labour and labour turnover

labour and labour turnover

1. MANAGEMENT ACCOUNTING Topic: Labour and Labour Turnover Arya Venugopal

2. Labour and Labour Cost Human efforts used for conversion of materials into finished products or doing various jobs in the business are known as labour. Payment made towards the labour is called labour cost. Labour cost is the significant element of the total cost of production. Labour costs represent the various items of expenditure incurred on workers by the employer and includes Monetary and Fringe benefits.

3. Labour Labour is the most perishable commodity and as such should be effectively utilized immediately. Therefore, efficient and effective utilisation of labour is an important need of the modern business.

4. Types of Labour LABOUR DIRECT LABOUR INDIRECT LABOUR

5. DIRECT LABOUR Direct labour is the labour which is directly engaged in the production of goods and services, s uch as worker on machine, shoemaker making shoes, etc. 2. INDIRECT LABOUR Indirect labour is that labour which is not directly engaged in the production of goods and services but which indirectly helps the direct labour engaged in production such as watchman, foreman, gardener, cleaners, etc.

6. LABOUR TURNOVER Labour turnover denotes the percentage change in labour force of an organisation. High percentage of labour turnover denotes that labour is not stable. Labour turnover ratio is calculated by the following formula :- Labour Turnover Rate = No of employees leaving during the period Average No employed during the period 100

7. Causes of Labour Turnover 1. Personal Cause Death Ill Health Dislike for the job Marriage of women workers Retirement Family Problem 2. Unavoidable Causes Due to insubordination Due to lack of attention to duty Due to immoral character Due to accidents 3. Avoidable Causes Lack of job security Lack of proper training facilities Lack of promotion opportunities Lack of medical facilities

8. Measurement of Labour Turnover 1. Separation Method LT = No of employees left during a period Avg No. of workers during a period 2. Replacement Method LT= No of workers replaced during a period Avg No. of workers during a period 3. Flux Method LT= No. of separation +No of additions Avg No of employees during a period

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