labour costing introcuction
TRANSCRIPT
LABOUR COSTING
Group MembersAzra Syani
Sajeel BhattiHassan Ahmad
OPENING / INTRODUCTION Labour cost represents the human contribution to production. Labour cost is a amount which is paid to worker or employee. Labour cost consist of Basic Pay and Fringe BenefitsBasic PayThe pay according to worked performed by workers.Fringe BenefitsIt is substantial element of labour cost. It consist of employer
share of FICA Tex, Overtime Premium Pay, Insurance Benefits and pension Cost, that should be added in labour cost.
WHY LABOUR COST IS IMPORTANT
For getting the maximum productivity For better output by the use of minimum resources It is useful for minimum waste of time, material and resources Increase the ability, efficiency and skill of workers. It is useful to increase the company competiveness &
profitability.
HOW TO IMPROVE LABOUR PRODUCTIVITY
To provide employees handsome wages/incentive Offer to employees bonus and better workplace Encourage to employees to meet standard in production and
get earn more and higher Give to employees basic needs like safety, education, family
protection etc
INCENTIVE PLANS (ITS PURPOSE)
Primary Purpose Induce the worker to produce more Earn higher wagesSecondary Purpose Reduce unit cost
INCENTIVE WAGES PLAN
1. Straight Piecework Plan2. Time Rate System Plan3. Differential Piece Rate System Plan4. Bonus System Plan
STRAIGHT PIECE RATE SYSTEM
In this system wages are paid on the basis of output/quantity of work of workers.
Wages: No of Units Produced x Rate Per Unit
TIME RATE SYSTEM
In time rate system wages are paid on the basis of time spent for worked in factory. In this system wages are paid hourly, daily, weekly and monthly basis. It is also known as day work, time work etc.
Wages: Total Hour Worked x Rate Per Hour
DIFFERENTIAL PIECE RATE SYSTEM
This system is based on standard task where worker can received increase or decreased piece rate by varies in production that expected for standard time.
Wages: Units Produced x Differential Rate Per Unit
BONUS PLAN
The bonus plan is allowed standard time for completing a job/unit, in this system bonus is allowed on time saved in addition to regular earning.
Wages: (Hour Worked X Rate Per Hour) + (Time Save x Rate Per Hour)
ECONOMIC IMPACT OF PRODUCTIVITY
When productivity increase Business profit increase Real earning increase People purchasing power increase etcAt meantime Demand increase, supply increase, people spend
more, and positively unemployment fall/goes down.According to Congressional Joint Economic Committee said 01
percent in productivity growth will reduce inflation by at least 2.1 percent.
LABOUR COST PROCEDURES
Employment history like date of hired, wages rate, initial assignment, promotions, sickness and vocation
Productivity and types of wages and compensation for work Each worker time worked, wages rate and total earning for
each payroll period The deduction from gross wages for each worker Total labour cost in each department for each payroll period
etc
