Direct Labour Costing Formula

Labour Turnover
(i)                  Separation Rate Method = Number of separations ina period ÷ Average number of workers in the period x 100
(ii)                Replacement Method = Number of replacements in a period ÷ Average number of workers in the period x 100 
(iii)               Flux Rate Method = No. Of separations + No. Of replacements ÷ Average number of workers in the period x 100
No. Of separations + No. Of replacements ÷ 2 / Average of workers in the period x 100
(iv)              Equivalent Annual Turnover Rate = Turnover rate x 365 ÷ No. Of days in the relevant period x 100
(v)                Valuation of closing stock in units = cost of production ÷ units produced x No of closing stock units.  
Remuneration and Incentives
1.       Halsay wier  scheme = Time taken x howely rate +  ( Time saved x Howely rate x 30% )
2.       Barth’s variable sharing plan = Howely rate standard time x Actual time
3.       Bedeaux’s point premium system = Time taken x ( Howely rate x 75/100 x points saved x Basuc rate per hour ÷ 60 )
Incentive Plans:
4.       Halsey Plan: Total Earnings = Time taken x Hourly rate + ( Time saved x Rate x 50%)
5.       Rowan Plan: Total Earnings = Time taken x Hourly rate + Bonus
Bonus = Time saved ÷ standard time x time taken x Hourly rate.
6.       Barth Scheme = Hourly rate x Standard hours x hours worked
Obsorbtion of overhead:
1.       Overhead rate = overhead Expenses ÷ Total quantum of base selected
2.       Actual overhead rate = Actual overhead incurred during a period ÷ Actual quantum or value of the base selected
3.       Blanket overhead rate = overhead cost of the entire factory ÷ Total quantum of the base selected
4.       Preduemined overhead rate = Budgeted overhead Expenses for the period ÷ Budgeted base of the period
5.       Treatment of over / under obsorption overhead supplementary rate = Amount of over / under obsorption of overhead ÷ Total of base

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  Piece Rate System:
1.       Straight Piece Rate System ( ordinary piece rate )  = No. Of units produced x Rate per piece
2.       Taylor’s differencial piece rate system: –
(a)    Output below standard output :-
Piece rate = No of units produced x (straight piece rate x 80% )
(b)   Output above standard output :-
Piece Rate = No of units produced x ( straight piece rate x 120% )
3.       Merricks multiple or Differential price :-
(a)    Output below 83% of standard output :-
Piece rate = ordinary piece rate
(b)   Output between 83% to 100% of standard output :-
Piece rate = No of units produced x ( rate per piece x 110% )
(c)    Output above 100% of standard :-
Piece rate = No of units x ( rate per piece x 120% )
4.       Gantt’s Task :-
(a)    Earnings = Standard time x Hourly  rate – ( below 100% per                  )
(b)   Earnings = ( standard time x Hourly rate) + 20% of ( standard time x Hourly rate) ( performance at 100% )

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1 Comment


  1. Nice explanation .Need more description about the formula's

    Reply

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