Lynx Corp. manufactures windows and doors. Lynx has been using a standard cost s

Question

Lynx Corp. manufactures windows and doors. Lynx has been using a standard cost system that bases cost and efficiency standards on Lynx’s historical long-run average performance. Suppose Lynx’s controller has engaged your team of management consultants to advise him or her whether Lynx should use some basis other than historical performance for setting standards.

There are many approaches to setting standards other than simply using long-run average historical costs and quantities.

List three alternative approaches that Lynx could use to set standards, and explain how Lynx could implement each alternative.

Explanation / Answer

Answer :

Yes, Lynx Corp. needs to adopt some new alternatives to uplift its present standards. The alternative approaches to be adopted may include -

1. Quality Management Techniques i.e. Total Quality Management : It is a technique through which standards may be implemented by an organisation in order to uplift overall quality of products so manufactured in terms of overall efficiency so that the returns may be maximised in terms of profit through increasing sales volume.

Lynx. Corp. should relate itself to this explanation and if thinks fruitful, then it should adopt it.

2. Product planning and Control : It is also another technique regarding planning and looking ahead in the terms of future of a product. It involves generally the organisation and the planning of the manufacturing process. It consists of planning of functions relating to product that is routing, scheduling , dispatching and inspection. Main motive of this technique is to find out deviations and taking measures to eradicate them.

Lynx Corp. , in its organisation should follow the procedure of proper planning of the product in order to minimize the deviations so that efficiency can be increased.

3. Quality of work life : It refers to favorableness or unfavorableness of the organisation's job environment for its employees. Thus, according to this concept , a proper quality of working environment should be maintained in the organisation so that workers may work with full concentration and provide their 100% in the production tasks being caried out.

Lynx Corp. should use this technique so that their workers give 100% and make their production event a success in terms of maximized profits.

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