1. Cost & Management Accounting
Labour

2. Labour Direct Labour Indirect Labour Labour Cost Control
Personnel Department
Production or Engineering Department
Time Keeping Department

3. Time Keeping Department
A. Time Recording B. Time Booking

4. Time Recording Manual Methods: -Attendance Register -Disc System
Mechanical Methods
- Time Recording Clock
- Dial Time Recorder
Electronic Devices
- Swipe Card
- Bio-Metrics

5. Time Recording Clock-1

6. Time Recording Clock 2

7. Clock 3

8. Clock 4

9. Clock 5

10. Clock 6

11. Clock 7

12. Time Booking
Time Booking is tracing the time spent by the worker and identifying such time to jobs, processes or operation so as to calculate the wage cost of such processes, jobs or operations

13. Objectives of Time Booking
Ascertainment of Labour Cost
Control of Idle Time
Determining Overhead Absorption Rate
Evaluating Performance of Workers
Determining Performance Bonus

14. Methods of Time Booking
Daily Time Sheets
Weekly Time Sheets
Job Tickets
Job Cards

15. Daily Time Sheets Daily Time Sheet Time Name: Date:
Clock Card No Week No.
Machine No Cost Centre.
Work Order No.
Description
Work
Done
Time
Hours
Started
Finished
Workers’ Signature Foreman’s Signature Cost Office Reference

16. Weekly Time Sheets Weekly Time Sheet Name: Date:
Clock card No Week Ending:
Cost Centre/Department:
Day
Job No.
Description
Time
Total Hours
For Cost Office
Start
Finish
Normal OT
Rate
Amount
Worker’s Signature Foreman’s Signature Cost Office Ref:

17. Idle Time
Idle Time is the difference between the time for which payment is made and the actual time worked.
It is the time during which the worker did not engage himself in productive work

18. Causes of Idle Time
Avoidable Causes
Unavoidable Causes

19. Avoidable Causes Failure of Power Supply Breakdown of Machinery
Non-Availability of Material
Strike
Lock-out
Natural Calamities

20. Unavoidable Causes Setting-up Time
Movement from Gate to Production Floor
Movement from One Job to Another
Time to Take Instruction
Tea-Breaks
Personal Needs
Minor Accidents
Seasonality of Industry

21. Over-Time Work Carried on Beyond Normal Hours
Double the Rate of Payment
Should be Avoided
Normal Causes OT –charged to the concerned Job or Batch
Abnormal Causes OT-transferred to Costing Profit and Loss account
Only on Proper Authorisation

22. Causes of Over-Time Completion of a Rush Order
Meeting a sudden spurt in demand
Completion of a Delayed Work
Making up for Loss of Production due to Accidents, Flood or Other Natural Calamities

23. Labour Turnover
The rate at which the employees are leaving the organisation in a year
Also known as Attrition rate
In IT industry, it was as high as 26-30% in It has come down to 12-16% in 2009
It is unhealthy for the organisation
It should be reduced as much as possible through constant enquiry

24. Measurement of Labour Turnover
Separation Rate =
Replacement Rate
Labour Flux Rate

25. Causes of Labour Turnover
Avoidable Causes
Unavoidable Causes

26. Avoidable Causes of Labour Turnover
Low Wages
Working Conditions
Labour Relation
Trade Union Rivalry
No Job Satisfaction
Lack of Training
Bad Working Hours
Lack of Incentives
No Welfare Measures
Lack of Job Security
Unfair Promotion
Supervisory Staff

27. Unavoidable Causes of Labour Turnover
Death, Retirement or Disablement
Marriage or Pregnancy in case of Women
Better Career Opportunities
Retrenchment
Termination
Change of Place of Work
Change for Better Working Environment
Domestic Responsibilities

28. Preventive Cost of Labour Turnover
Higher Wages
Better Welfare Measures
Better Training
Better Working Conditions
Retirement Benefits

29. Replacement Cost of Labour Turnover
Recruitment Cost
Cost of Training
Vacancy Time Gap and Loss of Output
Adjustment Time for the New Workers
Loss of Quality
Strain on Tools & Equipment
Higher Scarp and Defective Work

30. Measures to Reduce Labour Turnover
Proper Recruitment
Good Training
Fair Wages
Good Working Conditions
Labour Amenities
Labour Welfare
Building up Loyalty
Improving the Skills
Improving Relations
Communication of Policies
Grievances Cell
Workers’ Participation in Management

31. Features of a Fair Wage System
Guaranteed Wage
Uniformity
Connected to CPI
Recognition of Efficiency
Incentive for Hard Work
Equality
Clarity
Progressive Scale
Consistency
Flexibility
Simplicity
Fairness
High Level of Morale
Viability of operation

32. Systems of Wage Payment
Time Rate
Piece Rate
Taylor’s Differential Piece Rates
Halsey’s Incentive Plan
Rowan’s Incentive Plan

33. Time Rate Wages are paid for the Time spent on the job
Output is irrelevant
Rate per Hour. Per Day, or per Month
Suitable when Quality of work is important
Trade Unions prefer this method
Monthly Payment goes with other allowances

34. Advantages of Time Rate
Simplicity
Easier Computation
Encourages Skill Development
Guaranteed Wages
Minimum Loss to Material and Equipmnets
Equality of Wages
Team Work
Cordial Relation among the Workers
Support of Trade Unions

35. Disadvantages of Time Rate System
Abilities are not Differentiated
No Incentive for Hard Work
Requires Supervision
Dissatisfaction of Efficient Workers
Low Morale
No Punishment for Inefficiency
Labour Cost is not a variable cost under this system

36. Piece Rate System Rate per unit of output
Output decides the wages payable
A standard time is taken and the standard output is determined
Time Wages for the standard output determines the piece rate

37. Advantages of Piece Rate System
Efficiency is recognised
Motivates the workers
Reduces labour cost per unit
Labour cost is variable
Computation of labour cost in advance is easy
Lesser Supervision
Less Idle Time

38. Disadvantages of Piece Rate System
Quality suffers
Difficulty of Fixing the standard output and Piece Rate
More scrap and Defective Work
Damage to Tools and Equipment
No Guaranteed Wages
Uncertainty in Income
Trade Unions Oppose the System

39. Taylor’s Differential Piece Rate System
Two Piece Rates: Low Piece Rate and High
No Guaranteed Wages
Standard Output is fixed on Time and Motion Study
Low Piece Rate at 83% of standard piece rate for output below standard
High Piece Rate at 175% of standard piece rate for output above standard

40. Merits and Demerits of Taylor’s Method
Increases Efficiency and Motivates the Worker ensuring a high level of morale
Differentiates among workers leading to bad labour relation
Detailed records are to be maintained regarding the output of the workers
Demoralises human values

41. THANK YOU