Additional Case 7.1

question 36

Multiple Choice

Additional Case 7.1
Shannon is the CEO of a firm that provides high-tech service support to other small businesses. He plans to revise the performance appraisal system to align it more closely with company goals. The tailored program should be fair and ethical and should produce consistent results.

Shannon wants service employees to work together to maximize service quality. Since the sales force has not been particularly aggressive, sales are lagging. Shannon believes that profits and customer satisfaction will increase if sales people start providing after-sale service to customers.

In the past, Shannon's sales managers have been receiving the same raises, regardless of their effectiveness. Now, Shannon wants to identify and reward the best-performing managers. By comparing managers across functions, Shannon believes he will be able to identify workers who are ready for more challenging responsibilities.

-Refer to Additional Case 7.1.What perspective of the performance appraisal process does Shannon most likely have?

Definitions:

Plantwide Overhead Rate

A single overhead rate calculated for an entire manufacturing plant, used to allocate overhead costs to multiple production departments or products.

Machine Hours

A measurement representing the operational running time of machinery, used in allocating manufacturing overhead costs based on usage.

Overhead Assigned

The process of allocating indirect costs to specific cost objects, such as products or services, based on predetermined rates or bases.

Allocation Base

A criterion or standard used to distribute costs among multiple cost objects in a fair and systematic manner.