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labour cost, labour turnover
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Labour CostBy:- Sagar Wadhawani Chinmay Vichare Rohit Umrao Mamta Thakur
Objectives • Direct and indirect labours.
• Labour turnover.
• Time keeping and time booking.
• Overtime.
• Payroll.
• Idle time
• Remuneration.
• Incentives plans.
Direct and Indirect labour
• Direct.
• Indirect.
Organization for accounting and control of labour cost• Departments –
Personal
Engineering
Time keeping
Payroll
Cost accounting
Labour Turnover• Measurement methos
1. Seperation
2. Replacement
3. Flux
Causes of Labour Turnover
• Avoidable causes.
• Unavoidable causes.
Reduction and control • Suitable wage policy.
• Healthy and efficient working condition.
• Impartial and systematic attitude of personal management.
• Promotional opportunities.
• Labour participation.
• Taking welfare measures.
Till here by sagar
Time keeping & Time Booking• Time keeping – recording arrival and departure time of
workers for attendence purpose and for calculations of wages,
• Time booking – recording time send by workers on different jobs or processess for determining labour cost of job/process.
MethodsTime keeping
• Attendence register.
• Token or disc method.
• Time recording cocks
Time booking
• Job ticket
• Daily time sheet
• Weekly time sheet
• Piece work card
Overtime Disadvantages
Excessive labour cost.
Decrease in labour productivity.
Increase in lighting cost.
Effect on health of workers.
Increase in wages.
Treatment of overtime
• When overtime is job specific.
• When overtime is due to general pressure.
• When overtime is due to abnornal reasons.
Control of overtime• All overtime premium should be authorised by works
manager.
• It should be seperatly recorded for future planning.
• Total overtime premiun should be daily reported to the manager.
• When overtime becomes permanent feature, then steps should be taken to cope wid additional work.
Till here by chinmay
Payroll department• Responsible for computation and disbursement of wages
payable.
• Records hours worked and wages earned.
Functions of payroll department
To maintain records of job classification.
To verify and summarize the time of each worker.
To prepare the payroll and compute the wages.
To compute payroll deduction
To maintain payroll record of each employee.
Wage SheetCausual workers
Out-worker
Payroll Department
Idle Time• ‘Idle time represents time lost by workers who are paid on
time bais’.
Causes
• Productive
• Administrative
• economic
Treatment
• Normal
• abnormal
Till here rohit
Remuneration
Time rate system
• Workers are paid according to the time for witch they work.
wages = no. of hrs worked X rate per hr
• Eg: If worker is paid at the rate of Rs 25 per hrs, his wage for the day of 8 hrs will be ---
8 X 25 = Rs 200
Time rate systemAdvantages
• Simplicity
• Security of workers
• Quality of work
• Accepted by trade unions
• economical
Disadvantages
• No incentives
• Low quality
• Extra supervision cost
• Costing difficulties
• Idle time
Piece rate system• Wages under this system are paid according to the quantity of
work done.
wages = rate per unit X No. of units produce
Eg :- if rate per unit is 17, and during a day a worker has completed 10 units , then his wage will be……
Rs 17 X 10 units = Rs 170
Piece rate systemAdvantages
• Incentives to efficient workers.
• Increase in production.
• Lower cost.
• Equitable.
• Decrease in supervision.
• Simple.
Disadvantages
• Poor quality of work
• No security of wages.
• Misuse of material and equipment.
• Injurious to health of workers.
• Opposed by trade unions.
Incentive planes
Halsey premiun plan & Halsey Weird plan.• Paid at a rate per hour.
• If worker takes standard time or more time he is paid for the actual time taken at the time rate.
• If worker takes less than the standard time , then he is paid a bonus equal to 50% of the time saved.
Eg:- std time = 50 hrs
Wage rate per hour = Rs 3
actual time taken =42 hrs
time saved = 50 -42 =8 hrs
Earnings = 3 X 42 + 50% 0f [8 hrs X 3]
=126+12 =Rs138
Rowan Plan• Wages are paid on time bases.
• If worker takes standard time or more time he is paid for the actual time taken.
• If worker takes less than the standard time , then he is paid a bonus.
Eg:- std time = 50 hrs
Wage rate per hour = Rs 3
actual time taken =42 hrs
time saved = 50 -42 =8 hrs
Bonus = time saved /time allowed X time taken X time rate ==20.16
Earnings = 3 X 42 + bonus
=126+20.16 =Rs146.16
Taylor’s differential piece rate system• Day wages are not guaranteed.
• Lower rate & higher rate.
• Eg :- std production = 8 units per hr
working hrs per day = 8 hrs
lower rate = Rs 5 per unit
higher rate = Rs 8.75 per unit
worker X = 7 units
worker Y = 9 units
:- wages of worker X --- 7 X 5 = Rs 35
Wages of worker Y ---- 9 X 8.75 = Rs 78.75
Merrick’s differential piece rate system
Level of efficiency Piece rate
Upto 83%83% to 100%Above 100%
Ordinay piece rate110% of piece rate120% of piece rate
References
• http://en.wikipedia.org/wiki/Incentive_program
• http://smallbusiness.chron.com/incentive-plans-1776.html
• http://managementstudyguide.com/employee-remuneration.htm
• http://www.business-case-analysis.com/direct-labor.html
• http://dictionary.reference.com/browse/Incentives.
Thank you for your Attention