StudentShare solutions
Triangle menu

Planning and Controlling Direct Labor Costs - Essay Example

Nobody downloaded yet

Extract of sample
Planning and Controlling Direct Labor Costs

In the current competitive business environment, companies that cannot afford to charge low prices on their products are likely to be excluded from markets. In this regard, cost cutting allows firms to employ low pricing strategy and still make profits (Burns, Quinn, Warren & Oliveira, 2013). Business costs come in many forms. As noted by Burn et al. (2013), manufacturing companies incur expenses in acquisition of raw material and labour among other things. Sometimes it is not easy to assess the value contributed to the company’s 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, planning and control of direct labour costs is one of the most challenging tasks for businesses. This paper discusses direct labour costs in relation to a soda ash mining 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 May this year to help streamline its operations. After analysing the company’s operations, Paul Patterson (the expatriate) asserted that the Magadi’s 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 company’s direct labour costs. The specific objectives include: (1) determining actual contribution of individual employees to product output 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) Enhancing maximum output from employees. Analysis 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 workmen’s compensation insurance among other things. This excludes labour expenses related 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 before 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 ...Show more
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Planning and Controlling Direct Labor Costs Essay”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/113187-planning-and-controlling-direct-labor-costs
(Planning and Controlling Direct Labor Costs Essay)
https://studentshare.net/finance-accounting/113187-planning-and-controlling-direct-labor-costs.
“Planning and Controlling Direct Labor Costs Essay”, n.d. https://studentshare.net/finance-accounting/113187-planning-and-controlling-direct-labor-costs.
  • Cited: 0 times

Summary

Planning and Controlling Direct Labour Costs Name: Grade Course: Date: Outline Introduction…………………………………………………………………….….……….3 Importance of the study…………………………………………………………….….…….3 Analysis…………………………………………………………………………
Planning and Controlling Direct Labor Costs
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Planning and Controlling Direct Labor Costs"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Planning and Controlling Capital Expenditures
According to Nice (2002), Capital expenditures imply outlays of cash that are mostly needed to upgrade a business asset. Capital expenditure can sometimes be referred to as capital spending or capital expense.
13 pages (3250 words) Essay
Analyzing Direct Costs
Assembly has a rate $8.20, multiply that by the their 2,000 projected hours and the total is $16,400. Fabrication has a rate of $7.50 and 1500 projected hours. Multiplied together this gives you a total of $11,250. Production’s projected labor cost at the $9.00 labor rate and 750 projected hours is $6,750.
3 pages (750 words) Essay
Planning and Controlling Purchases and Materials Usage
Materials management activities related to purchasing, storing and providing goods and services for production are headed by the Purchase Manager and Stores Manager respectively. The quality, quantity, place and time for supply of materials are predetermined for smooth flow of production in the organization.
6 pages (1500 words) Essay
Use of computers in construction cost controlling process
The technique of cost controlling forms an important weapon in the fight to manage project costs and to ensure those clients receive value for money. It is now cleared that costs are not confirmed to initial construction, but also relate to operational aspects such as maintenance, cleaning, energy usage and functional occupancy.
12 pages (3000 words) Essay
Control labor costs
The employees are indispensable resources of a company. They are responsible for the productivity, and profitability of any venture undertaken by the company at a particular time. The labor force and its attendant issues are the vital concerns of employers everywhere in the world.
3 pages (750 words) Essay
Use Of Computers In Construction Cost Controlling Process
Cost controlling, as a tool to aid the process of design development, has been around for the best part of half a century, however, it is only in recent times that the technique has undergone a considerable facelift.
12 pages (3000 words) Essay
Government price analysis of direct and indirect costs
This paper aims to discuss some of the issues underlying with direct and indirect costs during their analysis process. Governmental analysis for direct and indirect cost is
1 pages (250 words) Essay
Lesson 16 - Analyzing Direct Costs
The rates in Question 1 are different from the rates in Question 3 because the actual amounts have changed. The actual factory overhead amount for both question 1 and question 3 are different. Likewise, the actual hours for both the direct labor hours
4 pages (1000 words) Essay
Analysis of Direct Costs
“Direct Cost: is a cost that can be directly traced to a cost object, such as a product. Direct Materials: become a physical part of the finished product. The cost of direct
1 pages (250 words) Assignment
Planning and Controlling Direct Labor Costs
However, in order to control the cost of the product or inventory, it is extremely essential to perform extensive planning. This might prove effective for the organization, in enhancing its selling cost that may reduce its
9 pages (2250 words) Term Paper
Comments (0)
Click to create a comment
Let us find you another Essay on topic Planning and Controlling Direct Labor Costs for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us