Labour cost control - Lecture notes 5 PDF

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Labour cost control short notes in the chapter of labour...

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LABOUR COST CONTROL : Labour constitutes an important part of total cost of production. Any decrease in labour costs can lead to significant decrease in total cost, leading to higher profits. This is extremely important in the case of labour intensive industries. Labour cost control ensures maximum utilisation of the labour force, efficient operations and labour cost. Importance of Labour Cost control: 1. Significant reduction in total cost of production.leading to minimum labour cost per unit. 2. Effective control over idle time, overtime. Labour Turnover etc. 3. Increases labour productivity through scientific selection and training. 4. Helps in correct assessment of labour cost. 5. Overall reduction in cost of operation. Important Terms Used in labour Cost Control 1. Time Keeping : refers to the process of recording the total time spent by an employee in the organsiation. Attendance is recorded on the arrival and departure of the employees every day. In large organsiation, a time keeping department may be functioning and a time keeper may be appointed to record attendance.. It s important for attendance records and wages calculation. Objectives of Time Keeping : To prepare pay roll, To ensure discipline. To calculate overtime, to control labour cost, To meet statutory requirements. Methods of Time Keeping: 1. Manual Methods (a) Attendance register : Workers mark attendance on arrival and departure or at FN and An. The register may be kept at the gate or in departments. On arrival, attendance is marked in the IN column, or departure, it is recorded in the OUT column. (b) Disc or token Method : A mechanical disk or token with the identification number of each worker will be hung on a board kept at the factory gate or department entrance. As and when a workers enters into the factory, he takes his disk from the board and puts it in a separate box. After scheduled time of arrival, the box is removed and in its place a new box is kept. This is to note the late comers.

This box is also removed after the expiry of maximum time allowed. Now the discs remaining on the board belongs to the absentees. 2. Mechanical Methods ( time recording with the help of machines) (a) Time recording clocks (b) Dial time recorder (c) Key recorder (d) Biometric punching. TIME BOOKING This is the process of recording of actual time spent by a worker on a job during his attendance in the workplace. A worker may not be working all through the day. There may be intervals, lunch break, machine break down, power failure etc. So in order to calculate productive time spent by a worker, time booking is necessary. It is usually done by the immediate supervisor of the employee. Objectives of Time Booking : 1. To ascertain labour cost of each job 2. To ensure effective utilisation of time 3. To prevent wastage of time. 4. To calculate idle time. 5. To control labour cost. 6. To compare labour cost of different jobs. Difference between Time Keeping and Time Booking Time Keeping

Time Booking

Records entry and exit time only

Records actual time spent on a job.

Records total time spent in the factory/office

Records specific time spent on each job/ work

First step in time recording

Follows time keeping

Helps in payroll preparation

Helps in the calculation of labour cost of each job.

Done by the time keeping department

Done by departmental supervisors.

Methods of Time Booking 1. Daily time sheet : every day, a time sheet is given to each worker, containing his name, id number and starting time and closing time of each job. The worker makes entries which is then handed over to his supervisor. The supervisor countersigns this sheet. 2. Weekly time sheet : instead of a daily time sheet, the worker is given a weekly time sheet on the first day of the week. He fills a week’s particulars in the same sheet. This is to reduce clerical work. 3. Job card : In this method, a separate card is kept for each job. This card is handed over to the worker at the time of starting the job. He records the time of starting and completing the job. Thus the time spent on the job can easily be ascertained. Contents of a job card : Name of worker, starting time, ending time, details of work done, signature of the worker....