Every manufacturing company and business organization needs human being resources.
These humans being may be resource of administrators and labour.
Without labour, a manufacturing company cannot complete its production.
It is saying that talents, calibers and skilled manpower are other assets of the business organization.
Labour cost is the important part in manufacturing and Construction Company.
After materials, labour cost is the largest part in production.
Every labour has his merits and demerits.
To control labour cost, organization should understand to workers.
To take more work from workers, the organization should satisfy them.
When workers do best work, cost per unit will be decreased.
There are three types of labour.
They are unskilled labour, semi-skilled labour and skilled labour.
Unskilled labour gets fewer wages but skilled labour gets highest wages.
Format of employees history card (personnel record card)
Everest Company Limited Employee History Card |
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Name: |
Clock/Card No; |
Father’s/husband’s name: |
Date of appointment: |
Education: |
Department: |
Date of birth: |
Date of joining: |
Address: |
Basic salary: |
1. Permanent: |
Grade: |
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Marital status: |
2. Local: |
No. of children: |
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Son: |
References: |
Daughter: |
1. |
Name of previous employer: |
2. |
Reason for leaving: |
Labour cost is an important element of production; some importances of labour cost are given below:
The main importance of labour cost is to determine labour cost of production.
It helps to minimize idle time of the workers.
It helps to effective mobilization of work.
It helps the manager to take decision regarding workers.
It helps to cost control regarding labour.
It provides basis of apportionment for indirect labour and general expenses.
It helps to minimize labour turnover in the organization.
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Accounting Equation |
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Journal Entries in Nepali |
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Journal Entries |
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Journal Entry and Ledger |
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Ledger |
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Subsidiary Book |
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Cashbook |
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Trial Balance and Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Financial Accounting and Analysis (All videos) |
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Accounting Process |
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Accounting for Long Lived Assets |
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Analysis of Financial Statement |
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Without labour cost, it is not possible to production.
All the production company needs labour.
Large amount is paid for labour for production.
Therefore, it is necessary to control labour cost.
To control labour cost, proper exercise is needed.
Efficient utilization of labour force is known as labour cost control.
For most favorable labour cost control, management should use effective technique.
From the functional point of view, labour is involved in following department:
Personnel department
Engineering or work study department
Time and motion study department
The time keeping department
Cost accountancy department
The payroll department
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The following are the needs or reasons to control labour cost:
· To minimize labour cost as possible as.
· To obtain maximum output by using skilled labour.
· To obtain best quality goods by using good materials and skilled labour.
· To adopt fair wages system for skilled and unskilled labour.
· To minimize labour turnover.
· To minimize wastage of materials and idle time of labour.
· To coordinate among various departments about labour.
· To use basis of apportionment for indirect labour and general expenses.
The wage system should be planned with great care.
The most suitable wage system helps to increase efficiency of the workers.
It also brings satisfaction to the workers.
An ideal wage payment system should have the following characteristic:
It should be easily understood by workers.
It should ensure satisfaction to both the employees and employer.
The system should provide sufficient incentives to workers to work hard.
It should guarantee a minimum wage at satisfactory level.
It must be accepted by trade union.
It should have flexibility.
It should reduce labor turnover.
It should be economical to operate.
It should reduce absence and late attendance.
It should be consistent with government policy.
It should encourage productivity.
Most of the company provides its employees extra benefits to encourage them.
There are two types of benefits or expenses. One is monetary and other is non-monetary expense.
Monetary expenses are paid in cash but non-monetary expenses are not paid in cash.
Monetary benefits |
Non-monetary (non-pecuniary) benefits |
Pecuniary benefits: |
· Medical facilities |
· Wages and salaries |
· Entertainment |
· Dearness allowance |
· Educational |
· Home allowance or house rent allowance |
· Training facilities |
· Overtime pay |
· Subsidized canteen facilities |
· Holiday and vacation pay |
· Subsidized transportation |
· Incentive for targeted/ standard production |
· Subsidized housing |
· Profit sharing bonus etc. |
· Re-creation and sports facilities |
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· Leave facilities etc. |
Deferred monetary benefits: |
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· Contribution for provident fund |
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· Contribution for group insurance |
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· Contribution for pension fund etc. |
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Keep in Mind (KIM)
There are other some special allowances and incentives: such as chairman allowance, audit allowance and night shift allowance etc. |
Every organization and trading concern pays wages to its employees.
Wages is paid daily, weekly or monthly basis.
Pay-roll department maintains or calculates total wages payable to employee.
The wages sheet records:
Gross wages including basic wages, over time (OT), incentives and monetary benefits etc.
Provided fund, insurance, fine, house rent, medical, advance etc are deducted from gross wages.
Net wages = Gross wages – Deduction
Combined Time and Pay-roll Card Name of the worker: …………………………………….……..…. Week ending: ………………………..………………… |
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No. of worker: ………………………………………………………… Department: ………………………..………………… |
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Days |
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Regular time |
Over time |
Total time |
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In |
Out |
In |
Out |
Normal time |
Overtime |
Sunday |
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Monday |
am |
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Tuesday |
am |
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pm |
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Wednesday |
am |
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pm |
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Thursday |
am |
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Friday |
am |
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Saturday |
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Calculation of wages |
Worked hours |
Rate |
Total amount |
Deduction |
Net amount |
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Normal time |
××× |
××× |
××× |
(×××) |
×××× |
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Over time |
××× |
××× |
××× |
(×××) |
×××× |
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Total |
×××× |
×××× |
×××× |
(×××) |
×××× |
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Name of the time keeper: ………………………………….…..…. Received net amount as above |
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Name of the foreman: ………………………………………….…… Worker: ……………………………… |
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Name of pay-roll clerk: …………………………………………….. |
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