Standard Costing; Variance Analysis; Strategic Considerations In a Wall Street Journalarticle, the author notes that various retailers in the United States (e.g., Meijer, Gap, and OfficeDepot) are turning to consulting firms, such as Accenture, to develop engineered labor standards forcashiers and other retail workers. Monitoring labor-hour consumption (i.e., labor efficiency) undersuch standards involves timing from the first scan of an item in a customer’s purchase to the production of a sales receipt for the customer. A commentator for Meijer states that the system now in usehas enabled the company to more efficiently staff stores while concomitantly increasing customerservice ratings. A representative from another client of Accenture states that the new system allowsthe retailer to determine how many workers to schedule at a given time, resulting in a labor-costreduction of approximately 8%. Engineered standards were developed many years ago in a manufacturing environment, at places such as Westinghouse, by time-and-motion study experts. Unlikefactory workers, however, most retail clerks deal directly with customers. This raises interestingquestions as to whether and how the use of such monitoring (i.e., control) systems affects customerrelations, including customer satisfaction. Uncertainties associated with nonstandard transactions orevents are also thought to have negative motivational effects on employees whose performance isassessed using such engineered standards. (Source: Vanessa O’Connell, “Stores Count Seconds toCut Labor Costs,” The Wall Street Journal, November 13, 2008, pp. A1, A15. For additional information regarding “workforce-management systems,” go to the website of Accenture Ltd. (www.accenture.com/home.asp) and search under “Operations Workforce Optimization.”)Required3. What is it about the activities performed by cashiers that might complicate efforts to develop engineeredlabor standards for this context?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
article, the author notes that various retailers in the United States (e.g., Meijer, Gap, and Office
Depot) are turning to consulting firms, such as Accenture, to develop engineered labor standards for
cashiers and other retail workers. Monitoring labor-hour consumption (i.e., labor efficiency) under
such standards involves timing from the first scan of an item in a customer’s purchase to the production of a sales receipt for the customer. A commentator for Meijer states that the system now in use
has enabled the company to more efficiently staff stores while concomitantly increasing customerservice ratings. A representative from another client of Accenture states that the new system allows
the retailer to determine how many workers to schedule at a given time, resulting in a labor-cost
reduction of approximately 8%. Engineered standards were developed many years ago in a manufacturing environment, at places such as Westinghouse, by time-and-motion study experts. Unlike
factory workers, however, most retail clerks deal directly with customers. This raises interesting
questions as to whether and how the use of such monitoring (i.e., control) systems affects customer
relations, including customer satisfaction. Uncertainties associated with nonstandard transactions or
events are also thought to have negative motivational effects on employees whose performance is
assessed using such engineered standards. (Source: Vanessa O’Connell, “Stores Count Seconds to
Cut Labor Costs,” The Wall Street Journal, November 13, 2008, pp. A1, A15. For additional information regarding “workforce-management systems,” go to the website of Accenture Ltd. (www.
accenture.com/home.asp) and search under “Operations Workforce Optimization.”)
Required
3. What is it about the activities performed by cashiers that might complicate efforts to develop engineered
labor standards for this context?
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