13 May EXPLAIN POSSIBLE REASONS FOR THE SIMILAR STANDARD COSTS IN PLANTS WITH DIFFERING TECHNOLOGY.
A Multinational group wishes to internally benchmark the production of identical components made in several plants in different countries. Investments have been made with some plants in installing new Advanced Manufacturing Technology (AMT) and supporting this with manufacturing management systems such as Just in Time System (JIT) and Total Quality Management (TQM). Preliminary comparison suggests that the standard cost in plants using new technology is no lower than that in plants using older technology. Requirement: Explain possible reasons for the similar standard costs in plants with differing technology. Recommend appropriate benchmarking measures, recognizing that total standard costs may not provide the most useful measurement of performance. (10marks)
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