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  • Labour Cost Management

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    Amiya Arnav
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    This document discusses various aspects of labor costs, including: 1. Types of monetary and non-monetary incentives provided to workers such as wages, profit sharing, better working conditions, and retirement benefits. 2. Different types of labor time such as normal working hours, overtime, and idle time which can be unavoidable or avoidable. 3. An example calculating idle time and avoidable idle facilities for a machine with a weekly capacity when actual hours worked are less than budgeted hours.

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    This document discusses various aspects of labor costs, including: 1. Types of monetary and non-monetary incentives provided to workers such as wages, profit sharing, better working conditions, and retirement benefits. 2. Different types of labor time such as normal working hours, overtime, and idle time which can be unavoidable or avoidable. 3. An example calculating idle time and avoidable idle facilities for a machine with a weekly capacity when actual hours worked are less than budgeted hours.

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    © All Rights Reserved
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    8 views10 pages

    Labour Cost Management

    Uploaded by

    Amiya Arnav
    This document discusses various aspects of labor costs, including: 1. Types of monetary and non-monetary incentives provided to workers such as wages, profit sharing, better working conditions, and retirement benefits. 2. Different types of labor time such as normal working hours, overtime, and idle time which can be unavoidable or avoidable. 3. An example calculating idle time and avoidable idle facilities for a machine with a weekly capacity when actual hours worked are less than budgeted hours.

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    © All Rights Reserved
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    of 10

    Labour Cost

    ADM
    MBA I 2014

    Labour cost

    Wages : direct monetary incentive


    Indirect monetary incentive:
    1.
    Profit sharing/bonus
    2.
    Co-partnership ( management
    /equity holding)

    Non monetary incentives


    Better working conditions:
    Health & safety
    Canteen
    Housing
    Education & training
    Retirement benefits

    Labour Time
    Normal working hours
    Overtime
    Idle time: unavoidable/avoidable

    Example

    Machine capacity: 48 hours per week


    No. of working weeks: 50
    Expected working hrs: 80% of max hrs
    Actual hrs worked: 1,800
    Idle time: in hrs
    Waiting for instructions:
    Waiting for materials
    Machine breakdown
    Total idle time
    Calculate the idle facilities

    40
    20
    30
    90

    Answer

    Max capacity: 48*50=2,400


    Budgeted/std(80%):
    1,920
    Unavoidable 480

    Actual recorded 1,800


    Idle time
    90
    Total
    1,890
    Budgeted
    1,920
    Avoidable idle facilitie

    30

    Idle facilities vs time


    Idle facilities: plant capacity utilization
    Idle time
    : labour time utilization

    Treatment of
    Overtime
    Labour turnover

    Overtime
    For specific job
    For regular but additional production
    Negligence or delay in one particular
    department
    Abnormal causes

    Labour turnover
    Preventive costs
    Replacement costs

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