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Manufacturing Output Rises in the Us

In: Business and Management

Submitted By dcoyle
Words 628
Pages 3
An economic revival is here according to an article in The Atlantic titled “America’s Coming Manufacturing Revolution”. In the author’s own words, “The combination of lower energy prices, innovative information technologies, and advances in robotics and materials science are powering a manufacturing revolution that will reinvigorate the U.S. economy,” (Naím, Apr. 21, 2014). Bold words considering the recent financial crisis and drama in the geopolitical arena, but is there enough evidence to back his claims of this so called “manufacturing revolution”? Several news outlets are reporting gains in manufacturing operations such as increases in labor and use of factory space. Using this information, I hope to describe the elements used to determine manufacturing output and their overall effect on the manufacturing sector from the viewpoint of an accountant. In cost accounting for manufacturing companies, direct labor, direct materials, and manufacturing overhead are typically on the top of the spreadsheet and correlate with the amount of goods being produced. In regards to labor, the ADP research institute reported an additional 28,000 workers hired by US manufacturers in March of this year. (Woellert, Apr. 2, 2014) Although the ratio of direct laborers to indirect laborers is not stated, variable costs in US manufacturing certainly have risen, which is almost always associated with a rise in activity levels. Unfortunately, the ADP’s assessment did not include information about the degree activity levels rose; however, other reports exist to gauge changes in output or measure efficiency by way of factory capacity. Another indicator of growth in manufacturing is allocation of unused equipment or factory space. Simply put, there is a finite amount of space inside a factory to fit tools, equipment, and personnel in order to create the products that are later…...

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