Sample Essay
The overhead associated with the benefits provided to employees in terms of overtime payment, on an hourly basis, state unemployment and the pension provided to employees and labor at the company would not reduce by a significant amount. Instead this expense can increase as more people are laid off or provided early retirement if the manifold line is outsources. Similarly the benefits of this kind provided to the skilled hourly workers specifically those associated with production will also reduce in the long term due to the outsourcing of the manifold producing. The reduction of this overhead would be due to the reduction in the employee/ labor strength in the production department which would reduce the expenses of benefits for the labor.
In order to effectively budget for the year 1991, considering the manifold line is outsourced to a third party for manufacture, substantial assumptions had to be made. These assumptions pertained included adjusting the estimates of the active production lines at Bridgestone Industries with the incremental growth trend for their respective costs. The costs increase from year to year due to inflation and the changes in the CPI index. As a result it is important to adjust any forecasted figures for the respective growth trend of the costs and revenues.
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