Labour Cost Control in Cost Accounting-B.V.Raghunandan
Upcoming SlideShare
Loading in...5
×
 

Labour Cost Control in Cost Accounting-B.V.Raghunandan

on

  • 16,802 views

Various aspects of wages and wages control as part of the study of Cost Accounting

Various aspects of wages and wages control as part of the study of Cost Accounting

Statistics

Views

Total Views
16,802
Views on SlideShare
16,523
Embed Views
279

Actions

Likes
4
Downloads
398
Comments
0

2 Embeds 279

http://uoj.nodes.lk 237
http://www.slideshare.net 42

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Labour Cost Control in Cost Accounting-B.V.Raghunandan Labour Cost Control in Cost Accounting-B.V.Raghunandan Presentation Transcript

    • 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
      Determining Performance Bonus
    • Methods of Time Booking
      Daily Time Sheets
      Weekly Time Sheets
      Job Tickets
      Job Cards
    • Daily Time Sheets
    • Weekly Time Sheets
    • 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
      Seasonality of Industry
    • 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 26-30% 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 Rate =
      Replacement Rate
      Labour Flux Rate
    • 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
      Lack of Training
      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
      Guaranteed Wage
      Uniformity
      Connected to CPI
      Recognition of Efficiency
      Incentive for Hard Work
      Equality
      Clarity
      Progressive Scale
      Consistency
      Flexibility
      Simplicity
      Fairness
      High Level of Morale
      Viability of operation
    • Systems of Wage Payment
      Time Rate
      Piece Rate
      Taylor’s Differential Piece Rates
      Halsey’s Incentive Plan
      Rowan’s 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 other allowances
    • 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
    • Taylor’s 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 Taylor’s 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