Page 118 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes 900+1100
= = 1,000
2
Labour Turnover Rate by:

Number of separations during a period
(a) Separation Method = × 100
Average number of workers during the period
10+40
LTR = × 100
1000
LTR = 5%
Number of workers replaced in a period
(b) Replacement Method = × 100
Average number of workers during the period
25
LTR = × 100
1000
LTR = 2.5%
Number of separations + Number of replacements
(c) Flux Method = × 100
Average number of workers during the period
50+25
LTR = × 100
1000
LTR = 7.5%
Working note: Workers engaged on an expansion plan are not included in the number of
replacement.

Example: There were 10,000 workers in a factory on 1st January 2008. New entrants in
service during the year 500 and leavers were 250. Calculate labour turnover rate.
Solution:
No. of workers in the beginning = 10,000

No. of workers at the end = 10,000 + 500 – 250 = 10,250
10,000+10,250
Average number of workers = = 10,125
2
Labour Turnover Rate by :
250
(i) Separation Method = × 100 2.47%
=
10,125
500
(ii) Replacement Method = × 100 = 4.94%
10,125
250+500
=
(iii) Flux Method = × 100 7.41%
10,125
Example: The cost accountant of a company has computed labour turnover rates for the
year ending 31-12-07 as 10%, 5% and 3% respectively under Flux Method, Replacement Method
and Separation Method. If the number of workers replaced during that year is 30, find out number
of (i) workers recruited and joined, and (ii) workers left and discharged.
Solution:
Replacement Method:
No. of replacements
Labour Turnover Rate = × 100
Average No. of workers on roll
100
Average No. of Workers = 30× = 600
5

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