To determine the appropriate adjustment to labor costs, let's examine the specific details given:
- Projected Labor Cost: [tex]$8,423
- Actual Labor Cost: $[/tex]9,541
- Difference: [tex]$1,118 (over the projected amount)
Labor costs for this week are $[/tex]1,118 over the projected amount. To manage costs effectively and improve profitability, it is necessary to address this overage.
Given the options:
a. Labor costs do not need to be adjusted because it will balance out next week.
b. Labor costs should be reduced by scheduling fewer employees and/or reducing hours.
c. Labor costs should be reduced by sending salaried employees home early.
d. Labor costs should be reduced by cutting employee wages.
Examining these options:
- Option (a) assumes the overage will balance without intervention, which might not be a reliable strategy.
- Option (c) is less practical since sending salaried employees home early doesn't directly reduce overall labor hours or costs significantly, as salaried employees typically receive fixed pay.
- Option (d) involves reducing wages, which can have legal implications and negative impacts on employee morale and retention.
The most practical and feasible approach is:
Option (b): Reducing labor costs by scheduling fewer employees and/or reducing hours. This approach allows for a more manageable and direct control over labor costs, ensuring they stay within the projected budget without significantly impacting employee morale.
Thus, the correct answer is:
b. Labor costs should be reduced by scheduling fewer employees and/or reducing hours.
