Professional Documents
Culture Documents
AGSB-MBA
RFD
Introduction
Labour cost is classified as direct and indirect.
They form the labour cost which in turn
forms a significant percentage of the total cost
of production in a manufacturing or service
organization and there is need to exercise
maximum care to minimize these costs.
Minimizing costs does not mean reducing cost
but means getting optimal and efficient
productivity from the employees
Purposes of Labour Cost
To calculate the correct gross and net wages
for each employee.
For financial accounting purposes.
For management accounting purposes (i.e.
stock valuation)
Decision making and control purposes
Elements of Labour Cost.
Labour Cost can either be direct, or Indirect
they include.
Basic Wages.
Overtime premium
Idle time
Labour turnover.
Remuneration Methods
Basic wages can be determined using various
methods that include:
Fixed salary per month.
Time based systems.
Piece works systems.
Bonus / incentive schemes.
Fixed Salary per month:
Mainly applies to permanent workers who receive a fixed salary every
month.
TOOLS
Time card=how many hours work
Payroll Procedures, from time card to payroll
register; regular earnings, OT, and total earnings
are computed.
Tools.
Weekly payroll register, gross earnings are
computed appropriate deduction are made
and net pay for each employees are
determined.
Semi monthly Factory Payroll, record salaries
of supervisor and managers. Fixed salaries in
2 instalments 15 n 30.
Earnings Deductions
Income taxes-WHT, employers act as collection
agent by BIR, collects then remit.
SSS certain amount deducted for the
protection of the employees and their families
in cases of disability, sickness and death.
Deduct, remit.
PhilHealth health insurance, deducted to
employess who are members of SSS.
Employees employer pa equal share.
PAG-IBIG equal contribution. It is a mutual
Fund.
Entries
Factory Payroll xxx
WHT payable xxx
SSS Cont. Payable xxx
PhilHealth Cont. Payable xxx
Pag-ibig cont. payable xxx
Payroll Payable (Net earnings) xxx
To record payroll
Payroll Payment
Payroll Payable xxx
Vouchers Payable xxx