Planning and Controlling Direct Labor Costs Essay

Planning and Controlling Direct Labor Costs - Essay Example 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 exper iencing 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 co mprises 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

Global Water Resources Development - Experience From China Assignment

Global Water Resources Development - Experience From China - Assignment Example During the late 1970’s China implemented widespread economic reforms throughout the nation. As a result, the country’s economy grew remarkably which in turn increased the national wealth. Thus, China accumulated the financial resources necessary to implement the SNWTP. (Yang and Zehnder, 2005, p.1) The northern part of China comprises of a fertile flat plain similar to that of France and Ukraine which is ideal for farming. However, this part of the country is devoid of adequate water resources. Though the Yellow, Huihe and the Haihe rivers flow through north China, these river basins are too dry for the growing of produce. In contrast, southern China has abundant sources of water but is not suitable for extensive agriculture because of its hilly terrain. Therefore, it was essential to conceive the SNWTP which provided a solution to this problem. The project is supposed to link the four main Chinese rivers – the Yangtze Kiang, the Yellow River, the Huaihe and the Haihe through three diversion routes stretching from the southern to the northern part of China across the eastern, western and central parts of the country. The SNWTP is an ambitious project which is being constructed with the help of advanced engineering techniques. (Changming, 2009) Environmental Effects on Regional Ecology and Society Once the first stage of the SNWTP is fully implemented, it is expected to channelize 40-50 km3 water annually from the river Yangtze-Kiang basin in southern China to the northern plains. This will partially address the water scarcity faced by about 300-325 million people residing in north China. However, this will not be adequate to satisfy the water requirement of the entire region. According to a study by the World Bank on the SNWTP, the project would involve the shifting of 300,000 Chinese citizens to the northern plains which is expected to incur a series of economic costs. The report also indicates that the SNWTP is likely to deprive the inhab itants of the Han sub basin, of their essential water supplies. (Berkoff, 2003 p.1) The SNWTP is expected to provide a solution to the dual problems of floods in southern China and drought in the north China by transferring the excess water from the south to the north. The project will involve the construction of three canals linking the Yangtze Kiang river in south China to the basins of the Yellow, Hu