Abstract:
Labor cost is a significant element of cost especially in an organization using more manual operations. It is the cost of human endeavour in the product and requires coordinated efforts for its control. The management objective of keeping labour cost as low as possible is achieved by balancing productivity with wages. The object is often achieved by paying higher wages to limited satisfied workmen with high productivity. Low wage does not necessarily mean low labour cost.
You should be able to:
1. Explain Labour cost and what it involves;
2. Record Labour time and output;
3. Calculate time clocks and other methods of remuneration;
4. Distinguish between idle time, shift premium and overtime premium.
TABLE OF CONTENTS
TITLE ………………………………………………………………………………….PAGE
INTRODUCTION1
TYPES OF LABOUR COST1
Direct LabourCost1
Indirect LabourCost1
TECHNIQUES OF LABOUR COST CONTROL1
PURPOSE OF LABOUR COST2
ELEMENT OF LABOUR COST2
ORGANIZATION FOR LABOUR CONTROL2
Personnel Department2
Engineering Department2
Time-keeping Department3
Payroll Department3
Production Department3
Cost Accounting Department3
METHOD OF TIME RECORDING AND OUTPUT OF LABOUR COST4
Objectives of Time-keeping4
Methods of Time-keeping4
COMBINED TIME AND PAY ROLL CARD6
Requisites of a Good Time-keeping System7
Objectives of Time-Booking9
PAYROLL PREPARATION9
Payroll Department Functions10
WAGE ANALYSIS AND LABOUR10
WAGE ANALYSIS10
WAGES ANALYSIS BOOK11
TREATMENT OF IDLE TIME13
CAUSES OF IDLE TIME14
TYPES OF IDLE COST14
TREATMENT IN COST ACCOUNTING:15
CONTROL16
SHIFT PREMIUM ON LABOUR COSTING16
Shift Differential17
Eligibility for shift premium17
Shift pay hours18
TREATMENT OF OVERTIME PREMIUM18
Overtime18
Overtime Premium18
ELEMENTS OF OVERTIME PAYMENT:18
CONTROL OF OVERTIME:19
Advantages of overtime premium19
Disadvantages of overtime premium19
OVERTIME CALCULATION COMPONENTS: HOW THEY WORK TOGETHER20
1.Rates Costing Method20
2.Extension Costing Method20
Overtime Expenditure Types21
Labour Costing Multipliers21
Labour Costing Rules22
Overtime Projects and Tasks22
How to Calculate Employer’s Cost of Overtime22
EFFECT OF UNIT COST23
METHOD OF REMUNERATION24
Illustration: 129
Solution:29
Bonus or Incentives Schemes30
Illustration: 231
Solution:31
Illustration: 331
Solution:31
Illustration: 433
Solution:33
QUESTIONS AND ANSWERS33