Description
Labour Cost in cost acounting and it contains topics like meaning of labor cost, importance of proper renumeration system, components of labor cost, types of compensations, labor turnover
LABOUR COST
MEANING OF LABOUR COST
• Labour – human capital is most important factor since it has unlimited productivity and capacity to give value addition • Labour Cost - Any amount paid to employees for their skill and time spent on job. • It may be direct or indirect labour cost • Direct labour cost is variable and indirect is treated as overhead
Importance of Proper Remuneration system
• • • • • • • Motivation Internal Equity External Equity Compliance with law Proper selection Retention of employees Other factors
Components of Labour cost
• Salary/Wages • Allowances – Taxable/Tax free • Perquisites • Incentives – Monetary/Non-monetary • Fringe Benefits like subsidised food, education, housing • Retirement benefit plans • Contribution to Statutory Funds • Medical and Insurance Plans • Indirect cost Concept of Take home salary and Cost to Company
Labour Cost
There are different ways to calculate Incentives payable to employees.
• Individual Incentive scheme – Traditionally there were few systems like Halsey plan, Rowan Plan etc. • Group Incentive schemes
Methods of Payment
There are three methods for payment • Time Rate system – Fixed pay system (Also known as Guaranteed Income) • Piece rate System – Variable pay system • Time & Piece rate – Combination of above two
Other Factors affecting Labour Cost
• • • • • • • Regular pay Overtime Idle Time Leaves and leave with pay Holiday pay Shift allowance Preparation of payroll
Types of Compensations
• Direct Compensation like salary, bonus, commission
• Indirect Compensation like Insurance, Educational cost reimbursement
Time Recording
• If the remuneration is based on time rate system then recording of time has two objectives – Time Keeping and Time booking • Time keeping is necessary for the purpose of recording attendance and wage base • Time booking is importance for utilisation of labour for cost analysis and cost ascertainment
LABOUR TURNOVER
• Meaning of Labour Turnover • Causes of labour turnover • Methods of calculation of labour turnover Separation rate method Replacement method Flux Method Cost of Labour turnover Preventive cost Replacement cost Reduction of Labour Turnover
doc_663778406.ppt
Labour Cost in cost acounting and it contains topics like meaning of labor cost, importance of proper renumeration system, components of labor cost, types of compensations, labor turnover
LABOUR COST
MEANING OF LABOUR COST
• Labour – human capital is most important factor since it has unlimited productivity and capacity to give value addition • Labour Cost - Any amount paid to employees for their skill and time spent on job. • It may be direct or indirect labour cost • Direct labour cost is variable and indirect is treated as overhead
Importance of Proper Remuneration system
• • • • • • • Motivation Internal Equity External Equity Compliance with law Proper selection Retention of employees Other factors
Components of Labour cost
• Salary/Wages • Allowances – Taxable/Tax free • Perquisites • Incentives – Monetary/Non-monetary • Fringe Benefits like subsidised food, education, housing • Retirement benefit plans • Contribution to Statutory Funds • Medical and Insurance Plans • Indirect cost Concept of Take home salary and Cost to Company
Labour Cost
There are different ways to calculate Incentives payable to employees.
• Individual Incentive scheme – Traditionally there were few systems like Halsey plan, Rowan Plan etc. • Group Incentive schemes
Methods of Payment
There are three methods for payment • Time Rate system – Fixed pay system (Also known as Guaranteed Income) • Piece rate System – Variable pay system • Time & Piece rate – Combination of above two
Other Factors affecting Labour Cost
• • • • • • • Regular pay Overtime Idle Time Leaves and leave with pay Holiday pay Shift allowance Preparation of payroll
Types of Compensations
• Direct Compensation like salary, bonus, commission
• Indirect Compensation like Insurance, Educational cost reimbursement
Time Recording
• If the remuneration is based on time rate system then recording of time has two objectives – Time Keeping and Time booking • Time keeping is necessary for the purpose of recording attendance and wage base • Time booking is importance for utilisation of labour for cost analysis and cost ascertainment
LABOUR TURNOVER
• Meaning of Labour Turnover • Causes of labour turnover • Methods of calculation of labour turnover Separation rate method Replacement method Flux Method Cost of Labour turnover Preventive cost Replacement cost Reduction of Labour Turnover
doc_663778406.ppt