Showing papers on "Overhead (business) published in 1989"

Strategic Implications Facing Small Manufacturers: The Linkage between Robotization, Computerization, Automation and Performance

Abstract: (Tables and illustrations not shown) The United States has a long tradition of entrepreneurship in manufacturing by small and medium-sized businesses. This tradition is often associated with the "rugged individual's common sense" approach to business and enterprise, which has been paraphrased as, "If it ain't broke, don't fix it." Whether this reactive type of management was ever appropriate is doubtful, but in the present era many U.S. business owners are being compelled to take a much more proactive stance in manufacturing and operations control. This study will look at the technological adaptations of small businesses and how these relate to the manager's evaluation of firm performance and barriers to greater technology use. Small manufacturers in the United States face new technological challenges which are forcing them to consider more cost-effective production systems and operations. This forced implementation of new technologies is due to recent computer advances, greater domestic and international competition, and increased labor costs, all of which are requiring small manufacturers to focus on methods to reduce manufacturing costs, control overhead, improve productivity, and increase product and service quality. One of the first major technological changes to influence small businesses was the introduction of numerical control, which enables firms to use coded instructions to control and operate machines. In addition to the linkage of numerical codes and computers, a revolution in computer hardware technology is taking place with the advent of microcomputers. The microcomputer, a smaller, easier to use, and less costly alternative than the mainframe computer, is strongly linked to the growing trend that Lincoln and Warberg describe as small businesses entering the "high-tech world." However, even in small businesses where microcomputer software and hardware have been been purchased, the predominant use has been for processing transactions (i.e., listing customer names and addresses, items purchased, date of sale, marketing costs) rather than as a decision-making tool in the operations and manufacturing areas (i.e., analyzing inventory levels or sales effectiveness.) Experts predict that new technology, as it develops, will create new uses and applications for small businesses. Currently, this situation exists with CAD-CAM(computer-aided design/computer-aided manufacturing). With the development of a common database and three-dimensional graphics, small businesses will be able to apply CADCAM technologies to materials handling, automatic assembly, new product innovation, and office automation.3 Increased competition (both domestic and international) is the second factor which is spurring small and mediumsized businesses toward greater computerization of tools and machine technology. As large manufacturers employ industrial robots more extensively, small entrepreneurial firms are buying robots to compete with larger firms. In addition to the need to deal more ef fectively with competition, stronger financial performance has encouraged small business owners into more extensive utilization of computerized processes and systems. A few empirical studies have been done which show at least a tentative linkage between the use of technology and performance. Small firms which used computerized systems for forecasting and aggregate planning, for example, financially outperformed those firms not employing such techniques. Some activities critical to better financial performance are analyzing changes in target customers, making sales projections, and preparing a monthly cash now analysis. Small business can be greatly aided in these planning functions by the use of computers. It seems, then, that the interest in information processing tools, computerized systems, and robotization is justified from a number of standpoints. These systems allow small businesses to reduce costs and improve the efficiency of their operations because they can bring about better materials management, smoother customer relationships, tighter control of finances, and greater overall planning for the future of the firm. …

The state and economic development in Haiti and the Dominican Republic

Abstract: In the search for a “development theory”, during the 1950s and 1960s economists on the whole gave only limited consideration to the behavior of the state. Interest was mainly focused on the role of such factors as capital accumulation, education, transfer of technology, trade strategies etc in the development process. When the state entered the analysis, emphasis was usually put on its positive contribution to development: the state provides infrastructure and overhead capital, it corrects for externalities and designs overall development plans.1

The Resource-Based Relative Value Scale

Abstract: To the Editor.— Hsiao et al 1 concluded that redistribution of 1986 Medicare physician payments according to their Resource-Based Relative Value Scale would have led to 56% increased payments for evaluation and management services and 42% reduced payments for invasive services. A physician with predominantly invasive work would assume a 42% reduction in fees and revenue; with a steady overhead (about 50% of current revenue), however, this would represent an 84% loss of income after expenses. The authors incorrectly assume that relative practice income, or overhead/revenues, would remain constant in any redistribution of fees and revenue. In fact, with a constant overhead, the relative practice income is inversely proportional to revenue. The change in fees would be less than is stated.

Reporting the Effects of Excess Inventories

Abstract: REPORTING THE EFFECTS OF EXCESS INVENTORIES The trend toward manufacturing systems that emphasize lower inventories has caused manufacturers to recognize the problems of overproduction Many company managements have realized they need to become less production-driven and more sales-driven The problem is that traditional cost accounting systems tend to reward overproduction and do not recognize the savings associated with minimizing inventories Absorption costing actually increases net income when inventory levels are increased, even though sales may be unchanged At the same time, the cost of capital required to carry excessive inventories is largely ignored because interest expense is treated as a financing rather than a manufacturing cost In a standard cost system, two basic measures are related to production levels: 1 Computing a volume variance (the usual approach), which shows that fixed overhead has been over-or underabsorbed due to producing above or below the planned production level 2 Computing a marketing variance based on excess or lost contribution margins due to volume of sales above or below the planned sales level While either of these provides useful information, neither shows the cost of excessive production--in fact, overproduction results in a favorable volume variance A better method is to compute overproduction variances, as some companies have begun to do Computing costs of excess production levels can be integrated into a standard cost system; the effect can be evaluated on a timely basis in much the same way price and efficiency variances are currently evaluated From this output, cost of capital computations can be made and used internally for decision-making purposes VARIANCES FOR LABOR AND OVERHEAD To understand a standard cost system that integrates overproduction variances into the system, consider EXHIBIT 1 Production variances for labor and overhead The company has scheduled production of 1,000 units This figure is obtained on a short-run basis by considering sales orders received and minimal inventory needs The idea in just-in-time and other low inventory systems is to schedule from the sales end (the pull-through concept) rather than from the production end (the push-through concept) If production exceeds the scheduled figure, an unfavorable production variance for labor is generated The production variance is equal to the excess hours used for over-production multiplied by the standard labor rate per hour Exhibit 1 shows 1,200 units, or 200 excess units, were actually produced, which results in an unfavorable production variance for labor of $2,000 Customary rate and efficiency variances are computed as usual If actual production exceeds scheduled production, an unfavorable production variance for variable overhead also is generated Assuming a machine-hour basis for applying overhead, the production variance is equal to the excess machine hours used for overproduction multiplied by the standard variable overhead rate Exhibit 1 shows an unfavorable production variance for variable overhead of $3,200 There is no production variance for fixed overhead because the increased production does not result in an increase in this fixed amount The traditional overhead variances are computed as usual Production variances are used internally without being booked However, a journal entry, such as the one in exhibit 1, can be used to integrate the variances into the cost accounting system The production variances are debited, and an account called excess production is credited A credit balance in the excess production account can be viewed internally as a liability account even though generally accepted accounting principles would prohibit it from being treated as such in the financial statements The production variance and excess production accounts can be offset against each other when the excess inventory is sold or, alternatively, at the end of the accounting period …

The role of infrastructure in saudi arabia's development : the relative importance of linkage vs. spread effects

Abstract: During the last decade, Saudi Arabia has had perhaps the largest ever program of investment in transport and related infrastructure. Since the expansion in oil revenues in 1973/74 the country invested in a wide variety of programs to expand not only its road network, but sea and air ports as well. In large part the rationale of this program was based on the presumption that the cost reducing impact of this investment would make private investment much more profitable, and thus stimulate a major expansion in private sector output. The purpose of this paper is to determine the manner in which the country's expanded infrastructure has impacted on the economy. Specifically, a test is made of the Hirschman thesis whereby expanded social overhead capital induces increased levels of private sector investment. The main finding of the study is that Saudi Arabia's expanded infrastructure has stimulated private consumption and non oil incomes, but not private investment. Apparently the demand related spread effects of infrastructure have been stronger than the more direct Hirschman type linkage effects. There are several important policy implications stemming from this result. First, it appears that the country's strategy of infrastructure led development, while successful in generating higher real incomes, has done so at costs that can no longer be sustained. Perhaps more importantly, it appears that more direct programs must be designed to induce expanded private sector investment. (Author/TRRL)