how to do project(business studies)change in man machine ratio result in cost structure change??
Answers
In any centre of production which has two exactly identical units, one unit where manual production takes place and an automated or machine-run production in the other unit would be ideal for this study. An example would be a hosiery unit which bleaches and dyes fabric for use by garment manufacturers in two separate units, with the use of human labour in one and by the use of machinery in another.
The difference in the way the cost structure is affected would be worked out as follows:
1) What is the total wage per day vs what is the total running cost of machines per day. Machine running cost would depend on the usage of power and/or fuel cost.
2) How many tonnes of fabric is processed in each unit per day.
3) What is the quantum of Chemicals and other material required in each of the two units and what is their total cost.
4) Which finished fabric fetches what price on a daily basis. The total quantity and price to be noted here.
We can thus work out how technological advancement has resulted in improving production processes, cut down on wastage and reduced idle or downtime.