Many equipment replacement or outsourcing decisions haverelevant qualitative considerations, which may impact theacceptance of...Many...

90.2K

Verified Solution

Question

Accounting

Many equipment replacement or outsourcing decisions haverelevant qualitative considerations, which may impact theacceptance of a quantitative evaluation, regardless of thecalculated outcome. For instance, Steve Smith has completed ananalysis of budgeted volumes for the U.S. division of SwissChocolate Company for the coming year, and noted that the firm’sdirect labor cost of production is significantly less per unit thanits Swiss affiliate plant, but is higher than its Mexican affiliateplant. The Swiss corporate office has indicated that if its costsare not competitive with the Mexican plant, closure of the U.S.plant is imminent. Rick White has proposed a plan for automation ofsome of the processes, which are now completed by hand at the U.S.division. Although the expected results are attractive, five of 10,or half of the production staff, would be terminated. Consider theethical implications of such a decision. Would the replacement ofthe equipment be optimal? What might the impacts be to theworkforce? Would there be potential impacts on financial resultsthat extend beyond the immediate savings proposed in the equipmentreplacement?

Answer & Explanation Solved by verified expert

3.6 Ratings (561 Votes)

First of all let us understand the ethical implications of employee layoffs In todays challeniging markets layoffs are a common strategy to reduce the cost of business Executives and managers sometimes feel as if they have few other options But layoffs can have a serious impact on the remaining employees and the idled workforce See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingMany equipment replacement or outsourcing decisions haverelevant qualitative considerations, which may impact theacceptance of...Many equipment replacement or outsourcing decisions haverelevant qualitative considerations, which may impact theacceptance of a quantitative evaluation, regardless of thecalculated outcome. For instance, Steve Smith has completed ananalysis of budgeted volumes for the U.S. division of SwissChocolate Company for the coming year, and noted that the firm’sdirect labor cost of production is significantly less per unit thanits Swiss affiliate plant, but is higher than its Mexican affiliateplant. The Swiss corporate office has indicated that if its costsare not competitive with the Mexican plant, closure of the U.S.plant is imminent. Rick White has proposed a plan for automation ofsome of the processes, which are now completed by hand at the U.S.division. Although the expected results are attractive, five of 10,or half of the production staff, would be terminated. Consider theethical implications of such a decision. Would the replacement ofthe equipment be optimal? What might the impacts be to theworkforce? Would there be potential impacts on financial resultsthat extend beyond the immediate savings proposed in the equipmentreplacement?