Summary Labour in Cost Accounting

11
Unit 03 : Labour
Labour
labour or manpower refers to the human resources used inproduction Afte
materials it is thesecondmost importantcomponentof cost Despite
the use of large scale equipment and machinery in the production process
the role of labour cannot be under estimated The productivity of all othe
resourcesdepends upon the productivity of labour
Thus an efficient and proper organisation and control oflabour can help
in reducingthe cost per unitofproduction

Direct labour indirect labour

costoflabourthatcan be directly coststhatcannot beeasily identified
attributable tothecostobject withtheproduction process
in an economicallyfeasibleway workersnotengaged in theprocess
of
directlabourinvolvesaltering the converting rawmaterials tofinished
construction composition orcondition goods

of a product example securityguard cleaner

it can beeasilyidentifiedwith a supervisor etc
costobject
example weaver welder tailor
machineoperator




LabourTurnover
labourturnover refers to the rate of change in the workforce of an
organisation Overthe normal course of a business workers leave the

,employment and are replaced with new workers It can bedefined as the
rateofchangeofthe composition of workforce in an organisation
Alabourturnover report mustbe preparedforthe management giving a
detailed breakdownof the causes because
of which the workers are leavi
Causes
of LabourTurnover
a Avoidable causes lowwages allowances

unhappy relation with superiors management
unsatisfactory working conditions
tradeunion rivalries
lackofmedical transport welfarefacilities
inadequatejobsecurity retirement benefits pension schemes
b unavoidable causes illness or accident
death or retirement
domestic problems

marriage women
change in plant location
changing job due to better opportunity
personal dislike
seasonalnature ofjob
discharge on disciplinary grounds


CostsofLabourTurnover
a Preventative costs these are the costs incurred to satisfy the workers
and topreventthemfrom leaving the organisation
cost on Personnel management goodrelation b w workers management

costofmedicalfacilities
education canteenfacilities
cost of welfare activities incentives transport

, Pensionschemes retirement benefits jobsecurity
abovenormalsalary
Bonusotherpromotional incentives entrabenefits
b Replacement costs these are the losses or expenses incurredwhe
workers leave and new inexperienced workers are recruited and
trained It is the costarising when new workers replaceold ones
costofrecruitment selection
costof training of new workers
loss in output due totime in recruiting new workers
gap
costof tools equipment breakdown due tofaulty handling by


if aue to inefficiency
of workers
costof extrascrap detective work
of new workers
cost
of accidents due to lackof experience

Reduction control
oflabourTurnover
labourTurnover
maybe reduced by taking
action on avoidablecauses

suitable satisfactory
wage policy
goodworking conditions conducive to health productivity

encouraging labourparticipation in management

strengtheningwelfare measures

propergrievance redressal system
impartial sympathetic attitude of the management
providepromotional opportunities

introducefinancial nonfinancial incentive plans




Time keeping Department

, Thetimekeeping department is an importantpartofa firmssystem ofaccounting an
control
oflabourcost Themainfunctionofthis department is to accurately recordcac
workerstime
ofarrivalanddeparture in thefactory andalsothe timespentondiffere
jobs orprocesses
Itembraces twomajorfunctions
Timekeeping recordingarrivalanddeparture time ofworkersforattendencepurpos
andcalculation ofwages
TimeBooking recording timespent byworkers on different
jobs
Thepurposeofthe timekeeping department istoprovidebasicdatafor

ofpayroll
preparation

attendancerecords tomeet statutory requirements
computing labourcost
of ajob orprocess
computingoverheadcosts
ofjob
of fordetermining productivity andcontroloflabourco
statisticalanalysis labourrecords




Methods
ofTimekeeping
1 AttendanceRegister theattendance eachworker is recorded in theregister
of
maintained
forthispurpose It provides sufficient no ofcolumnsfortheattendanceof
eachworker Entries in thearrivaland departure column aremade
bytheforeman
theworkerthemselves Workers can be made to
signagainst theirentries to avoid
disputelateron Separateattendance registerscan be maintained ineachdepartment

no ofworkersis large
simpleandcheap
usedonlywhen no workersis small
of
forseparate timekeeper
noneed foreman is sufficient


2 TokenorDiscMethod eachworker is allocated an identification no engraved on a