Accounting for Labor Flashcards
represents labor costs that are traceable to individual jobs or process worked on during the period (touch labor)
direct labor
incurred for a variety of jobs that are related to the production process, but are not directly identifiable with the individual jobs worked during the period.
indirect labor
Difference between the time for which payment is made and the actual time worked.
idle time
normal vs abnormal idle time
- normal idle time = unavoidable
- abnormal = avoidable
Is the extra compensation paid to an employee who works beyond the normal period of time.
overtime
is the additional rate an employee earns for working more than a regular daily shift (extra rate)
overtime premium
Is paid at a higher rate than the normal rate, time-and-a-half, and double rate.
accounting treatment of overtime
The excess paid over normal rate is called
overtime premium
ot premium is part of
manufacturing overheads
systems of wage payment (2)
- time rate
- piece rate
Wages are paid for the time spent on the job
Output is irrelevant
Rate per hour, per day, or per month
Suitable when QUALITY OF WORK is important
time rate
formula for time rate
Total Wages = TT X TR
Rate per unit of output
Output decides the wages payable
A standard time is taken, the standard output is determined
piece rate
formula for piece rate
total wages = output x piece rate
payment of net earnings roles
- accounting dept = sends the payroll record to the treasurer’s office
- treasurer’s office = responsible for making the payments to employees
