The document provides an overview of labor cost management, detailing methods for tracking working hours, including manual, mechanical, and electronic time recording systems. It discusses various causes of idle time, attrition rates, and strategies to improve employee retention and productivity. Additionally, it highlights different wage payment systems such as time rates and piece rates, along with their respective advantages and disadvantages in labor cost management.

1. Cost & ManagementAccounting
-B.V.Raghunandan, SVS College, Bantwal

2.  Direct Labour
 Indirect Labour
 Labour Cost Control
 Personnel Department
 Production or Engineering
Department
 Time Keeping Department

3. A.Time Recording
B.Time Booking

4.  Manual Methods:
-Attendance Register
-Disc System
 Mechanical Methods
-Time Recording Clock
- DialTime Recorder
 Electronic Devices
- Swipe Card
- Bio-Metrics

12.  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

13.  Ascertainment of Labour Cost
 Control of IdleTime
 Determining Overhead
Absorption Rate
 Evaluating Performance of
Workers
 Determining Performance Bonus

14.  DailyTime Sheets
 WeeklyTime Sheets
 JobTickets
 Job Cards

15. DailyTime Sheet
Name: Date:
Clock Card No. Week No.
Machine No. Cost Centre.
Work
Order
No. Description
Work
Done
Time
Hours
Started Finished
Workers’ Signature Foreman’s Signature Cost Office Reference

16. WeeklyTime Sheet
Name: Date:
Clock card No. Week Ending:
Cost Centre/Department:
Day Job No. Description Time Total Hours For Cost Office
Start Finish Normal OT Rate Amount
Worker’s Signature Foreman’s Signature Cost Office Ref:

17.  IdleTime 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

18. Avoidable Causes
Unavoidable Causes

19.  Failure of Power Supply
 Breakdown of Machinery
 Non-Availability of Material
 Strike
 Lock-out
 Natural Calamities

20.  Setting-upTime
 Movement from Gate to Production
Floor
 Movement from One Job to Another
 Time toTake Instruction
 Tea-Breaks
 Personal Needs
 Minor Accidents
 Seasonality of Industry

21.  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

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

23.  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

24.  Separation Rate =
 Replacement Rate
 Labour Flux Rate
100
ker
.
X
sberofWorAverageNum
sLeavingofEmployeeNo
100
ker
Re
X
sberofWorAverageNum
placedNo

100
ker
Re...
X
sberofWorAverageNum
placementofNoLeavingNo 


25. Avoidable Causes
Unavoidable Causes

26.  LowWages
 Working
Conditions
 Labour Relation
 Trade Union
Rivalry
 No Job
Satisfaction
 Lack ofTraining
 BadWorking
Hours
 Lack of Incentives
 No Welfare
Measures
 Lack of Job
Security
 Unfair Promotion
 Supervisory Staff

27.  Death, Retirement or Disablement
 Marriage or Pregnancy in case ofWomen
 Better Career Opportunities
 Retrenchment
 Termination
 Change of Place ofWork
 Change for BetterWorking Environment
 Domestic Responsibilities

28.  HigherWages
 BetterWelfare Measures
 BetterTraining
 BetterWorking Conditions
 Retirement Benefits

29.  Recruitment Cost
 Cost ofTraining
 VacancyTime Gap and Loss of Output
 AdjustmentTime for the NewWorkers
 Loss of Quality
 Strain onTools & Equipment
 Higher Scarp and DefectiveWork

30.  Proper
Recruitment
 GoodTraining
 FairWages
 GoodWorking
Conditions
 Labour Amenities
 LabourWelfare
 Building up Loyalty
 Improving the Skills
 Improving Relations
 Communication of
Policies
 GrievancesCell
 Workers’
Participation in
Management

31.  GuaranteedWage
 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

32.  Time Rate
 Piece Rate
 Taylor’s Differential Piece Rates
 Halsey’s Incentive Plan
 Rowan’s Incentive Plan

33.  Wages are paid for theTime 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

34.  Simplicity
 Easier Computation
 Encourages Skill Development
 GuaranteedWages
 Minimum Loss to Material and Equipmnets
 Equality ofWages
 TeamWork
 Cordial Relation among theWorkers
 Support ofTrade Unions

35.  Abilities are not Differentiated
 No Incentive for HardWork
 Requires Supervision
 Dissatisfaction of Efficient Workers
 Low Morale
 No Punishment for Inefficiency
 Labour Cost is not a variable cost under
this system

36.  TotalWages =TT XTR whereTT =TimeTaken
TR =Time Rate

37.  Rate per unit of output
 Output decides the wages payable
 A standard time is taken and the
standard output is determined
 TimeWages for the standard output
determines the piece rate

38.  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 IdleTime

39.  Piece Rate =
 TotalWages = Output X Piece Rate
dardOutputS
TimeWages
tan

40.  Quality suffers
 Difficulty of Fixing the standard output and
Piece Rate
 More scrap and DefectiveWork
 Damage toTools and Equipment
 No GuaranteedWages
 Uncertainty in Income
 Trade Unions Oppose the System

41.  Two Piece Rates: Low Piece Rate and High
 No GuaranteedWages
 StandardOutput is fixed onTime 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

42.  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

43.  For time taken, wages are paid
under time rate
 A standard time is fixed in advance
 For the time saved, 50% of time
wages is paid as bonus
 Remaining 50% goes to supervisor
or management

44. TotalWages=TimeWages + Bonus
=TT XTR + [TS XTR x 50%] where
TT =TimeTaken
TR =Time Rate
TS =Time Saved

45.  Easy understandability
 Guaranteed time rate irrespective of the
efficiency
 Incentive in the form of bonus for time saved
 Workers can evaluate their own performance
on the basis of actual time taken against
standard time
 Management also shares the benefit leading
to better investment in tools & equipment

46.  Quality may suffer
 Workers would drive themselves at top speed
leading to tension
 Lack of team work as each worker will
concentrate upon finishing his work at the
earliest
 Wastage of material and more scrap
 Tools would be subject to strain as they may
be carelessly handled

47.  Similar to Halsey’s Plan
 Guarantee of time wages
 Bonus for time saved
 Standard time is predetermined
 The bonus is in the proportion of time saved
to standard time
 Quantum of bonus depends upon the time
saved
 Management enjoys the remaining value of
time saved

48.  TotalWages =TimeWages + Bonus
=TT XTR + [TS XTR X
whereTT =TimeTaken
TR =Time Rate
TS =Time Saved
ST = StandardTime
]
TS
TT