ACCOUNTING

FOR LABOR
ORGANIZATION
FOR LABOR COST
ACCOUNTING
AND CONTROL.
Organization for Labor Cost Accounting
and Control Labor cost accounting involves the following;

1. The employment history of

each worker. needed to comply with contracts,
2. Information
laws, taxes, state, local government requirements.
3. Labor time and cost standards.
Organization for Labor Cost Accounting
and Control
Labor cost accounting involves the following;
4. Each employee’s time worked, wage rate, and total
earnings for each payroll period.
5. The computation of deductions from gross wages
for each employee.
6. The output or accomplishment of each employee.
Organization for Labor Cost Accounting
and Control
Labor cost accounting involves the following;

7. The amount of indirect labor cost and the direct

labor cost
8. Total labor cost in each department for each
period.
9. Cumulative data on earnings and payroll deduction
for each employee.
Financial Accounting Cost Accounting

A record is kept of the A record is kept of the

total time worked and time worked on each
the total amount earned job, process or
by each worker. department by each
worker and the
associated cost
Financial Accounting Cost Accounting
Dr Cr Subsidiary record Dr Cr
Payroll XXX
Employee XXX WIP XXX
income tax
FOH Control XXX
payable

FICA Tax XXX

payable Indirect Labor XXX

Accrued XXX
payroll Payroll XXX
Personnel Timekeeping

Production Payroll
Planning
Cost Department
 •Personnel functions
PERSONNEL include recruiting, hiring,
training, evaluation,
DEPARTMEN retirement counseling,
T termination and
outplacement
PRODUCTION PLANNING
DEPARTMENT
•A production planning
department is responsible for
scheduling work and releasing
work orders to the producing
departments.
Production Planning Department
 TIMEKEEPING DEPARTMENT

A clock card or timecard Time tickets or job

that provides reliable tickets to secure
evidence of the employee’s information as to the
presence in the plant from type and duration of
time of entry to departure. work performed.
 Timekeeping Department

Time Clock – the time clock or time recorder is an

instrument that records employees’ time in and out of the
office or factory
A clock card provides space for the name and number of the
employee and usually covers and entire payroll period.
 Timekeeping Department

Time Ticket or Report- in accounting for labor, the clock

card is evidence that time has been purchased and it is
comparable to a receiving report.

Time ticket Daily time report

 Timekeeping Department

Bar-Coding Technology- computerized on-site data entry

for both clock cards and time tickets can be achieved by
bar coding.

Bar codes
 PAYROLL DEPARTMENT

1 2
Computing and Distributing the payroll
preparing the payroll cost to jobs and
and departments.
 •Payroll Computation and
Preparation- the payroll is
prepared from clock cards.
PAYROLL The final computed payroll
DEPARTMEN is recorded in a payroll
T journal or payroll record.
The record shows total
wages, deductions and the
net payroll.
 •Payroll Distribution- the
individual time ticket or daily
time report shows the use of
PAYROLL the time purchased from each
DEPARTMENT employee. The tickets for
each employee must agree
with the employee’s total
earnings for the last week
 COST DEPARTMENT
•In the basis of the labor distribution
summary or the time tickets, the cost
department records direct labor cost
on job cost sheets or departmental
overhead records.
 •Labor, the human
contribution to production,
has a direct link to
SUMMARY productivity. Productivity
improvements require better
management of human
resources.
Thank you!