Idaho Industrial is a medium-size manufacturing corporation in a capital-intensive industry. Currently, actual profits are not meeting expectations. As a result, investment funds are limited and hiring is restricted. These consequences of the corporation's problems have placed a strain on the plant's repair and maintenance program. The result has been a reduction in work efficiency and cost control effectiveness in the repair and maintenance area.
The assistant controller proposes the installation of a maintenance work order system to overcome these problems. This system would require a work order to be prepared for each repair request and for each regular maintenance activity. The maintenance superintendent would record the estimated time to complete a job and send one copy of the work order to the department in which the work would be performed. The work order would also serve as a job cost sheet. Actual cost of parts and supplies used on the job as well as actual labor costs incurred in completing the job would be recorded directly on the work order. A copy of the completed work order would be the basis for the charge to the department in which the repair or maintenance activity occurred.
The maintenance superintendent opposes the program because the added paperwork will be costly and nonproductive. The superintendent states that the departmental clerk who now schedules repairs and maintenance activities is doing a good job without all the extra forms the new system would require. The real problem, in the superintendent's opinion, is that the department is understaffed.
a. Discuss how such a maintenance work order system would aid in cost control.
b. Explain how a maintenance work order system might assist the maintenance superintendent in getting authorization to hire more staff.