Labour CostADMMBA I 2014

Labour costWages : direct monetary incentiveIndirect monetary incentive:1.Profit sharing/bonus2. Co-partnership ( management /equity holding)

Non monetary incentivesBetter working conditions:Health & safetyCanteenHousingEducation & trainingRetirement benefits

Labour TimeNormal working hoursOvertimeIdle time: unavoidable/avoidable

ExampleMachine capacity: 48 hours per weekNo. of working weeks: 50Expected working hrs: 80% of max hrsActual hrs worked: 1,800Idle time: in hrsWaiting for instructions:40Waiting for materials20Machine breakdown30Total idle time90Calculate the idle facilities

AnswerMax capacity: 48*50=2,400Budgeted/std(80%): 1,920Unavoidable480

Actual recorded1,800Idle time 90Total1,890Budgeted1,920Avoidable idle facilitie 30

Idle facilities vs timeIdle facilities: plant capacity utilizationIdle time: labour time utilization

Treatment of OvertimeLabour turnover

OvertimeFor specific jobFor regular but additional productionNegligence or delay in one particular departmentAbnormal causes

Labour turnoverPreventive costs Replacement costs

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