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4 EMPLOYER’S CONTRIBUTIONS
1 Charging Labor Costs into Production
Time Tickets
• to facilitate the allocation of labor costs
between direct and indirect labor, a time
ticket is prepared by each employee.
• Sometimes called “job time cards” – used
to show how time was used on specific jobs.
1 Charging Labor Costs into Production
Time Tickets
• Workers paid on hourly wage rate (both
indirect and direct) are required to prepare
daily time tickets.
• Workers receiving fixed monthly salary are
not required to prepare.
Semimonthly Payroll
• Shows the wages earned by employees
who are on a fixed monthly salary.
• Earnings are classified as indirect labor.
Unearned Wages
• At the end of the month, time tickets are
analyzed to determine labor costs that have
been incurred but have not yet been paid.
• This labor costs are to be accrued.
2 Recording Labor Costs
Procedures:
1. Record the number of hours worked each
day by each employee on a time card.
2. Record the hours and type of work
performed each day by each employee on
a time ticket.
3 Flow of Labor Costs
Overtime Premium
• Gross earnings of employees are divided
into two parts: (1) earnings at regular rate;
(2) overtime premium
• Earning at regular rate = total hours x
regular pay rate
• Overtime premium = overtime hours x
overtime pay rate.
**to further understand see illustration on page 181**
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