labour cost, labour turnover

1. Labour Cost
By:- Sagar Wadhawani
Chinmay Vichare
Rohit Umrao
Mamta Thakur

2. Objectives
• Direct and indirect labours.
• Labour turnover.
• Time keeping and time booking.
• Overtime.
• Payroll.
• Idle time
• Remuneration.
• Incentives plans.

3. Direct and Indirect labour
• Direct.
• Indirect.

4. Organization for accounting and control
of labour cost
• Departments –
 Personal
 Engineering
 Time keeping
 Payroll
 Cost accounting

5. Labour Turnover
• Measurement methos
1. Seperation
2. Replacement
3. Flux

6. Causes of Labour Turnover
• Avoidable causes.
• Unavoidable causes.

7. 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

8. 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.

9. Methods
Time keeping
• Attendence register.
• Token or disc method.
• Time recording cocks
Time booking
• Job ticket
• Daily time sheet
• Weekly time sheet
• Piece work card

10. Overtime
Disadvantages
 Excessive labour cost.
 Decrease in labour productivity.
 Increase in lighting cost.
 Effect on health of workers.
 Increase in wages.

11. Treatment of overtime
• When overtime is job specific.
• When overtime is due to general pressure.
• When overtime is due to abnornal reasons.

12. 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

13. Payroll department
• Responsible for computation and disbursement of wages payable.
• Records hours worked and wages earned.

14. 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.

15. Wage Sheet
Causual
workers
Out-worker
Payroll Department

16. Idle Time
• ‘Idle time represents time lost by workers who are paid on time bais’.

17. Causes
• Productive
• Administrative
• economic
Treatment
• Normal
• abnormal
Till here rohit

18. Remuneration

19. 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

20. Time rate system
Advantages
• Simplicity
• Security of workers
• Quality of work
• Accepted by trade unions
• economical
Disadvantages
• No incentives
• Low quality
• Extra supervision cost
• Costing difficulties
• Idle time

21. 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

22. Piece rate system
Advantages
• 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.

23. Incentive planes

24. 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

25. 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

26. 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

27. Merrick’s differential piece rate system
Level of efficiency Piece rate
Upto 83%
83% to 100%
Above 100%
Ordinay piece rate
110% of piece rate
120% of piece rate

28. 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.