Labor Cost Control

Like material control, cost accountant has also genuine interest to control over the labor cost, but he can not control labor like material control. Both decreasing the number of laborers and wages will increase the cost of laborers because less no. of worker with fewer wages will produce less output and its cost will be more. Suppose, you have to make your building, if you appoint only two laborer but it require for laborer for saving the labor cost, it will be reverse effect be because no. of days will increase and its is also risk of losing of other stock like cement etc. So, optimum use of workers is the way to control the cost of labor. There are also many factors which affect labor cost control.

Factor affecting cost of labor

1 Assessment of man power requirement

Correct assessment of manpower requirement will decrease the cost of labor because they are actually we need, if laborers are more than these no., its excess cost will be suffer by co. and overall cost of labor will increase. To assess of manpower requirement is the duty of personnel department. So, it should be do its duty with best way.

2  Time and motion study

In this study, supervisor records time spent on each job and correct record will reduce excess paid for overtime to workers.

3  Control over idle time and overtime

Idle time is time when worker is not doing any production activity due to delay of receiving the material or electricity cut or any other things. This is loss of business and it will increase the cost of labor. By continuing supply of raw material, review and repair of machines and continue supply of electricity can reduce idle time loss. But some time, these factors are also not under our own control. So, we have to depend on others. Overtime cost also can be optimized by providing good amount for this.

4  Wage system

Wages should be at competitive price. High and low rate of wages will disturb workers and increase cost of laborers. It also is on the basis of time or unit produced.

5  Control over labor turnover

Labor turnover means losing of laborers due to not providing good wages or incentive or any other reason. It will increase the cost of training of new workers and also errors in production. So labor turnover should minimize as soon as revealed.


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Accounting Education: Labor Cost Control
Labor Cost Control
Accounting Education
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