Planning and Controlling Direct Labor Costs Essay

Planning and Controlling Direct Labor Costs - move ExampleIn the current competitive business environment, companies that can non afford to charge low prices on their harvest-homes are likely to be excluded from markets. In this regard, cost barren allows firms to employ low pricing strategy and still make profits (Burns, Quinn, Warren & Oliveira, 2013). Business costs come in many forms. As note by Burn et al. (2013), manufacturing companies incur expenses in acquisition of raw material and apprehend among early(a) things. Sometimes it is not easy to assess the value contributed to the associations product or service by the expenses incurred. According to Burn et al. (2013), many firms find it hard to assess actual contribution of their employees to their products. In this regard, cooking and examine of direct labour costs is one of the most challenging tasks for businesses. This paper discusses direct labour costs in relation to a restorative ash tap company called Tata Chemicals Magadi. Importance of the study Tata Chemicals Magadi has been experiencing financial difficulties in the recent years. As a result, the company hired an expatriate in whitethorn this year to help streamline its operations. After analysing the companys operations, Paul Patterson (the expatriate) asserted that the Magadis financial problems were mainly caused by poor planning and control of labour costs. He therefore proposed a plan to improve labour efficiency. He took office in July 2013 but his progress has never been assessed until today. This study aims at determining the extent to which Patterson has been successful in streamlining the companys direct labour costs. The specific objectives include (1) determining actual contribution of individual employees to product forbiddenput in the months of September, October and November. (2) Reconciling variances and providing information that will help the company to properly plan and control its direct labour costs. (3) Enha ncing maximum output from employees. depth psychology Direct labour cost comprises of human resource expenses that goes directly to processing of products or provision of services (Horngren, Datar & Foster, 2003). In a manufacturing set up, direct labour cost would be the expenses incurred in form payment of wages and other benefits to employees who are directly involved in product manufacturing (Horngren, Datar & Foster, 2003). In this regard, as pointed out by Horngren et al. (2003), benefits may range from house allowance, transport allowance, medical cover, social security contribution and workmens compensation insurance among other things. This excludes labour expenses link to administrative functions such as accounting, human resources and purchases departments. Some functions in manufacturing department such as supervision and other overhead costs are not part of direct labour costs (Horngren et al., 2003). Tata Chemicals Magadi mines and dries soda ash from Lake Magadi befo re packaging and transporting to the market. In this case, direct labour costs comprise of wages and other benefits enjoyed by employees who are directly involved in mining and drying of soda ash. There are seven plant operators in charge of mining machines and 22 in charge of driers. In addition, there are 6 drivers who operate tracks that transport wet ash from the lake to the drying plants 4 in charge of front-end loaders at mining