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.
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In every organization, workers leave their jobs and new workers join.
This coming and going of workers is called labour turnover.
Too much labour turnover is not good for organization.
Generally, skilled workers leave job and unskilled or semi-skilled workers enter.
Unskilled workers need training.
It increases labour cost.
Sometimes employee leaves a company.
Sometimes company has to replace employees.
Some employees will retire or leave the workforce; it can be beneficial.
It brings new people into the organization with new ideas and new energy.
Keep in Mind (KIM)
A certain amount of turnover is unavoidable, but too much can ruin a company. |
Labour turnover ratio (LTR) according to separation method
= No. of separation workers ÷ Average No. of workers during the period × 100
Labour turnover ratio (LTR) according to replacement method
= No. of replaced workers ÷ Average No. of workers during the period × 100
Replacement cost per employee ($) = Total replaced cost ÷ No. of workers replaced
Preventive cost per employee ($) = Total preventive cost ÷ No. of workers replaced
Labour turnover ratio (LTR) according to flux method (separation-cum-replacement method)
= (No. of separation workers + No. of replacement workers) ÷ Average No. of workers during the period × 100
Where:
Average number of worker = (Beginning number + Ending number) ÷ 2
Equivalent annual rate = Turnover % × 365 days ÷ No. of days in period
(A) Brief Answer Questions
Labour Turnover
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
TU: 2072, Q: 7
The following extracted particulars are provided:
Average number of workers 2,000
Cost of selection Rs 25,000
Training cost Rs 20,000
Medical service Rs 30,000
Cost of machine breakdown Rs 25,000
Number of workers replaced 100
Required: Replacement cost per employee
[Answer: Rs 700]
SOLUTION
Given and working note:
Total replacement cost = Cost of selection + Training cost + cost of machine breakdown
= 25,000 + 20,000 + 25,000
= Rs 70,000
Replacement cost per employee
= Total replacement cost ÷ Number of workers replaced
= Rs 70,000 ÷ 100 workers
= Rs 700
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
TU: 2073, Q: 10
The following particulars are extracted from the records of A Company:
Beginning and ending numbers of employees were 100 and 200 respectively
Numbers of employees quit and discharged were 20 and 10 respectively
Employees replaced during the period were 20
Required: Labour turnover rate under separation method
[Answer: 13.33%]
SOLUTION
Given and working note:
Average number of employee = (100 + 200) ÷ 2 = 150
Number of employees replaced = 20
Labour turnover ratio (LTR) according to replacement method
= (No. of replaced employees ÷ Average No. of workers during the period) × 100
= (20 ÷ 150) × 100
= 0.1333 × 100
= 13.33%
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2074, Q: 10
The personnel department furnishes you the following extracted particulars:
Beginning numbers of workers 800
Ending numbers of workers 1,000
Numbers of workers discharged 20
Numbers of employees resigned 70
Workers replaced during the period 80
Additional workers employees for expansion plan 100
Required: Labour turnover rate under replacement method
[Answer: 8.89%]
SOLUTION
Given and working note:
Average number of workers = (800 + 1,000) ÷ 2 = 900
Number of employees replaced = 80
Labour turnover ratio (LTR) according to replacement method
= (No. of workers replaced during the period ÷ Average No. of workers during the period) × 100
= (80 ÷ 900) × 100
= 0.0889 × 100
= 8.89%
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2076, Q: 10
The following particulars are extracted from the records of A Company:
Beginning and ending numbers of employees were 200 and 300 respectively
Numbers of employees quit and discharged were 25 and 15 respectively
Employees replaced during the period were 35
Required: Labour turnover rate under separation method
[Answer: 16%]
SOLUTION:
Given and working note:
Average number of employee = (200 + 300) ÷ 2 = 250
Numbers of employees separated during the period = 25 + 15 = 40
Labour turnover ratio (LTR) under separation method
= (No. of employees separated during the period ÷ Average No. of workers during the period) × 100
= (40 ÷ 250) × 100
= 0.16 × 100
= 16%
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(B) Short Answer Questions
Labour Turnover
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2072 ii, old Q: 6
Following extracted information is available:
Workers at the beginning |
3,000 |
Workers at the end |
3,400 |
Number of workers left |
20 |
Number of workers discharged |
8 |
Number of replaced |
20 |
Total prevention cost |
Rs 64,000 |
Total replacement cost |
Rs 36,000 |
Required: (a) Prevention cost per employees; (b) Replacement cost per employees
[Answer: (a) Rs 20; (b) Rs 1,500]
SOLUTION
Given and working note:
Average number of workers = (3,000 + 3,400) ÷ 2 = 3,200
Preventive cost per employee
= Total preventive cost ÷ Average number of workers
= Rs 64,000 ÷ 3,200 workers
= Rs 20
Replacement cost per employee
= Total replacement cost ÷ Number of workers replaced
= Rs 36,000 ÷ 24 workers
= Rs 1,500
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