need 100 % correct answer

Evaluation of proposal

improvement in performance. TEXTILE MILLS LTD. has been having low profit. The Company appointed a special task force to review performance and prospect of improving the profitability of the Company. The task force submitted the following report to the company. to (1) The company has 1440 looms working in two shifts De are 30 sections of 24 loomis each working in two shifts. Each such Section has 25 weaver and a jobber. Thus there are 1560 direct labourers other than indirect labourers. The working time is between 7 am, and 12 mid night comprising 2 shifts of 8 hrs, each with a half hour interval between shifts. (3) The production cloth is 21.60 lakh metres per month and the realisation is 4.30 per metre. (1) The average wage of direct labourers is 1200 per month and the Exed cost amounting to * 2.90,000 per month. The product cost is 2.75 per metre in addition to direct wages. The following suggestions/advised are be considered for improvement (a) Labour productivity can be improved by changing lay out of the machines. (b) Given the space available with proposed change in layout only 1008 looms can be re-installed with 48 looms in each section. (C) Technically a section of 48 looms can run with 13 weavers, a helper and a jobber. t will be necessary to increase the wages of direct labourers for such sections by *140 per head per month. The company is not going to retrench the labour at present. (d) The company can run a third shift between 12 mid night to 7 am in the morning with a half hour interval. However eight hours wages are to be paid for six and half hour for the night shift. (e) As an initial step the company can switch to three shift workings with 11 sections having 26 direct labourers each shift and 10 sections having 15 direct labourers each shift. Excess hands can be planned for relirement or may leave the job voluntarily. The production for three shift workings will be 26.10 lakh metres. Additional fixed cost will be 50,000 per month for third shift. (f) Only 21.60 lakh metres can be sold at present price of 4.30 per metre and additional cloth of 4.50 lakh metres can be exported at 3,80 per metre, as there is an export offer. Examine the implications of the proposals, for company's profit and give your advice to the company, (8 + 2 = 10 marks)