Planning and Controlling Direct Labor Costs Essay

Planning and Controlling Direct boil Costs - Essay ExampleIn the current competitive business environment, companies that cannot afford to maintenance little prices on their products are likely to be excluded from markets. In this regard, cost cutting allows firms to employ low set strategy and still make profits (Burns, Quinn, Warren & Oliveira, 2013). Business cost come in more forms. As noted by Burn et al. (2013), manufacturing companies incur expenses in acquisition of raw material and travail among other things. Sometimes it is not easy to assess the value contributed to the caller-ups product or service by the expenses incurred. According to Burn et al. (2013), many firms find it hard to assess actual parcel of their employees to their products. In this regard, planning and control of direct jab costs is one of the most challenging tasks for businesses. This make-up discusses direct labour costs in relation to a soda ash mining company called Tata Chemicals Magadi. I mportance of the study Tata Chemicals Magadi has been experiencing financial difficulties in the recent years. As a result, the company hired an kick out in May this year to help streamline its operations. After analysing the companys operations, Paul Patterson (the expatriate) maintain that the Magadis financial problems were mainly caused by poor planning and control of labour costs. He and then 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 output in the months of September, October and November. (2) accommodate variances and providing information that will help the company to properly plan and control its direct labour costs. (3) Enhancing supreme output from emplo yees. Analysis Direct labour cost comprises of human resource expenses that goes straight 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, witch allowance, medical cover, social credential contribution and workmens 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 case and transporting to the mar ket. 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