Cost & Management

Accounting

Labour

Labour
Direct

Labour
Indirect Labour
Labour Cost Control
Personnel Department
Production or Engineering
Department
Time Keeping Department

Time Keeping
Department

A. Time Recording
B. Time Booking

Time Recording
Manual

Methods:
-Attendance Register
-Disc System
Mechanical Methods
- Time Recording Clock
- Dial Time Recorder
Electronic Devices
- Swipe Card
- Bio-Metrics

Time Recording Clock-1

Time Recording
Clock 2

Clock 3

Clock 4

Clock 5

Clock 6

Clock 7

Time Booking
Time

Booking is tracing the

time spent by the worker
and identifying such time to
jobs, processes or operation
so as to calculate the wage
cost of such processes, jobs
or operations

Objectives of Time
Booking
Ascertainment

of Labour

Cost
Control of Idle Time
Determining Overhead
Absorption Rate
Evaluating Performance of
Workers

Methods of Time
Booking
Daily

Time Sheets

Weekly

Time

Sheets
Job

Tickets

Job

Cards

Daily Time Sheets

Daily Time Sheet
Name:
Date:
Clock Card No.
Week No.
Machine No.
Cost Centre.
Work
Work
Descriptio
Order
Done
n
No.

Workers Signature
Office Reference

Time
Starte
d

Finished

Foremans Signature

Hours

Cost

Weekly Time Sheets

Weekly Time Sheet
Name:
Clock card No.
Ending:
Cost Centre/Department:
Day

Job No. Descriptio Time

n
Start

Workers Signature

Date:
Week

Total Hours
Finish Norm
al

OT

Foremans Signature

For Cost Office

Rate

Amoun
t

Cost

Idle Time
Idle

Time is the difference

between the time for which
payment is made and the
actual time worked.

It

is the time during which the

worker did not engage himself
in productive work

Causes of Idle Time

Avoidable

Causes

Unavoidable

Causes

Avoidable Causes
Failure

of Power Supply
Breakdown of Machinery
Non-Availability of Material
Strike
Lock-out
Natural Calamities

Unavoidable Causes
Setting-up Time
Movement from

Gate to

Production Floor
Movement from One Job to
Another
Time to Take Instruction
Tea-Breaks
Personal Needs
Minor Accidents

Over-Time
Work

Carried on Beyond Normal

Hours
Double the Rate of Payment
Should be Avoided
Normal Causes OT charged to the
concerned Job or Batch
Abnormal Causes OT-transferred to
Costing Profit and Loss account
Only on Proper Authorisation

Causes of Over-Time
Completion

of a Rush Order
Meeting a sudden spurt in
demand
Completion of a Delayed Work
Making up for Loss of Production
due to Accidents, Flood or Other
Natural Calamities

Labour Turnover
The

rate at which the employees are

leaving the organisation in a year
Also known as Attrition rate
In IT industry, it was as high as 2630% in 2007- It has come down to
12-16% in 2009
It is unhealthy for the organisation
It should be reduced as much as
possible through constant enquiry

Measurement of Labour
Turnover
Separation

No.ofEmployeesLeaving
Rate =
X 100
AverageNum berofWor ker s

Replacement

Labour

No
Re
placed
Rate

X 100
AverageNum berofWor ker s

Flux Rate

No.Leaving No.of . Re placement

X 100
AverageNum berofWor ker s

Causes of Labour
Turnover
Avoidable

Causes

Unavoidable

Causes

Avoidable Causes of Labour

Turnover
Low Wages
Working

Conditions
Labour
Relation
Trade Union
Rivalry
No Job
Satisfaction

Bad

Working
Hours
Lack of
Incentives
No Welfare
Measures
Lack of Job
Security
Unfair Promotion
Supervisory Staff

Unavoidable Causes of Labour

Turnover
Death,

Retirement or Disablement
Marriage or Pregnancy in case of
Women
Better Career Opportunities
Retrenchment
Termination
Change of Place of Work
Change for Better Working
Environment
Domestic Responsibilities

Preventive Cost of Labour

Turnover
Higher

Wages

Better

Welfare Measures

Better

Training

Better

Working Conditions

Retirement

Benefits

Replacement Cost of Labour

Turnover
Recruitment

Cost
Cost of Training
Vacancy Time Gap and Loss of
Output
Adjustment Time for the New
Workers
Loss of Quality
Strain on Tools & Equipment
Higher Scarp and Defective Work

Measures to Reduce Labour

Turnover
Proper

Recruitment
Good Training
Fair Wages
Good Working
Conditions
Labour
Amenities
Labour Welfare

Building

up Loyalty
Improving the Skills
Improving Relations
Communication of
Policies
Grievances Cell
Workers
Participation in
Management

Features of a Fair Wage

System
Progressive
Guaranteed

Wage

Uniformity
Connected

to CPI
Recognition of
Efficiency
Incentive for Hard
Work
Equality
Clarity

Scale
Consistency
Flexibility
Simplicity
Fairness
High Level of
Morale
Viability of
operation

Systems of Wage
Payment
Time

Rate
Piece Rate
Taylors Differential Piece
Rates
Halseys Incentive Plan
Rowans Incentive Plan

Time Rate
Wages

are paid for the Time

spent on the job
Output is irrelevant
Rate per Hour. Per Day, or per
Month
Suitable when Quality of work is
important
Trade Unions prefer this method
Monthly Payment goes with

Advantages of Time
Rate
Simplicity
Easier Computation
Encourages Skill Development
Guaranteed Wages
Minimum Loss to Material and

Equipmnets
Equality of Wages
Team Work
Cordial Relation among the Workers
Support of Trade Unions

Disadvantages of Time Rate

System
Abilities

are not Differentiated

No Incentive for Hard Work
Requires Supervision
Dissatisfaction of Efficient Workers
Low Morale
No Punishment for Inefficiency
Labour Cost is not a variable cost
under this system

Piece Rate System

Rate

per unit of output

Output decides the wages
payable
A standard time is taken and the
standard output is determined
Time Wages for the standard
output determines the piece rate

Advantages of Piece Rate

System
Efficiency

is recognised
Motivates the workers
Reduces labour cost per unit
Labour cost is variable
Computation of labour cost in
advance is easy
Lesser Supervision
Less Idle Time

Disadvantages of Piece Rate

System
Quality

suffers
Difficulty of Fixing the standard
output and Piece Rate
More scrap and Defective Work
Damage to Tools and Equipment
No Guaranteed Wages
Uncertainty in Income
Trade Unions Oppose the System

Taylors Differential Piece Rate

System
Two

Piece Rates: Low Piece Rate and

High
No Guaranteed Wages
Standard Output is fixed on Time and
Motion Study
Low Piece Rate at 83% of standard
piece rate for output below standard
High Piece Rate at 175% of standard
piece rate for output above standard

Merits and Demerits of

Taylors Method
Increases

Efficiency and Motivates

the Worker ensuring a high level of
morale
Differentiates among workers
leading to bad labour relation
Detailed records are to be
maintained regarding the output of
the workers
Demoralises human values

THANK YOU