Downsizing, Kaizen Costing, and Ethics. Biltmore Insurance Corporation instituted kaizen costing in 1997 for all of its
Question:
Downsizing, Kaizen Costing, and Ethics. Biltmore Insurance Corporation instituted kaizen costing in 1997 for all of its divisions. During 1996, the Claims Division incurred costs of \(\$ 5.6\) million. Seeking to dramatically reduce costs, the manager of the Claims Division, Gail Norman, thought about cutting \(\$ 200,000\) in payroll costs for 1997 by eliminating all part-time claims adjuster positions. However, she soon realized that her kaizen cost target for 1998 would then be
\(\$ 5.4\) million. Therefore, she decided to institute her reforms much more slowly and, consequently, reduced payroll costs by only \(\$ 40,000\) during 1997 .
Required:
Discuss the ethical dimension of Gail Norman's dilemma.
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson