Important Techniques of Labour Costing

This article explains important techniques and formulas for calculating labor cost, payroll, and incentive wages. 1. Measurement of Labor Turnover Separation Method Labor turnover = (No. of separations in a period / Average no. of workers) x 100 LT = (NS / ANW) x 100 Replacement Method Labor turnover = (No. of replacements in a period / Average no. of workers) x 100 LT = (NR / ANW) x 100 Flux Meth…

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Labor Costing: Practical Questions With Answers

Question 1 Consider the following information concerning the monthly remuneration of three workers: Standard production per month per worker 1,000 units Actual production during the month: A, 850 units; B, 750 units; and C, 950 units. Piece work rate is $0.10 per unit (actual production) Additional production bonus is $10 for each percentage of actual production that exceeds 80% over standard Dear…

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Incentive Plans

Incentive Plans: Definition Incentive plans are used by companies to keep employees motivated. These plans rely on the power of incentives to affect employee behavior. When incentives are aligned through the use of incentive plans, this encourages employees to perform their tasks with more effort and efficiency. Advantages of Incentive Plans In the context of factories, the following advantages ty…

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Methods of Time-Keeping

There are two main time-keeping methods: Manual methods, which include attendance register or muster roll and the checks, token, or disc method Mechanical methods, which are divided into the time clock method (either the dial recorder system or the key recorder system) 1. Manual Methods of Time-Keeping (a) Attendance Register or Muster Roll Under this method, a register is maintained for the worke…

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Difference Between Direct and Indirect Labor Cost

Direct Labor Direct labor is labor that can conveniently be identified or attributed wholly to a particular job, product, or process. Direct labor is used directly in production work to convert raw materials into finished goods. For example, it helps when altering the construction, composition, or condition of a product. An important characteristic of direct labor is that it varies directly in rel…

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