Variation in labor efficiency and selected costs among Virginia meat packing firms

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Virginia Polytechnic Institute

Costs and production records from six 1/ Virginia meat packers and processors were analyzed by departments to obtain the interfirm variation in man-hours required and in the costs of labor and selected resources.

In addition, four firms that were unable to supply departmental data supplied total plant labor records and selected other costs. These four firms were combined with the other six and analyzed for interfirm variation of the selected resources for the total operation. The total analysis included the following costs in addition to labor efficiency: labor, supply, maintenance, office, insurance, sales, depreciation, rent, and utility.

Graphic analysis was used to investigate relationships between volume and labor efficiency and volume and costs. The standard deviation and coefficient of variation were calculated to measure the variation that existed among firms.

Considerable interfirm and interdepartmental variation was found. In most instances the coefficient of variation exceeded 30. In the departmental analysis there was a relationship between volume and labor efficiency only in calf kill and fabricating. There was no meaningful relationship between volume and costs in the departmental analysis. In the total analysis there was neither a meaningful relationship between volume and labor efficiency nor volume and costs.

All firms were inefficient in some areas of operation. The norms and measures of variation as discovered should prove to be valuable management tools when used with individual plant records to delineate problem areas within a firm.