geeta n company case study

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Vinay Kumar asked about 3 years ago

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered about 3 years ago

Geeta & Company has experienced increased production costs. The primary area of concern identified by management is direct labor. The company is considering adopting a standardcost system to help control labor and other costs. Useful historical data are not available becausedetailed production records have not been maintained.To establish labor standards, Geeta & Company has retained an engineering consultingfirm. After a complete study of the work process, the consultants recommended a labor standard of one unit of production every 30 minutes, or 16 units per day for each worker. The consultantsfurther advised that Geeta's wage rates were below the prevailing rate of Rs per hour.`Geeta's production vice-president thought that this labor standard was too tight, and fromexperience with the labor force, believed that a labor standard of 40 minutes per unit or 12 units per day for each worker would be more reasonable. he president of Geeta & Company believed thestandard should be set at a high level to motivate the workers and to provide adequate informationfor control and reasonable cost comparison. After much discussion, management decided to use adual standard.

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 20180702 145746 Vaibhav answered about 3 years ago

Geeta & Company has experienced increased production costs. The primary area of concern identified by management is direct labor. The company is considering adopting a standardcost system to help control labor and other costs. Useful historical data are not available becausedetailed production records have not been maintained.To establish labor standards, Geeta & Company has retained an engineering consultingfirm. After a complete study of the work process, the consultants recommended a labor standard of one unit of production every 30 minutes, or 16 units per day for each worker. The consultantsfurther advised that Geeta's wage rates were below the prevailing rate of Rs per hour.`Geeta's production vice-president thought that this labor standard was too tight, and fromexperience with the labor force, believed that a labor standard of 40 minutes per unit or 12 units per day for each worker would be more reasonable. he president of Geeta & Company believed thestandard should be set at a high level to motivate the workers and to provide adequate informationfor control and reasonable cost comparison. After much discussion, management decided to use adual standard. The labor standard of one unit every 30 minutes, recommended by the consultingfirm, would be employed in the plant as a motivation device, while a cost standard of 40 minutesper unit would be used in reporting. Management also concluded that the workers would not beinformed of the cost standard used for reporting purposes. The production vice-president conductedseveral sessions prior to implementation in the plant, informing the workers of the new standardcost system and answering questions. The new standards were not related to incentive pay butwere introduced when wages were increased to Rs7 per hour.The standard cost system was implemented on January 1, 19--. At the end of six months of operation, these statistics on labor performance were presented to executive management: *U = Unfavorable; F = FavorableMaterials quality, labor mix, and plant facilities and conditions have not changed to a significantextent during the six month period.

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