Labour Costing Introcuction
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This document discusses labour costing and improving labour productivity. It defines labour cost as the amount paid to workers including basic pay and fringe benefits. It then discusses why labour cost is important for maximizing productivity and profitability. Various incentive plans like piecework, time rates, and bonuses are presented as ways to improve productivity by motivating workers to produce more. The economic impacts of increased productivity such as reduced costs, inflation, and unemployment are also summarized.
Labour Costing Introcuction
- 1. LABOUR COSTING Group Members Azra Syani Sajeel Bhatti Hassan Ahmad
- 2. 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 Benefits Basic Pay The pay according to worked performed by workers. Fringe Benefits It 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.
- 3. 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.
- 4. 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
- 5. INCENTIVE PLANS (ITS PURPOSE) Primary Purpose Induce the worker to produce more Earn higher wages Secondary Purpose Reduce unit cost
- 6. INCENTIVE WAGES PLAN 1. Straight Piecework Plan 2. Time Rate System Plan 3. Differential Piece Rate System Plan 4. Bonus System Plan
- 7. 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
- 8. 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
- 9. 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
- 10. 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)
- 11. ECONOMIC IMPACT OF PRODUCTIVITY When productivity increase Business profit increase Real earning increase People purchasing power increase etc At 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.
- 12. 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
- 13. QUESTION/ANSWER