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9609 · 7.1.6

Line and staff — practice questions

Practice and worked examples for 9609 Line and staff. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Health & safety officer (staff) shuts down a production line; line production manager overrides decision to meet order deadline. Analyse the conflict.

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Staff role: Legal duty to enforce safety — advisory authority backed by law.

Line pressure: Delivery targets, bonus on output (2.2.4) — overrides safety.

Risk: Accident, prosecution, reputation damage — far exceeds one order.

Resolution: CEO backs staff role in policy; line manager accountable for both output and safety; no override without documented risk assessment.

Worked example 2

A Production Manager (line) proposes buying a new machine for $150,000. The Finance Manager (staff) is asked to analyse its financial viability. The machine is expected to generate net cash inflows of $40,000 in Year 1, $50,000 in Year 2, and $60,000 in Years 3 and 4. The company's policy is to only accept projects with a payback period of 3 years or less. Calculate the payback period and explain the Finance Manager's advisory role.

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1. Finance Manager's Staff Role: The Finance Manager acts in a staff capacity, providing specialist financial analysis to support the line manager's operational decision. They advise on financial viability but do not have the authority to approve the purchase themselves.

2. Calculation: Payback Period This method calculates how long it takes for the project's cash inflows to repay the initial investment.

  • Initial Investment: 150,000150,000

  • Step A: Calculate Cumulative Cash Flow

    • End of Year 1: 40,00040,000
    • End of Year 2: 40,000+40,000 + 50,000 = 90,00090,000
    • At the end of Year 2, the project has paid back $90,000 of the initial $150,000.

  • Step B: Calculate Amount Remaining

    • Amount needed to break even = Initial Investment - Cumulative Flow at end of Year 2
    • Amount needed = 150,000−150,000 - 90,000 = 60,00060,000

  • Step C: Calculate Time in Final Year

    • The cash flow during Year 3 is 60,000.60,000.
    • Time = (Amount needed / Cash flow in that year) × 12 months
    • Time = (60,000/60,000 / 60,000) × 12 months = 12 months (or 1 full year)

  • Step D: Total Payback Period

    • Payback Period = 2 years + 12 months = 3.0 years

3. Staff Advice to Line Management: The Finance Manager would advise the Production Manager that the project's payback period is 3 years. Since this meets the company's maximum acceptable period of 3 years, the project is financially acceptable on this measure. Their report would recommend it for consideration, while possibly highlighting that it offers no margin for error against the policy. The final decision to invest remains with line management.

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