Accounting
Question (10 Credits)
The president wants to upgrade the company’s fringe benefits and is considering a cafeteria plan. He has asked you as controller to report back to him on how a cafeteria plan works and some of the advantages and disadvantages to both the employee and employer.
Answer
In our present question we found that the President of a company want to upgrade the fringe benefits of the company and is considering a cafeteria plan. We have to consider how the cafeteria plan works and to find out the advantages and disadvantages to both the employees and the employer. The answer of this question can be presented as follows.
Establishing a cafeteria is a good idea to for the benefit of the employees as well as the employers. With the establishment of the cafeteria following benefits will follow to the employees.
1) Employees will get their Tiffin in time and they need not go somewhere else in search of Tiffin during the Tiffin hours. Thus they will not suffer for inconvenience for want of Tiffin. A lot of their time is also saved for this purpose..
2) The establishment of the cafeteria also enhance their belongingness as they can interact with other fellow employees during the Tiffin hours. This will fulfill their social need .
3) The employees can spend some time in the cafeteria in the off time and their psychological need will be fulfilled.
4) The employees can relax for time in the cafeteria after extortion of work..
Some benefit will also follow to the employers. The benefits can be listed as follows.
1) The employer will find the more active employees as the belongingness as well as the morale of the employees will increase. As result higher productivity is expected.
2) The employer will find easy availability of foods during the different conferences and meeting. It can also entertain the its valuable customers when they visit the company office.
3) Satisfied employees can devote greater effort for their company. Thus the better quality of work is also expected from the employees.
But the present plan of cafeteria has also certain disadvantages. The disadvantages can be listed as follows.
1) The implementation of the cafeteria plan leads to a lot of expenditure on the part of management. It has to incur both the fixed costs as well as the overhead cost on the part of the management. The fixed costs are the cost on the furniture, building and the other equipments. A permanent supervisor may also be appointed. The variables cost are on the raw foods and salaries of the employees appointed on contractual basis for the functioning of the cafeteria. In most the cases such cafeteria supplies the subsidized food. Hence there is very little possibility of earning any profit from such cafeteria. On the other hand the company have to allow certain subsidy the foods supplied by the cafeteria.
2) Again, the increase in productivity which is expected due the establishment of the cafeteria, may not be found. In this case the personal factors may be encouraged more rather than the task factor which will lead to lower productivity. A lot of time may be spent by the employees .in the cafeteria. They may remain in cafeteria even in the working hours. Thus the scope of better work may be lost.
3) The subsidized food supplied by the cafeteria may misutilized and brought
outside.
4) Again sufficient caution must be taken by the food supplied. If substandard food is supplied it may create grievance among the employees.
