. Decentralization and a team approach to production eliminate many conflicts that once existed.In addition to the new attitudes about responsibility, there needs to be improved reporting. The variances outlined in this paper can be reported in two types of management reports. The report illustrated in Fig. 5 shows the trade-offs between price, efficiency and quality. This type of report can be done on a plant level or department level as well as a work cell level. The price variance for work cells or departments should be computed on material used rather than purchased because this gives a better picture of the trade-offs involved. Upper-level management reports should probably show both types of price variances if there are significant differences between purchases and use.The report illustrated in Fig. 6 shows the effects of variances related to inventories. Raw material excesses at cost, related to both current and past purchases, are listed along with the related cost of capital. In this case it is assumed the excess was held the entire month and the cost of capital was one percent. Work-i n-Process excesses are measured in terms of the Production Variance. This variance measures the difference between scheduled and actual production. Presumably if there were excesses from the previous month, there was an adjustment made in the scheduled production. Cost of capital figures show the effect of holding these excess inventories.In the case of Finished Goods, the crucial factor is the opportunity cost of sales orders not filled measured by the lost contribution margins. Therefore, if orders are completed but not shipped or there is an inability to fill a sales order because of lack of capacity, this is indicated by the Finished Goods Variance or the Sales Order Variance. The illustration assumes a favorable Finished Goods Variance because more sales orders were filled than units produced, indicating a decrease in previous finished goods stock. Although a reporting system such as that illustrated in Figures 5 and 6 may not eliminate all conflicts, it is certainly