X Inefficiency is one of the type of inefficiency. This term is taken from economics but now it is also used in accounting. It means lack of efficiency to produce or get revenue at minimum cost. Our way of work is not good. Due to lack of quality in work, we will not obtain maximum return, so this lack of quality of work is X-inefficiency.
Main Reasons of X Inefficiency
1. If you use more resources for production what actually need, then this is big mistake. There are some accounting calculations which are wrong. Excess investment in production is not good. Only optimum investment is good because our resources are limited. Due to this x-inefficiency, our cost will increase and return will reduce.
2. Hiring excess employees than actual need in business will increase your fixed cost which you can not reduce. It will produce X inefficiency automatically.
Main Reasons of X Inefficiency
1. If you use more resources for production what actually need, then this is big mistake. There are some accounting calculations which are wrong. Excess investment in production is not good. Only optimum investment is good because our resources are limited. Due to this x-inefficiency, our cost will increase and return will reduce.
2. Hiring excess employees than actual need in business will increase your fixed cost which you can not reduce. It will produce X inefficiency automatically.
No comments:
Post a Comment