Question

For a product made by George Company, last year's standards for labor were 2 hours at $12 per hour. Which of the following considerations should George take into account in setting the standards for this year?

Multiple Choice

A ) George should consider any changes that may influence worker productivity.

B) George should revisit the prior year standards.

C) George should consider whether or not the prior year standards were achieved.

D) All of these answers are correct.

Answer 1

Final Answer is D

1. If any changes like low wages, Less motivated, change in management or any other positive or negative factors which might affect the worker productivity should be considered while setting standard labor hours. Positive factor will reduce the labor time from 2 hours and negative factor might increase labor time from 2 hours.

2. Factor considered while defining previous year standard should be reviewed. If any changes in the current factor or any new factors identified should be considered while setting current year standard.

3. Achievement of prior year Standard or deviation from set standard is to be reviewed while setting current year standard. If deviation from standard is within the permissible limit defined, then previous standard were accurately set. But if deviation is significant, then factor considered while defining previous year standard have changed drastically or we have made wrong estimate of labor efficiency. This will help us in defining our current standard more accurately.