Question

When the operating costs for Bill Smith's production department were released, he was sure that he would getting a raise. His costs were $20,000 less than the planned cost in the master budget. His supervisor informed him that the results look good but that a more in-depth analysis is necessary before raises can be assigned. What other considerations could Mr. Smith's supervisor be interested in before raises can be assigned?

Answer 1

Bill Smith's supervisor may consider factors such as the accuracy of cost calculation, performance evaluation, and comparison to other departments before assigning raises based on Bill Smith's lower operating costs.

Step-by-step explanation:

Before assigning raises based on Bill Smith's lower operating costs, Bill Smith's supervisor may consider several other factors:

1. Accuracy of the cost calculation: The supervisor may want to verify that the operating costs were accurately determined and that there were no errors or omissions in the calculation.
2. Performance evaluation: The supervisor may evaluate Bill Smith's overall performance, including factors such as productivity, quality of work, and adherence to company policies and procedures.
3. Comparison to other departments: The supervisor may compare Bill Smith's department's performance and operating costs to other departments in the organization to ensure fairness and consistency in assigning raises.