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    management

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    © All Rights Reserved
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    11 views41 pages

    CH14

    Uploaded by

    sajjad
    management

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 41
    Z| {| Controlling and Accounting Li For Labor Costs Labor cost represents the human contribution to production and is an important cost factor requiring constant measurement, control, and analysis, The economic advantage of increased production at lower unit costs, alow with rising wage rates and ever-increasing fringe benefits, has accelerated te trend toward greater use of automatic equipment to produce more goods in fewer labor hours. Changes in the utilization of a labor force often reqiit changes in methods of compensating labor, followed by changes in accountig for labor costs. All wage payments are, in the last analysis, directly or indirectly based and limited by the productivity and skill of the worker. Therefore, prom Motivation, control, and accounting for this human cost factor is one of tt most important problems in the management of an enterprise. A coopetti"é and enthusiastic labor force, loyal to the company and its policies, © oon tribute greatly toward efficient, low-cost operations, Wages are only ote ment in employer-employee relations, however. Adequate records, esl ¥ derstood and readily available, are an equally important factor in harmom relations between management, employees, labor unions, government * cies, and the general public. BASIS FOR LABOR COST CONTROL e q - i " Labor cost control is based on pertinent and timely information 1 ted to management. Top executives are often primarily interested 19 382 + CONTROLI quarter 14 LING AND ACCOUNTING FOR LaBoR costs cost to total cost and in cha i jabor COS changes in the labor ¢ dent needs to know details of the labor ec ot CO" Fao. t now jabor cost by ar st by departme wipes. by direct and indirect workers, and by jobs or Partments, prod- we aisars need similar detailed information applicable to thee gan SHOP h Cost control is often described as an attitude or state of mind no : tc F a in chy an activiy. Labor cost control begins with an adequate produeticn ce 2 ae on planning rOducing ‘Hours of Percent trgore | wcsicra | edit | perce | oeswimen: | eouie® | “Soil erence Rev | Redes? | "Suiput | Performance aie ue 3 107.1 na 9 3 260 300 if ; % 5:6 3 50 us 96:7 Ma 5 4 80.0 DAILY IDLE TIME REPORT Drea Idle Time Due TO. Pera Diect| Productive Direct wot ment |Labor} Labor Hours No Materials Other nt Amount % | Amount} % | Amout TN 500 1 1 |3,200| 2,900 | 90.6 200 |6.2 30 Hed 35 [3:9 199 33 3 [8300] 13200 | 92:3 25 119] 25 3-8 sel 38 8:9 a | "e00) "580 | 51:7 20 |323| 30 io (5. 200) 180 | 90:0 to |5:0 5 M 110 [2.1 ~ 05 [2-0 “115,300 4,830] 91.2] 255 |4-8L_ ate waa Bulletin ‘en aduction Costs. So.gtt Ferara, “Aan inegrated Approach to Control of ROLLING AND ort 14 CONTI ACCOUNTING FOR LaBoR costs 0 plant-wide labor cost report below i a to indicate (1) the trend of direct an : oes and (2) the actual cost compared depa sent CO executive and Plant man. d indirect labor cost in the three with the estimated cost figures, Actual Labor eon bor Cost, ee This Last vearve 7 qi Thi Week Week “gar Wee REY Direcc..-. | $28,500 828,200 Si risz- 2 7 Taatrect 2,200 "21250 Pty wih $70,440 $30,200 51,254, Direct.... | $13,600 $13,400 ¢ 430,525 $13,750 a4 . 41,09 famine | sbrects’ | tooo tooo? "08208 | SERB 81.630 $e one Toeat.« | £15,200 $13,000 $ 496,128 | e1s,390 sisson on es pereet 5+ | $25,690 $26,100 81,152,250 | snu,s80 san one vinous Indirect 2,825 2,896 7 5280 Ze as Eee Total.. | $28,425 $28,900" $1,270,153 |__Estmates Labor cost Total. | $30,700 $10,450 $1,256,029 on | s27,500_ $29,750 $1,267,000 The daily performance report for labor and the daily idle time report? below combine three types of daily labor reporis: (1) employee performance, (2) departmental performance, and (3) idle time. Physical factors such as hours are coupled with percentages to improve the effectiveness of these re- ports. DAILY PERFORMANCE REPORT FOR LABOR Pertormance Repon by Departments Daly Performance Repon by Employees Daly Performance Reon by Dep cua] Snag awa] Sanders | producing | Heurwot | Percent mh "hours Dutt mad 1 fours utput | Pertormance: Emmeree | Preaucne | FSUE St | petoriatce | oeparimen | "i Out 1.8 | 1 no 0 § b]) as ° 10 125.0 He ae [oud Big PTT Pera ae |e i : DAILY IDLE TIME REPORT Total Depart-| Direct | Productive Direct — Amount] % | Amount Idle Time ue To | Amount | % |Amount| % | 50 |1.6| 50 Bilis 3,200} 2,900] 90.6 | 200 |6-2) 35 |179} 50 2 117300} 13200 | 9273 ate 30 |5-0] 44 2 | 00] "550] 91:7 20 135 I 200| 180 | 90. 10 By Toxat|s, 00] 4,030] 91.1 NAA Bulletin, Vol. XL1. No 1 of Production Costs, ka 387 PLANNING AND CONTROL OF MATERIALS AND LABOR Pant 4 The daily efficiency report, illustrated below. is designed for and issueg to shop superintendents to help maintain schedules that depend greatly upon the ‘The report shows actual hours, standarg utmost efficiency of shop personnel. hours, and the percent of efficiency of each group. DAILY EFFICIENCY REPORT tanees $08 Daily Hours | _Cumutatie Hours Ettciency cious] __Groupname [acum | Stanend | Artal | sarcara | Daly [Cumulavel Remany jaune Ma wis 0501 Hind ling Lancer & Mat ssa ad ‘ gee {oie {ante f aoe | nes |e soot | tunenason sat ot rae {oe aumier [ roar foots [tors se: | seine Room a ne 1 fase feo | toe | oats sic | pemwusion MEL ae sea rev | sens | sor [130.7 er sie ine Roos wa ame Poymer | soe foes Pata ah assess vcr [one fonser | oatmr | sera | ase pil is wow | ae Ponce fo ws [ous nee Le se tem ne boas | ow | ne | ane THE COMPUTER'S CONTRIBUTION TO LABOR COST CONTROL Whenever large numbers of hourly workers perform standardized labor tasks, a computer program can calculate and report each worker's daily earn- ings and efficiency. Because such a report is too voluminous and impractical for a plant manager or supervisor to use, one procedure is to program for significant unfavorable shifts in performance from one day to the next. This type of report provides for management by exception, whereby the supervisor can work to correct problems of a very few workers and prevent chronic difficulties. With a work force of five hundred employees, a daily report from the computer, identifying significant adverse changes, might appear as show" below. The report is focused on adverse changes in performance from the workers’ historical pattern. For example, Perez is a highly efficient performet. but the 81% efficiency rate seems too low for this worker; and managemet has an opportunity to take early corrective action if needed. EMPLOYEE PERFORMANCE REPORT {Significant Adverse Change) 4% Efficiency Last Month Employee ‘weticiency | give Gays Hign average | Yesterday | 9 etticiency BOWAN, T. Bax 33 DURAM, A 2 a3 69 GOKDON, E. 78 74 31 HONSL, Ay 88 5, 36 sal eles Preez, G. 98 92 ar 95| 991 4 64% 79] 83] 82) 73] 85| 90] 7a] 75] 78] CONTROLLING AND ACCOU) Ba NTING FOR LABOR costs n daily efficiency performances in com, Wityed with monthly OF quarterly report. ve Pe Te following illustration is indicat wok: Frectiveness in labor utilization and se 389 Puler storage, management ¢ Son chronically low efficieney eal the information needed t, ADOF COSt Ci 7 7 and probably Varney are not likely to be Satisfactory wor! ean wrk ent if 757% of the standard rate is considered minimal erpeat vo be new employees and seem to he improving, while She pable of attaining the desired Productivity level vo kers in this Dettmer and EMPLOYEE PERFORMANCE REP. (Chronically Low Pertormancey November 30, 19. ‘ovember 30, 19-- % Efficrency Last 12 Month: hor [ieee [never * Je eticiency | Prenous [Numb 0) his Wvion! Five Months 5 J Ph Average | PS Month | a Eiterencs Reported 38% 40% 42 49 43 51 46! 6 50 52 36 45 51 45 51 7 66 7 73 68 66 58 63 3 63 66 64 60 56 54 50] 2 77 68 70 75 68 75 80 5 59 64 60 65 68 66 64 4 Effective control is best achieved by careiul use of comparisons between xual performance and predetermined standards of performance. Daily or weekly comparisons may be in aggregate (i.e., by department or division), or they may be made for each employce. Departmental labor cost reports can be ‘onbined to form a plant summary of operating performance, which is most. ‘Useful to the plant superintendent and other production officials. PRODUCTIVITY, INFLATION, AND PRICES ever-increasing cover- pl . i a ived In recent years the topic of inflation has recei ing public and political ee j un from TV and news publications, leading to a mo} chasing power. and Att Inflation erodes the value of savings. eee aes and workers Niles serious disparities between individuals on fixe Leann ™ing steady pay increases. Some wage earners, aa anges are Tess affected by this inflationary

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