Assume that the standards that were developed at Toyota were based upon using more automation and less labor. If Toyota switches to using more labor and less automation, what will be the effect on the following variances? For your answer, chose, favorable, unfavorable or no effect:
1. Labor rate variance
2. Labor efficiency variance
3. Materials price variance
4. Variable overhead rate variance
5. Variable overhead efficiency variance where overhead is allocated based upon machine hours.
A worker forges an automobile part in the forging department at a Toyota Motor Corp. plant in Toyota City, Aichi Prefecture, Japan. Photographer: Tomohiro Ohsumi/Bloomberg April 7 (Bloomberg) -- Inside Toyota Motor Corp.'s oldest plant, where humans have taken over from robots in thwacking glowing lumps of metal into crankshafts a corner. This is Mitsuru Kawai's vision of the future. "We need to become more solid and get back to basics, to sharpen our manual skills and further develop them," said Kawai, a half century-long company veteran tapped by President Akio Toyoda to promote craftsmanship at Toyota's plants. "When I was a novice, experienced masters used to be called gods, and they could make anything." These gods, or Kami-sama in Japanese, are making a comeback at Toyota, the company that long set the pace for manufacturing prowess in the auto industry and beyond. Toyota's next step forward is counter-intuitive in an age of automation: Humans are taking the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process. "Toyota views their people who work in a plant like this as craftsmen who need to continue to refine their art and skill level," said Jeff Liker, who has written eight books on Toyota and visited Kawai last year. "In almost every company you would visit, the workers' jobs are to feed parts into a machine and call somebody for help when it breaks down." The return of the Kami-sama is emblematic of how Toyoda, 57, is remaking the company founded by his grandfather as the CEO has pledged to tilt priorities back toward quality and efficiency from a growth mentality. He's reining in expansion at the world's largest automaker with a three-year freeze on new car plants. GM Recalls The importance of following through on that push has been underscored by the millions of cars General Motors Co. has recalled for faulty ignition switches linked to 13 deaths. "What Akio Toyoda feared the company lost when it was growing so fast was the time to struggle and learn," said Liker, who met with Toyoda in November. "He felt Toyota got big-company disease and was too busy getting product out." While the freeze and spread of manual work may bear fruit in the long run, it could come at the expense of near-term sales growth and allow GM to Volkswagen AG challenge Toyota by deepening their foothold in markets such as China. Toyota slipped 0.6 percent to 5,758 yen at the close of Tokyo trading, compared with the 1.6 percent decline by the benchmark Topix Index. The stock has fallen 10 percent this year. The effort comes as Toyota overhauls vehicle development, where the world's largest carmaker will shift to manufacturing platforms that could cut costs by 30 percent. It also underscores Toyota's commitment to maintain annual production of 3 million vehicles in Japan
