Problem:
Green co. is considering the addition of a new machine in its mold injection plant. Green already has 5 machines that are operating 3 shifts a day. The company uses a standard cost accounting system. The number of pieces that currently are being produced ont eh existing machines is 300 per worker-hour. The vendor of the new equipment has stated that its studies indicate the new machinery should be able to produce 400 pieces per worker-hour. Green engieers agree that under ideal conditions, the equipment should be able to generate 400 pieces an hour, and they support that rate as a labor standard. Production managers point out that the new machine is identical to the machines currently in use, the current production rate is only 300 pieces as the labor rate standard. The accounting staff believes that the most appropriate standard labor rate would be 350 pieces per labor hour.
Q1. What arguments are most likely to be offered by engineering, production and accounting to support their respective proposed standards?
Q2. Which alternative do you support? Consider the motivational aspects of establishing a standard and explain the reasons for your choice.