CHAPTER 5: COST THEORY
Overview of Huxley Maquiladora
Huxley Manufacturing Company, a large firm in the defense industry, is considering a strategic move to shift production from its California plant to Mexico. Tariff reductions made possible by the North American Free Trade Agreement (NAFTA) opened up the potential to enjoy significant cost savings by shifting production south of the Mexican border. Huxley is considering three options. The simplest option is to negotiate a subcontracting arrangement in which a Mexican firm manufactures steering column components (SCCs) according to the specifications of Huxley. The subcontracting firm would then be paid by Huxley on a per-piece arrangement. A subcontracting arrangement would
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Production Theory and Cost Theory
In the previous chapter, we discussed the economic theory of production. Comprehending production theory (the relationship between inputs and output) is a necessary prerequisite to understanding cost theory (the relationship between production and costs). As we noted in the previous chapter, costs are derived from production activities. As worker productivity increases, for example, unit costs decrease.
The relationship between productivity and cost was implied in the Huxley case. Most of the employees at Huxley’s San Diego plant were women. The plant experienced high employee turnover because working with metals was a dirty job. The Huxley Maquila Project Report suggested that young Mexican women might be more productive than their American counterparts because they would be more patient. Hence, even if the going wage rate south of the border was identical to that paid in San Diego, unit costs would be lower due to the increased productivity at a Mexican facility.
As you may recall from the chapter on production theory, in the early stages of production, a firm is expected to encounter increasing marginal product. As inputs are used for production, they become more specialized and the resulting efficiency gains cause production to increase more than proportionately. For example, suppose one worker was capable of producing one unit/hour. By adding a second worker, each worker
Economies of scale: Large companies can produce products at a much lower cost than small ones because the cost per unit drops as the volume of output rises
The former includes garments and textiles, footwear, electronics and various other sectors that require a large labour force to produce its goods or services, whereas the latter, includes—but not limited to— the production of chemicals, petroleum and automobiles. Among the many industries mentioned above, garment and textile and the automotive industries predominate in the maquiladoras. In fact, Wilson (1995) states that the automobile industry in its search for cheaper labor in the wake of increasing competition from the Asia market led U.S. companies like Ford, Chrysler and General Motors to significantly increase their investments in the maquiladoras in the 1980s (Wilson, 1995, p. 142). In regards to the garments and textiles, Billes (2003) argues that the movement from the border regions the interior parts was most apparent for firms that produced garments and textiles. Moreover, the search for cheaper labor as wages in the urban and northern border regions were rising led firm to migrate to poorer states like Yucatan (Billes, 2003, p.
According to Webster’s New World Dictionary, bravery is “possessing or exhibiting courage or courageous endurance” (Agnes 178). Oftentimes, people are commended for acts of bravery they complete in the heat of a moment or overcoming a life-changing obstacle. Rarely one is commended for simply living a brave life, facing challenges they do not even understand. The characters in the Aldous Huxley’s Brave New World live a peculiar lifestyle demonstrating bravery for just breathing. Although Huxley’s ideas are surfacing today, the dystopia he creates is unrelatable . The genetic make-up of these men and women is different, creating a human lacking basic function of life. In Western Europe an individual forms in a laboratory, “one egg, one embryo, one adult-normality. But a bokanovskified egg will bud, will proliferate, will divide. From eight to ninety-six buds, and every bud will grow into a perfectly formed embryo, and every embryo into a full-sized adult. Making ninety-six human beings grow where only one grew before. Progress” (Huxley 6). The dystopian way of reproduction rarely involves a man impregnating a woman. Huxley’s characters are born in a laboratory. These class divided people are manipulated to be personality less , sex-driven, dumb-downed, assembly line workers. Brainwashing from birth conditions them to go through the motions without doubting their purpose. Government controllers are not looking out for the egg at all, simply manufacturing them to keep the
Aldous Huxley’s “Brave New World” highlights the theme of society and individualism. Huxley uses the future world and its inhabitants to represents conflict of how the replacement of stability in place of individualism produces adverse side effects. Each society has individuals ranging from various jobs and occupations and diverse personalities and thoughts. Every member contributes to society in his or her own way. However, when people’s individuality is repressed, the whole concept of humanity is destroyed. In Huxley’s “Brave New World”, the concept of individualism is lost through hyperbolized physical and physiological training, the artificial birth and caste system, and the censorship of religion and literature by a
In his text Brave New World Aldous Huxley imagines a society genetically engineered and socially conditioned to be a fully functioning society where everyone appears to be truly happy. This society is created with each person being assigned a social status from birth, much like caste system in modern society or the social or the social strata applied to everyday society. Huxley shows the issues of class struggle from the marxist perspective when he says the structure of society in relation to its major classes, and the struggle between them as the engine change its major classes. Huxley describes a perfect society created through genetic engineering where each individual is assigned a class from the time of being . In Brave New World by Aldous Huxley it states “Why not? Bernard’s an Alpha Plus. Besides, he asked me to go to one of the savage reservations with him. I’ve always wanted to see a savage reservation. But his reputation?”(Huxley 123). Clearly the social interactions of the upper castes are a little more nuanced than a simple matter of agreed caste status.
My grandfather, an extraordinary man, has overcome many obstacles in his life. He is admirable because he has accomplished everything he has ever dreamed of and is still demolishing anything in his way. When he was younger, he worked in the army and deserves to be honored just because of that, but he has done much more that he also deserves credit for.
Mexico's trade with Asia is on the rise which is important to the country as it wants to reduce its overreliance on the U.S. market
Farmington (Antilles) N.V. – This facility is an offshore “shell corporation” by which the U.S. parent exports U.S.-manufactured products to Mexico and other countries.
Aldous Huxley’s novel Brave New World is a warning to society. Huxley describes a society that is completely conformed to government and relies on the government for all of their needs. Huxley uses symbolism in his novel to introduce warnings on how today’s society should not be ran. A society based on people being born into a caste system would not be a successful society according to Huxley. A destroyed society will occur when antidepressants are overused, the number of broken families increase, cloning becomes possible, and a decrease of sexual morals takes place.
Moreover, through his main protagonist, Huxley parallels the impact of acclimatization into postcolonial society onto the natives. Similar to John, who suffered from shock towards the cultural norms thrusted onto him, the autochthonous population struggled immensely during the assimilation process. While the reaction of the native populace was not as dramatic as Huxley portrays it, they responded in a similar mannerism. To illustrate, during the assimilation of Indian tribes into American culture, Native Americans, especially children, expressed cultural shock when forced to adapt to new societal norms. Particularly, when Native American students were sent to assimilative boarding school, many experienced intense cultural shocks. Similarly
Hi Conster, cost behaviors impact businesses in the way that if the raw material increases, the finished goods will also increase. For instance, every year the price of the steel goes up; therefore, any product build with steel will have an impact on their prices to cover up the increase in paid for the raw material (Edmonds,
Productivity and costs an economic indicator that measures the prices changes using the productivity and costs indicators. The productivity indicator measures the labor effectiveness and efficiency in the production of the goods and services in the organization. The costs indicator measures the unit labor costs of producing each product in the economy. The labor productivity is measured by change in the output per labor hour over a specific period of time. So the Disney will use the productivity and costs to maximize the production without increases workforce. Both productivity and costs measure inflationary trends in salaries.
Aldous Huxley, author of Brave New World, criticizes modern society’s desire for material objects, pleasure, and technology. In Brave New World, Aldous Huxley satirizes modern society’s desire for constant pleasure and the eradication of anything that might cause discomfort or anxiety. He does so by his treatment of casual sex, the frequent use of the drug soma, and the mandatory death conditioning each citizen must undergo. Huxley criticizes modern society’s desire for constant pleasure by creating characters who remain uncommitted to relationships and have casual sex. During a conversation between Lenina and Fanny, Fanny claims it would be a “horribly bad form to go on and on like this with one man.”
Work in progress turnover is almost 13 times higher than the industry average which could due to the long shipping time of key components from overseas. Expanding Gemini’s Mexico manufacturing facility will not only contribute to cost reduction, but will also reduce the work in progress turnover. Relocating its manufacturing to Mexico will also be supportive for opening Central and South America markets. Mexico is geographically in the middle of the continent and surrounded by oceans. This will benefits for both side on the continent on shipments and also provide a lower labor cost for Gemini. See Table 2 and Table 3.
Our treatment of job costing and process costing is as brief as we can make it and still get the general points across. Students do need to understand the general idea of these cost accumulation procedures; otherwise they are unable to visualize how costs are actually collected. The details, however, are appropriately left for an advanced course. The principal pedagogical problem here is how to get across the idea of equivalent production in process costing.