This document discusses labor cost control and timekeeping methods. It defines direct and indirect labor and explains the departments involved in labor cost control like personnel, engineering, timekeeping, payroll, and cost accounting. It then covers topics like labor turnover calculation methods, causes of turnover, and ways to control it. Finally, it describes various timekeeping methods like attendance registers, token systems, time clocks, and biometrics. It also discusses time booking methods like job tickets, combined time/job cards, daily/weekly time sheets, and piece work cards.

1. LABOUR COST CONTROL
By Prof. Anusha N Bhat

2. Meaning of Labour
 Labour or manpower represents human resources in production.
 After material cost, labour cost is the second major element of cost.
 Higher efficiency of labour helps in lowering the cost per unit of
production.
 Types of labour:
a) Direct Labour: It is that type of labour which directly engaged in
production work and can be identified wholly to a particular job,
process or cost unit. Example- tailor, carpenter, machine operator
etc.
b) Indirect labour: It is that type of labour who are not directly
engaged in converting raw materials into finished goods. Such
costs cannot be identified with a particular job, process or cost
unit. Example- supervisor, inspector, clerk etc.

3. Department under labour cost
 Personnel department- recruitment and selection of
workers, training of workers and development of HR etc.
 Engineering department- specification of jobs, job
analysis, make provision for safe working conditions
 Time-keeping department- recording of workers time for
the purpose of attendance and wage calculation
 Payroll department- record of job classification and wage
rate and computation of wages
 Cost accounting department- accumulates and classifies
all cost data. Submits payroll to the management

4. LABOUR TURNOVER
Labour Turnover is defined as “the rate of change in
work force in an organisation” it is nothing but the rate of
workers leaving the organisation and new workers joining
into the organisation.
Methods to calculate Labour turnover rate:
 Separation method: Takes into account only those workers
who have left the organisation during a particular period.
Labour turnover ratio=
No.of workers left during a period
Average no.of workers during the period
× 100

5.  Replacement method: this method takes into account only
those workers who have joined in place of those who have left.
Labour turn over ratio=
No.of workers replaced during a period
Average no.of workers during the period
× 100
Note: Additional workers joined for expansion will not be
considered for the computation.
 Flux method: This shows the complete change in the
composition of the labour force due to separation and
replacement.
Labour turn over ratio=
No.of workers left+No.of workers replaced
Average no.of workers
× 100

6. Causes of Labour Turnover
1. Avoidable causes:
a) Due to seasonal fluctuations
b) Dissatisfaction with job
c) Strained relationship with superiors
d) Lack of proper amenities like medical, recreational
centres etc.
e) Lack of proper training facility, inadequate security etc.

7. 2. Unavoidable causes:
a) Change of service for personal betterment.
b) Retirement due to old age and ill health.
c) Death
d) In case of women employees, domestic responsibilities,
pregnancy or marriage.
e) Discharge on disciplinary grounds or continous long
absence.

8. Control of Labour Turnover
 Adequate and satisfactory wage system
 Sound personnel policy for recruitment, induction and
training
 Satisfactory level of various amenities
 Satisfactory security like family pension, provident fund,
accident compensation
 Good policy for transfers and promotions
 A grievance cell for the employees can get their
grievances get redressed

9. TIME KEEPING
Time keeping refers to the recording arrival and departure
time of workers for attendance purpose and for calculation
of wages.
Objectives:
 Preparation of payroll
 Attendance records
 Computing labour cost
 Computing overhead cost
 Control of labour cost

10. METHODS OF TIME KEEPING
 Attendance register
 Token or disc method
 Time recording clock
 Biometric time recording clock

11. Attendance register
In this method, attendance of each worker is recorded in the
register. The register has sufficient number of columns for
attendance of each worker. Entries in the arrival and departure
columns may be made by the worker himself or by the foreman.
This method is followed in small sized concerns. This method is
more suitable for recording the attendance time of clerical staff
and other staff officers.
Merits:
 It is simple to maintain attendance register.
 It is an economical method in comparison to other methods.

12. Demerits:
 This method is not suitable for medium and large sized
businesses.
 Where the attendance is marked by calling out the names
of employees, there will be hold-ups near the factory gate.
 Dishonest employees may mark the attendance of
absentee employee.
 It involves additional work for posting the entries into the
individual working record.

13. Token or disc method
 Under this method, each worker is allotted an identification
number and that number is suitably painted or engraved on a
round metal token (or disk) with the hole in it. All such token
are hung in a serial order on a board at the factory gate.
 As the worker arrives he takes his token from the board and
puts it in a box kept nearby, which is specially kept for this
purpose. After the fixed time the second board is removed.
Those coming late have to hand over their token personally at
the time office so that exact time of their arrival can be noted.
 The time office records attendance on the basis of token in the
box. The absentees are indicated by the missing tokens. Similar
procedure is followed at the departure time in the evening.

14. Merits:
 It is simple to operate.
 It does not involve heavy investment.
 It suits to a factory which employs more number of employees.
Demerits:
 Dishonest practice of inserting a disc of an absentee worker by
another employee may take place.
 It involves more clerical work to prepare an attendance record
with the help of disc, where any mistake is committed in
recording attendance time on the basis of disc and in case of
any disputes between an employee and time keeping officer,
disc cannot offer any proof.

15. Time recording clock
 This method is mechanical in nature. Each worker is
allotted a Clock Card which bears his identification
number, name department etc. these cards are kept in a
rack in a serial order. There are two racks In rack, Out
rack. On arrival, the worker will pick up a card from the
Out Rack, put it in the slot of the clock, press a button and
the exact time is printed on the card. After this the card is
put in the in rack. An inspection of the of out rack reveals
the absentees. Similar process is followed if workers leave
the factory.

16. Biometric time recording clock
It is a new generation technique which is fast replacing the old
type of time recording clocks. Biometric time recording clock is
an electronic device to record attendance of workers. In this
method the worker simply places his fingers or hand on the
Finger Reading Sensor and his attendance is recorded in the
machine.
Merits:
1. Eliminates time card
2. Avoids proxy
3. Eliminates early or wrong punch time
4. Automatic payroll processing
5. Ensures accurate records

17. TIME BOOKING
Time booking is recording the time actually spent by a worker on
various jobs done by him in the factory for cost analysis and
dividing labour cost into various jobs and departments. It also
helps in control over wastage of time- idle time.
Objectives:
a) To ensure that the time for which a worker is paid is properly
utilised
b) To ascertain the labour cost of work done
c) To provide a basis of apportionment of overheads
d) To ascertain the idle time so as to control it

18. METHODS OF TIME BOOKING
 Job Ticket
 Combined Time and Job Card
 Daily Time Sheet
 Weekly Time Sheet
 Piece Work Card

19. Job Ticket
A job ticket or job card is commonly used for recording the
time worked on each job. A card is prepared for each worker
and is allotted to the worker who takes up job.
The worker enters in this card the time of starting as well as
finishing the job. After the completion of the job, the worker
submits his work along with the ticket. He is then issued
with another job ticket for the next job. This process keeps
on continuing. Here one job gets one ticket.

21. Combined Time and Job Card
 This card combines two in one- the clock card and the
job card. It records both attendance time as well as
time spent on different jobs. Idle time is automatically
revealed as the difference between attendance time
and work time.

23. Daily Time Sheet
Each worker is daily issued a time sheet in which the
time spent on the job is recorded. The sheet must be
completed on the same day and handed over to the
foreman for signature.

25. Weekly Time Sheet
 The weekly time sheets record almost the same
information as the daily time sheet. The difference is
that instead of recording the work done on daily basis,
record of work done is entered on a weekly basis. The
weekly time sheets need less paper work as compared
to daily time sheet. This method proves useful where
the jobs are big and their number is small. Example
building and construction work, internal decoration
etc.

27. Piece Work Card
This card is allotted to the workers who are paid on piece
basis. This card may be made either for each individual job
or for recording the work done on several jobs. This method
is based on the units produced and not on the basis of time.