Page 132 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes 4. ………………… represents the time wastage that cannot be avoided and, therefore, the
employer must bear the labour cost of this time.

5. The ……………… includes the time wasted on account of the failure of the power supply.
6. The wages paid for abnormal idle time should be debited to costing …………………
7. Labour turnover according to …………………
= Number of employees left during a period/Average number of employees during a
period × 100
8. In ………………… Employees are divided into groups on the basis of certain tests.
9. ………………… represents the time wastage that cannot be avoided.
10. To establish a sound wage structure is the objective of …………………

11. ………………… avoids the necessity of recopying attendance time in the payroll.
12. Under ………………… a card is made for recording the time spent by workers on various
jobs instead of sheets of paper.
13. ………………… method is generally used in a small organization or factory which has
limited financial resources.
Labour cost also forms a significant part of cost of production. Therefore, it is essential that there
should be proper and effective control over labour cost. Labour cost control will, in effect, lead
to minimization of cost of labour per unit. In India, a major part of labour cost is fixed and not
variable for production process. It may be pointed out, in this connection, that labour is not a
commodity or product and it does not behave like a commodity and product. From this angle,
the task of exercising control over labour cost is even more difficult than that of material cost
or other chargeable expenses. Then, human element in labour cost control should be given due
consideration in order to make any control effective. A large number of non-financial factors
affect the efficiency and capacity of labour. The general cleanliness of the working area, lighting,
ventilation, temperature, measures for the safety devices, impact of noise, working space in the
factory, etc., will have an effect on the labour efficiency. Therefore, labour cost control is the
important tool for the organisation.

Departments for Labour Control

The following departments will help to exercise control over labour cost:

z z Personnel and Administrative Department,
z z Engineering and Works Department,
z z Time-keeping Department,
z z Purchase Department,
z z Production and Maintenance Department,
z z Payroll Department, and

z z Accounting and Finance Department.
Scope of Control

Control over labour cost will include control over the following activities:

(i) Recruitment, Increments and Promotion: Recruitment is a crucial function for ultimate
success in attainment of labour cost control. A well-defined recruitment policy, a sound

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