Labour And Supervision Costs example essay topic
241 words
The cost incurred for this period is as follows: 5000 Compared to expected cost Direct Materials 110,000 +10,000 Direct Labour 70,000 +7,500 Power 18,000 SAME Repairs 30,000 +7,500 Supervision 20,000 +4,000 Rent and rates 8,000-1000 Insurance 17,500 SAME Total 273,500 +28,0002.2 Potential Reasons for variations: O Due to an increase in repairs by lb 7,500, the cost of material is going to increase. This is shown as an increase of lb 10,000. Because more work is carried out through higher repairs more labour and supervision costs are also incurred at lb 7,500 for labour and lb 4,000 for supervision. O The work force could be under skilled therefore are making mistakes, causing wastage in material, so additional material has to be purchased for lb 10,000. As they are not fully trained mistakes could be occurring causing a rise in repairs by lb 7,500. To carry out this additional work labour cost and supervision cost also goes up by lb 7,500 for labour and lb 4,000 for supervision.
2.3 Recommendations I would recommend this be looked into and some key management indicators set to correspond with the organization objectives and strategy. For example: O Unit production per employeeO Cost of unit production per employeeO Labour cost per pound of sales revenue Just as a business should be measured on more than one financial result, it is also necessary to use more than one performance indicator.
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