Selected Articles On Employment Management

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292 SELECTED ARTICLES 5. Excess plant cost of reduced production — A. Assume that the plant investment required under present conditions will bear the same ratio to total investment in plant which would be needed if there were no turnover, as the production which would be possible with the present equipment operated by all experienced men would bear to the actual output. In other words, if your reduced produc- tion is 20 per cent your excess plant required is 20 per cent.
This is stated as axio
...matic.
B. Find the present inventory.
C. Figure on the basis of your present loss of production how much less equipment would be necessary without labor turn- over.
D. The difference may be used as basis for figuring the amounts of— (a) Interest on capital.
(b) Depreciation.
(c) Power.
(d) Insurance.
(e) Rent.
(f) Repairs.
Which are due to turnover.
£. Figure by shops, as if separate plants, for each class of skill using equipment and spread cost over turnover in those classes.
Excess plant cost and labor cost of reduced production should be figured separately and then added together, instead of prorating excess plant cost as a burden on the labor cost of lost production, because the burden is not the same man for man, and department for department.' Furthermore, in de- partments where wages are in proportion to efficiency, "ex- cess plant" costs plus excess supervision constitute the sum lost by slow production.


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