Prepared by Chintan Pawaskar C08 Romil Malde C38 Deepak Kharatmol C10 Nivedita Sarode C23 Shweta Jogdand

C45 Rutuja Nene C51

Cost of labour • Sum of all wages paid to employees as well as the cost of employee benefits and payroll taxes paid by an employer Objectives • Determining labour cost in the cost of goods or service • Reporting labour cost for planning & control • Reporting labour cost for decision making

time keeper. Supervisors. etc . machine operators. office staff. etc Indirect labour cost • Consist of salaries paid to labours which are not directly engaged in manufacturing process • Ex. Line workers.Direct labour cost • Consist of wages paid to the workers which are actually involved in manufacturing process • Ex.

• • • • • Personnel department Engineering department Time keeping department Payroll department Cost accounting department .

• Main function is to provide efficient labour force • Prepares employee’s record card on engaging a new worker • Personnel manager is responsible for the execution of labour policies .

• Maintains control over production methods & working conditions for each job & department • Prepares plan & specification for each job scheduled • Survey & inspection of production activities • Safety & efficient working conditions .

• Prepares record of time spent by each employee • Determines total working hours for each employee so that his earning can be calculated • Also records attendance details of employees .

• Clock card • Disc methods • Attendance record .

process or operation Objectives • To determine amount of labour cost • To determine value & quantity of work done • To determine performance bonus .• It means recording time spent by employee in each job.

• • • • Job tickets Job cards Weekly time sheets Daily time sheets .



To prepare payroll from clock cards. job or time sheets Functions • To compute employee wages • To prepare departmental payroll summaries • To distribute salary & wage payments • To compute payroll deductions. taxes • To verify & summaries time of each worker as shown in daily time cards .

labour and expenses • It analyzes all costs of manufacturing. marketing and administration • It generates control reports and data for decision making to the executives .• Keeps records related with cost of material.

• It is important aspect labour cost control Objectives of wage system • Acceptance by employees to avert slowdowns • Stabilization of labour turnover • Provision for incentive plans • Provision for flexibility .

accountants. weekly or daily basis & his remuneration depends upon time for which he is employed • From employer point of view this method is easy to compute & provide economy in time keeping & payroll recording • Most popular method for workers such as clerks.Straight time • Under this basis the worker is paid at hourly. factory helpers .

Piece work Under this method fixed rate is paid for each unit produced or job performed Advantages • Efficiency is recognized • Motivates the worker • Lesser supervision • Less idle time • Computation of labor cost in advance is easy .

Disadvantages • Quality suffers • Difficult of fixing standard output & piece rate • Uncertainty in income • More scrap & defective work .

Basic purpose is to induce worker to produce more so he can earn higher wages & at the same time unit cost can be reduced Objectives :• Higher production without dispute between labor & management • Stability in labor turnover • Reduce absenteeism • It improves adminstrative efficiency .

• Taylor Differential piece-rate system Under this system there are two wage rate i..e. A Low wage rate for output below standard and a Higher wage rate for output above standard performance The system aims to discourage below average workers by Providing no guaranteed hourly wage Setting low piece rate for low level production and high rate resulting in high earning .

240 / day 8 / day 12 units / 1hr.• Example : Worker Earnings Working Hours Average Production Unit Cost Rs.5 / unit Rs. 2 / unit Rs. Production Averaged to 15 units or more / hr. / one worker 2. 3 / unit Production Averaged to 14 units or less / hr. .

• Gantt task & Bonus plan This system combines a GUARANTEED time rate with a bonus and piece rate plan using the differential piece rate principle Plan provides incentives and opportunities to those who reach high level production Provides security and encouragement to the less skilled workers workers are also satisfied in that they receive the total reward for their efforts .

• Example : Output Output Below Standards (high task) Output At Standards Payment Time rate (Guaranteed) Bonus on the time rate Output Above Standards High piece rate on worker’s whole output .

• Basic wages • Time based systems Total Wages = Hours x Basic rate of + Overtime hour worked + Overtime premium Worked pay per hour per hour • Piece works systems Basic earnings = Unit Produced x Rate of Pay per unit • Idle time • Idle time Ratio Idle time Ratio= Idle time X 100 Total attendance Time .

of separation during the period x 100 Average No. of Workers during the period • Replacement Method Labour Turnover= No. of ReplacementX100 Average No. of Workers during the period .• Labour turnover • Separation Method Labour Turnover = No. of Separation + No. of Workers during the period • Flux method Labour Turnover= No. of Workers Replaced during the period Average No.

500 workers were recruited during the year of these.600 No. 80 workers left while 320 workers were discharged. 1.Illustration: From the following information. 300 workers were recruited because of exits and the rest were recruited in accordance with expansion plans. of Replacement = 300 workers Average No. of Workers = 7600 + 8400 2 = 8000 . 2003 = 7. calculate labour turnover ratio and turnover flux rate No.400 During the year. 2003 = 8. of workers as on 1" Jan. Solution: Labour Turnover Ratio (1) Replacement Method: No. of workers as on 31" Dec.

• Labour Turnover = No.75 % x 100 • FLUX METHOD = No of Separation + No of Replacement Average No. of Workers 300 8000 = 3. of workers 1500 + 400 X 100 = 23.75 % 8000 X 100 . of Replacement x 100 Average No.

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