While managers have always been challenged to produce results, modern business environments require that managers must produce results in a time of rapid technological and social change. Production volume variance is a statistic that measures the amount of overhead applied to the number of goods produced. This tool helps corporate managers like in FuturePrint understand whether their staff can produce goods in line with the firm’s long-term expectations, enabling a proper amount of overhead to be allocated to the project. In FuturePrint the actual production is higher than the budgeted production. Therefore, Production variance is favorable since total fixed overhead is assigned to a higher number of units resulting in a lower production cost per unit. It is useful for spotlighting those areas in the production process that are using more labor hours than anticipated. Unfavorable production-volume variance helps the company improve the underlying process to reduce the number of production hours required, hence improving productivity. Measures can be taken like using a simplified product design to minimize assembly time. The labor standard may not reflect recent changes in the rates paid to employees. For example, the standard may not reflect the changes imposed by a new union contract.
The primary motivation for Rick’s directive is the ability to instill in the workers a sense of vital commitment and desire to contribute to organization goals. Ability to control and coordinate the efforts of the employees towards goal accomplishments. Increasing the amount of automation in production added to the motivation of the workers. Employees had a clear understanding of the quality and quantity of work expected from them. Ricks directive could have been continuous information about how effectively they are performing relative to expectations. Moreover, it would have been the employee’s performance that did not meet expectations was addressed. Employee performance is tightly related to organizational performance, effective and efficient employee performance will positively influence organizational performance.
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