Both direct and indirect contributions affect total costs in a manufacturing context. Direct costs include direct materials and direct labor. Indirect costs may include clerical staff, rent, utilities, etc. Indirect costs are incurred regardless of whether any manufacturing takes place. Direct costs are incurred in proportion to the amount of product produced. With increasingly sophisticated manufacturing environments, there is value in associating indirect costs with specific manufacturing activities. The association of a specific indirect cost or activity with a specific manufacturing output gives managers a more accurate picture of the cost of those outputs. The resulting measure is called a Cost Driver. Cost drivers may include machine setups and maintenance, design changes and special requirements from customers, such as inspections. Cost driver analysis is not limited to manufacturing. It can also apply in the services sector. Whether in manufacturing or services, meaningful association of indirect costs to output can be complicated and subjective. Whenever possible, objective measurements should be identified that clearly tie an indirect cost to an output in a consistent way. From Management Accounting: Cost Driver: A cost driver is an activity or variable that causes a cost. For example, increased production volume causes increased investment in production equipment and, in turn, higher levels of machine depreciation. The number of miles driven in a car is the cost driver for the cost of gasoline. The term cost driver is also used for the activity whose quantity is the denominator for a cost driver rate or predetermined overhead...

“There’s no such thing as business ethics”, argued John C. Maxwell in response to a suggestion that he write a book specifically about business ethics. His response highlighted his belief that there are not independent ethics for business matters and personal matters. In other words, it is unrealistic to expect a plurality of ethics to produce a consistent and beneficial outcome. From the Christian perspective this plurality of ethics is similarly discounted in the book of James 3:8-12. Speaking of the difficulty of managing the tongue, or what we say, James asks: 11 Doth a fountain send forth at the same place sweet water and bitter? 12 Can the fig tree, my brethren, bear olive berries? either a vine, figs? so can no fountain both yield salt water and fresh. In this passage an individual is the fountain or the fig tree. James asks whether it is reasonable to expect that a behavior in one context won’t impact behaviors in another. If a man lies at work, can he claim to be perfectly honest at home. If he takes advantage of a colleague at work, can he then be respectful and sincere with his family in the home. If a man cheats in sports, when the stakes are high, can he subdue that competitive shortcoming in professional settings when pressure mounts? Non-biblical issues also complicate ethical plurality. In the absence of a constant value system, the lines between ethical contexts, such as work, home and sports, may not be clearly delineated. For example, work situations that involve family relationships or sports leagues with work peers. In these situations where ethical contexts are mixed, which ethic takes priority? Even without mixing contexts, situations like workplace sales competitions and decisions that affect families can blur the lines between ethical contexts. Complexity in ethics leads to confusion and can result in a misstep, where behaviours spill over from one context to another. This complexity can be especially tricky in ethical philosophies like John Rawls justice ethics. The assumptions and presumptions necessary to pursue justice ethics as proposed will tend to discourage consensus. The more simple and practical an ethical theory, the more likely it will be applied accurately and consistently. Moral Philosophy Prevailing...

Ethics in business is a game, not unlike poker, argues Albert Carr in a 1968 paper entitled “Is Business Bluffing Ethical?”. Throughout his paper he argues that there is an ethical divide between personal ethics and business ethics, and that what may be unacceptable in personal matters, is not only acceptable in business matters, but expected. About 15 years later, Norman Chase Gillespie published a counterpoint to Carr’s paper entitled “The Business of Ethics”. Gillespie’s position is that there should not be as much license for business matters as Carr proposes, however, he stops far short of arguing for an absolute. Context drives the turning points in each argument from Carr and Gillespie. One main difference between their arguments is found in the assertion by Gillespie that morals represent an absolute that applies in all contexts, while implying that Carr throws morals out when promoting business ethics as a game. Carr does discuss morals, but not in their impact on business, instead taking the position that in the business context, the dominant guiding principle is law, not morals. What is right in business is determined not by morals or conscience, but by what is lawful. Carr does cede that  in circumstances where non-legislative stakeholders, such as clients, take a deep interest in a matter, that can also sway the business outcome. In this case, the choice is not made based on any right or wrong, but instead based on what is prudent and economically sound. Relativism enters into Gillespie’s arguments as he introduces the concept of a “moral rule”. When he originally published his paper in 1983, society may have had a narrower view of what moral rules applied to groups of people, so that some of the relativism observed in Gellespie’s arguments may be a reflection of contemporary society and culture. For example, he argues that lying to save a life is acceptable. He also argues that putting the driver of another car at risk is better than threatening oncoming traffic or sacrificing one’s self to preserve the safety of others. These examples are far from absolute and he provides no justification as to why his moral conclusions ought to be shared by others, which weakens his arguments. Dilemma...

My assigned term paper topic in Managing in a Global Economy was The Disunited States of America. The question posed was whether or not it could happen. I explored this from economic and ideological perspectives, drawing on the American Revolution and the Civil War as historical precedents. In both cases, economic pressure was the primary driver in favor of secession. Ideological division exacerbated existing economic tension. My conclusion from the paper is that it’s unlikely to happen, at least sometime soon. Secession in the United States is possible, but very improbable. Arguments that the government has failed in its constitutional duties and secession is the most logical course fail to capture the most likely outcome: increased economic hardship and decreased opportunity in a shrinking global economy. The economic costs and risk of global fallout is so high that a rift is unlikely to occur until conditions domestically deteriorate to a point that a significant proportion of the population believes there is no possible way to reform the existing government. Historically two very strong precedents for secession include the American Revolution and the Civil War. In both cases, economic duress was the dominant driver leading up to the conflict that brought secession. Secondary ideological divisions, of liberty in the revolutionary conflict and slavery leading up to the Civil War, compounded economic pressure, but were not sufficient on their own to lead to secession. Here’s a prezi I created to present my term paper to my class, followed by the actual term paper. Download The Disunited States of America Here’s the handout I used along with the presentation. It’s a short quiz on economic aspects of the constitution. I’ll put the answers in as a comment after the presentation. Download the...

China and India are the two most populous countries in the world. Despite relatively small growth rates when compared to the world, 1.312% for India and 0.481% for China, they still add every 22,271,565 new people to the world every year. In some cases, the size of the population has prompted government intervention, such as China’s one-child policy for urban residents. Infrastructure throughout India has struggled to keep pace with the burgeoning population. In both cases, the sheer mass of available workers has produced an economic engine built on top of cheap labor. Despite impressive growth, both of these countries have relatively fragile economies with high dependence on foreign allies. Emerging economies China and India are identified as emerging economies. Political and regional conflict and instability  over the last century has caused some setbacks economically. China has only operated as a market-oriented economy for the last few decades, during which time it has seen extensive growth. India has focused on the IT industry and has made great headway in winning business, although the appeal to Indian IT services is often the low cost relative to other sources. As a result, they have not enjoyed the high economic benefit from their IT outsourcing that might be expected. Fragile economy While both economies are growing, they are fragile. Risks for these two economies include unrest and discontent among citizens. In the case of China, the current communist government only goes back about 70 years, which is a relatively short period of time. Currency issues affect both countries. China has been under pressure from western trading partners in recent years to voluntarily increase the value of their currency against the Dollar and other currencies. Trade deficits and high exports are the reasons most often cited for this pressure. An increase in the value of the Yuan would benefit only the west, and not Chinese interests, which understandably causes reluctance on the part of the Chinese government to comply. Inflation poses a substantial threat to social programs and devaluation of the dollar conflicts with western interests. India has experienced growth economically, but their infrastructure has not kept pace. There is a stark contrast between urban and rural areas, with a great deal of...