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DIRECT LABOUR COST ALLOCATION FOR A MULTI‐PRODUCT HOSPITAL LAUNDRY
Author(s) -
Everett James E.,
McLeod Paul B.
Publication year - 1991
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.1991.tb00252.x
Subject(s) - laundry , productivity , production (economics) , product (mathematics) , relation (database) , regression analysis , production line , computer science , operations management , econometrics , operations research , industrial engineering , economics , business , mathematics , microeconomics , engineering , data mining , marketing , waste management , geometry , macroeconomics , machine learning
This paper discusses the application of correlation and regression methods to the analysis of productivity and allocation of costs in a laundry serving several hospitals, with several types of laundry being processed in the same production line. In particular, it is shown how the methods can be used to allocate the direct labour costs between the types of laundry. Analysis of residuals also permits investigation of temporal and product mix effects upon productivity. The regression paradox is discussed in relation to this problem, and it is shown that productivity is not a uniquely defined concept, because there is a difference between production being predicted from labour input and labour input being predicted from required production. Potential application of the model to other multi‐product processes is discussed.