What should managers examine to determine if actions need to be taken to reduce production costs?

To determine if actions need to be taken to reduce production costs, managers should focus on plant and production cost benchmarking statistics. Benchmarking involves comparing a company's production costs to those of other companies within the same industry or sector. This allows managers to identify how their production expenses stack up against competitors and best practice standards. If a company's costs are higher than the benchmarks, it signals potential inefficiencies or areas where improvements can be made.

By examining these statistics, managers can pinpoint specific cost drivers and assess whether their cost structures align with industry norms. This data-driven approach helps guide strategic decision-making regarding cost reduction initiatives, resource allocation, and operational adjustments.

Other aspects, such as retail price comparisons, employee satisfaction, and customer feedback, while valuable in their own contexts, do not directly inform managers about the efficiency or cost-effectiveness of production processes. They may highlight market positioning, workforce morale, or product quality, but they do not provide the necessary insights into production costs specifically. Therefore, focusing on benchmarking statistics is the most relevant and effective method for addressing cost reduction opportunities.