Cost & Management Accounting<br />Labour<br />
Labour<br />Direct Labour<br />Indirect Labour<br />Labour Cost Control<br />Personnel Department<br />Production or Engin...
Time Keeping Department<br />A. Time Recording<br />B. Time Booking<br />
Time Recording<br />Manual Methods:<br />    -Attendance Register<br />    -Disc System<br />Mechanical Methods<br />   - ...
Time Recording Clock-1<br />
Time Recording Clock 2<br />
Clock 3<br />
Clock 4<br />
Clock 5<br />
Clock 6<br />
Clock 7<br />
Time Booking<br />Time Booking is tracing the time spent by the worker and identifying such time  to jobs, processes or op...
Objectives of Time Booking<br />Ascertainment of Labour Cost<br />Control of Idle Time<br />Determining Overhead Absorptio...
Methods of Time Booking<br />Daily Time Sheets<br />Weekly Time Sheets<br />Job Tickets<br />Job Cards<br />
Daily Time Sheets<br />
Weekly Time Sheets<br />
Idle Time<br />Idle Time is the difference between the time for which payment is made and the actual time worked.<br />It ...
Causes of Idle Time<br />Avoidable Causes<br />Unavoidable Causes<br />
Avoidable Causes<br />Failure of Power Supply<br />Breakdown of Machinery<br />Non-Availability of Material<br />Strike<br...
Unavoidable Causes<br />Setting-up Time<br />Movement from Gate to Production Floor<br />Movement from One Job to Another<...
Over-Time<br />Work Carried on Beyond Normal Hours<br />Double the Rate of Payment<br />Should be Avoided<br />Normal Caus...
Causes of Over-Time<br />Completion of a Rush Order<br />Meeting a sudden spurt in demand<br />Completion of a Delayed Wor...
Labour Turnover<br />The rate at which the employees are leaving the organisation in a year<br />Also known as Attrition r...
Measurement of Labour Turnover<br />Separation Rate =<br />Replacement Rate   <br />Labour Flux Rate <br />
Causes of Labour Turnover<br />Avoidable Causes<br />Unavoidable Causes<br />
Avoidable Causes of Labour Turnover<br />Low Wages<br /> Working Conditions<br />Labour Relation<br />Trade Union Rivalry<...
Unavoidable Causes of Labour Turnover<br />Death, Retirement or Disablement<br />Marriage or Pregnancy in case of Women<br...
Preventive Cost of Labour Turnover<br />Higher Wages<br />Better Welfare Measures<br />Better Training<br />Better Working...
Replacement Cost of Labour Turnover<br />Recruitment Cost<br />Cost of Training<br />Vacancy Time Gap and Loss of Output<b...
Measures to Reduce Labour Turnover<br />Proper Recruitment<br />Good Training<br />Fair Wages<br />Good Working Conditions...
Features of a Fair Wage System<br />Guaranteed Wage<br />Uniformity<br />Connected to CPI<br />Recognition of Efficiency<b...
Systems of Wage Payment<br />Time Rate<br />Piece Rate<br />Taylor’s Differential Piece Rates<br />Halsey’s Incentive Plan...
Time Rate<br />Wages are paid for the Time spent on the job<br />Output is irrelevant<br />Rate per Hour. Per Day, or per ...
Advantages of Time Rate<br />Simplicity<br />Easier Computation<br />Encourages Skill Development<br />Guaranteed Wages<br...
Disadvantages of Time Rate System<br />Abilities are not Differentiated<br />No Incentive for Hard Work<br />Requires Supe...
Piece Rate System<br />Rate per unit of output<br />Output decides the wages payable<br />A standard time is taken and the...
Advantages of Piece Rate System<br />Efficiency is recognised<br />Motivates the workers<br />Reduces labour cost per unit...
Disadvantages of Piece Rate System<br />Quality suffers<br />Difficulty of Fixing the standard output and Piece Rate<br />...
Taylor’s Differential Piece Rate System<br />Two Piece Rates: Low Piece Rate and High<br />No Guaranteed Wages<br />Standa...
Merits and Demerits of Taylor’s Method <br />Increases Efficiency and Motivates the Worker ensuring a high level of morale...
THANK YOU<br />
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Labour Cost Control in Cost Accounting-B.V.Raghunandan

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

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

  1. 1. Cost & Management Accounting<br />Labour<br />
  2. 2. Labour<br />Direct Labour<br />Indirect Labour<br />Labour Cost Control<br />Personnel Department<br />Production or Engineering Department<br />Time Keeping Department<br />
  3. 3. Time Keeping Department<br />A. Time Recording<br />B. Time Booking<br />
  4. 4. Time Recording<br />Manual Methods:<br /> -Attendance Register<br /> -Disc System<br />Mechanical Methods<br /> - Time Recording Clock<br /> - Dial Time Recorder<br />Electronic Devices<br /> - Swipe Card<br /> - Bio-Metrics<br />
  5. 5. Time Recording Clock-1<br />
  6. 6. Time Recording Clock 2<br />
  7. 7. Clock 3<br />
  8. 8. Clock 4<br />
  9. 9. Clock 5<br />
  10. 10. Clock 6<br />
  11. 11. Clock 7<br />
  12. 12. Time Booking<br />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<br />
  13. 13. Objectives of Time Booking<br />Ascertainment of Labour Cost<br />Control of Idle Time<br />Determining Overhead Absorption Rate<br />Evaluating Performance of Workers<br />Determining Performance Bonus<br />
  14. 14. Methods of Time Booking<br />Daily Time Sheets<br />Weekly Time Sheets<br />Job Tickets<br />Job Cards<br />
  15. 15. Daily Time Sheets<br />
  16. 16. Weekly Time Sheets<br />
  17. 17. Idle Time<br />Idle Time is the difference between the time for which payment is made and the actual time worked.<br />It is the time during which the worker did not engage himself in productive work<br />
  18. 18. Causes of Idle Time<br />Avoidable Causes<br />Unavoidable Causes<br />
  19. 19. Avoidable Causes<br />Failure of Power Supply<br />Breakdown of Machinery<br />Non-Availability of Material<br />Strike<br />Lock-out<br />Natural Calamities<br />
  20. 20. Unavoidable Causes<br />Setting-up Time<br />Movement from Gate to Production Floor<br />Movement from One Job to Another<br />Time to Take Instruction<br />Tea-Breaks<br />Personal Needs<br />Minor Accidents<br />Seasonality of Industry<br />
  21. 21. Over-Time<br />Work Carried on Beyond Normal Hours<br />Double the Rate of Payment<br />Should be Avoided<br />Normal Causes OT –charged to the concerned Job or Batch<br />Abnormal Causes OT-transferred to Costing Profit and Loss account<br />Only on Proper Authorisation<br />
  22. 22. Causes of Over-Time<br />Completion of a Rush Order<br />Meeting a sudden spurt in demand<br />Completion of a Delayed Work<br />Making up for Loss of Production due to Accidents, Flood or Other Natural Calamities<br />
  23. 23. Labour Turnover<br />The rate at which the employees are leaving the organisation in a year<br />Also known as Attrition rate<br />In IT industry, it was as high as 26-30% in 2007- It has come down to 12-16% in 2009<br />It is unhealthy for the organisation<br />It should be reduced as much as possible through constant enquiry<br />
  24. 24. Measurement of Labour Turnover<br />Separation Rate =<br />Replacement Rate <br />Labour Flux Rate <br />
  25. 25. Causes of Labour Turnover<br />Avoidable Causes<br />Unavoidable Causes<br />
  26. 26. Avoidable Causes of Labour Turnover<br />Low Wages<br /> Working Conditions<br />Labour Relation<br />Trade Union Rivalry<br />No Job Satisfaction<br />Lack of Training<br />Bad Working Hours<br />Lack of Incentives<br />No Welfare Measures<br />Lack of Job Security<br />Unfair Promotion<br />Supervisory Staff<br />
  27. 27. Unavoidable Causes of Labour Turnover<br />Death, Retirement or Disablement<br />Marriage or Pregnancy in case of Women<br />Better Career Opportunities<br />Retrenchment<br />Termination<br />Change of Place of Work<br />Change for Better Working Environment<br />Domestic Responsibilities<br />
  28. 28. Preventive Cost of Labour Turnover<br />Higher Wages<br />Better Welfare Measures<br />Better Training<br />Better Working Conditions<br />Retirement Benefits<br />
  29. 29. Replacement Cost of Labour Turnover<br />Recruitment Cost<br />Cost of Training<br />Vacancy Time Gap and Loss of Output<br />Adjustment Time for the New Workers<br />Loss of Quality<br />Strain on Tools & Equipment<br />Higher Scarp and Defective Work <br />
  30. 30. Measures to Reduce Labour Turnover<br />Proper Recruitment<br />Good Training<br />Fair Wages<br />Good Working Conditions<br />Labour Amenities<br />Labour Welfare<br />Building up Loyalty<br />Improving the Skills<br />Improving Relations<br />Communication of Policies<br />Grievances Cell<br />Workers’ Participation in Management<br />
  31. 31. Features of a Fair Wage System<br />Guaranteed Wage<br />Uniformity<br />Connected to CPI<br />Recognition of Efficiency<br />Incentive for Hard Work<br />Equality<br />Clarity<br />Progressive Scale<br />Consistency<br />Flexibility<br />Simplicity<br />Fairness<br />High Level of Morale<br />Viability of operation<br />
  32. 32. Systems of Wage Payment<br />Time Rate<br />Piece Rate<br />Taylor’s Differential Piece Rates<br />Halsey’s Incentive Plan<br />Rowan’s Incentive Plan<br />
  33. 33. Time Rate<br />Wages are paid for the Time spent on the job<br />Output is irrelevant<br />Rate per Hour. Per Day, or per Month<br />Suitable when Quality of work is important<br />Trade Unions prefer this method<br />Monthly Payment goes with other allowances<br />
  34. 34. Advantages of Time Rate<br />Simplicity<br />Easier Computation<br />Encourages Skill Development<br />Guaranteed Wages<br />Minimum Loss to Material and Equipmnets<br />Equality of Wages<br />Team Work<br />Cordial Relation among the Workers<br />Support of Trade Unions <br />
  35. 35. Disadvantages of Time Rate System<br />Abilities are not Differentiated<br />No Incentive for Hard Work<br />Requires Supervision<br />Dissatisfaction of Efficient Workers<br />Low Morale<br />No Punishment for Inefficiency<br />Labour Cost is not a variable cost under this system<br />
  36. 36. Piece Rate System<br />Rate per unit of output<br />Output decides the wages payable<br />A standard time is taken and the standard output is determined<br />Time Wages for the standard output determines the piece rate<br />
  37. 37. Advantages of Piece Rate System<br />Efficiency is recognised<br />Motivates the workers<br />Reduces labour cost per unit<br />Labour cost is variable<br />Computation of labour cost in advance is easy<br />Lesser Supervision<br />Less Idle Time<br />
  38. 38. Disadvantages of Piece Rate System<br />Quality suffers<br />Difficulty of Fixing the standard output and Piece Rate<br />More scrap and Defective Work<br />Damage to Tools and Equipment<br />No Guaranteed Wages<br />Uncertainty in Income<br />Trade Unions Oppose the System<br />
  39. 39. Taylor’s Differential Piece Rate System<br />Two Piece Rates: Low Piece Rate and High<br />No Guaranteed Wages<br />Standard Output is fixed on Time and Motion Study<br />Low Piece Rate at 83% of standard piece rate for output below standard<br />High Piece Rate at 175% of standard piece rate for output above standard<br />
  40. 40. Merits and Demerits of Taylor’s Method <br />Increases Efficiency and Motivates the Worker ensuring a high level of morale<br />Differentiates among workers leading to bad labour relation<br />Detailed records are to be maintained regarding the output of the workers<br />Demoralises human values <br />
  41. 41. THANK YOU<br />

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