Sunday, April 27, 2014

Labour Costing Formula

1. Labour Turnover: It denotes the percentage change in the labour force of an organisation. High percentage of labour turnover denotes that labour is not stable and there are frequent changes in the labour force. It is always expressed in the terms of percentage. It can be measured with the help of the following formula:

1) Separation rate method = Separation during the period
Average No. of worker’s during the period
Note: This method is not suitable when surplus labour is discharged.

2) Net labour Turnover rate (or) Replacement method = Number of replacements
Average No. of worker’s during the period
Note: This method takes into surplus labour.
3) Labour flux rate = No. of separation + No. of replacement
Average No. of worker’s during the period
Note: this method is not applicable when the organisation is expanding.
4) Labour turnover = (No. of Additions + No. of Separations)/2
Average no. of employees during a period
Note: This method will misguide when an organisation has reached its optimum size and does not require expansion at all.

Here,
a.      Average number of employees = (No. of workers in the beginning + No. of workers at the end)/2
b.      No. of additions = Total of new workers appointed and workers replaced during the year.
c.       No. of Separations = Total of workers discharged, leaved and retrenched during the year.
d.      No. of Replacement = Workers appointed on behalf of those workers who are separated from the organisation.

2. Labour Productivity: It is simply relationship between output and input. It is calculated as:
a.      Output per man hour = Total output/Man hour used
b.      Output per rupee of wages paid = Total output/Total wages
c.       Output per worker = Total output/Total No. of workers
d.      Sale value per worker = Sales value/Total No. of workers
e.       Wages per unit of Product = Direct wages/No. of Units
f.        Added Value per rupee of wages = Added Value of Product/Total wages

3. Labour Performance Ratios:
a.      Absenteeism Rate = (No. of Absentees during a period/Avg. no. of workers employed during a period)x100
b.      Accident Frequency Rate = (No. of accidents to date/Number of days to date)
c.       Labour Illness Rate =(Lost hours due to illness/Total man hours during a period)x100
d.      Labour Efficiency Rate = (Hours Allowed for Actual Production/Actual hours taken)x100
e.       Labour Utilization Rate = (Actual hours utilized/Available hours)x100
f.        Ratio of Overtime Premium cost to Total labour cost = (Overtime premium cost/Total labour cost)x100

4. Method of Remuneration:
1) Time Rate system
a) Flat time Rate
b) High wage system
c) Graduated time rate
2) Payment by Results
a) Piece rate system
ü  Straight piece rate
ü  Differential piece rate
ü  Taylor system
ü  Merrick system

b) Group Bonus System
ü  Budgeted Expenses
ü  Towne gain sharing scheme
ü  Cost efficiency bonus
ü  Priest man system

c) Combination of Time and Piece rate
ü  Gantt task and Bonus scheme
ü  Emerson Efficiency system
ü  Point scheme
ü  Bedaux system
ü  Haynes manit system

d) Premium bonus plans
ü  Halsey premium plan
ü  Halsey weir premium plan
ü  Rowan scheme
ü  Barth scheme
ü  Accelerating premium bonus scheme

e) Other incentive schemes
i) Indirect monetary incentive
ü  Profit sharing
ü  Co-partnership
ii) Non-Monetary Incentive

1) Time rate system = Hours worked * Rate per hour (Basic wages)

2) Piece rate system: 
i) Straight piece rate earnings = Number of units produced * Rate per Piece
If Units are not given, then straight piece rate earnings are calculated on the basis of Standard time basis.

ii) Differential Piece rate = Number of units produced * Differential Rate per Piece
F.W.Taylor’s differential rate system
» 80% of piece rate when below standard
» 120% of piece rate when above or at standard

Merrick differential or multiple piece rate system
» Efficiency Level up to 83% = Normal piece rate is applicable
» 83% to 100% = 110% of Normal piece rate is applicable
» Above 100% = 120% of Normal piece rate is applicable

iii) Gantt Task and Bonus system
» Output Below standard = Time rate (Guaranteed Payment)
» standard output = 20% Bonus of Time rate
» Above standard = 120% of ordinary piece rate

iv) Emerson’s Efficiency system
» Efficiency Level Below 66.7% = Hourly Rate of payment
» Efficiency Level from 66.7% to 100% = Hourly rate of payment (+) increasing bonus according to degree of efficiency on the basis of step bonus rates
» Efficiency Level Above 100% = Hourly rate of payment (+) 20% Bonus (+) additional bonus of 1% of hourly rate for every 1% increase in efficiency                

v) Halsey Premium Plan = (Time Taken * Hourly Rate) + 50% (time saved * Hourly Rate)
vi) Halsey Weir Premium Plan = (Time Taken * Hourly Rate) + 30% (time saved * Hourly rate)
vii) Rowan Plan = (Time Taken * Hourly Rate) + (Time saved/Time Allowed) *(Time Taken * Hourly Rate)                                                          
viii) Bedaus Point system = (Time Taken * Hourly Rate) + 75% * Bedaus point/60 * Rate per hour

ix) Barth’s System = Hourly rate * √Std time *Time taken

Sunday, April 20, 2014

Operation Management and Information System - Abbreviations

CNC
Computer Numerical Controlled
RPM
Revolution Per Minute
MS
Mild Steel
TCM
Total Cost Management
TQM
Total Quality Management
CRAFT
Computerize Relative Allocation Facilities Technique
OT
Overtime
FC
Fixed Cost
VC
Variable Cost
BCA
Benefit Cost Analysis
EFT
Earliest Finish Time
LFT
Latest Finish Time
EST
Earliest Start Time
CPM
Critical Path Method
PERT
Programme Evaluation and Review Techniques
GERT
Graphical Evaluation and Review Techniques
FIFS
First In First Served
LCFS
Last Come First Served
SPT
Shortest Processing Time
MDD
Minimum Due Date
SSRO
Static Slack for Remaining Operations
DSRO
Dynamic Slack for Remaining Operations
EDD
Earliest Due Date
LPT
Longest Processing Time
CR
Critical Ratio
LE
Line Efficiency
BD
Balance Delay
CT
Cycle Time
SI
Smoothness Index
EBQ
Economic Batch Quantity
ELS
Economic Lot Size
EMQ
Economic Manufacturing Quantity
ERL
Economic Run Length
EOQ
Economic Order Quantity
HRP
Human Resource Planning
MRP
Material Requirement Planning
AQL
Acceptable Quality Level
LTPD
Lot Tolerance Percentage Defective
SQC
Statistical Quality Control
LCL
Lower Control Limit
UCL
Upper Control Limit
LP
Linear Programming
IBFS
Initial Basic Feasible Solution
VAM
Vogel's Approximation Method
NET
Net Evaluation Table
CAD
Computer Aided Design
CAD/CAM
Computer Aided Design and Manufacturing
NC
Numerically Controlled
AIS
Automated Identification System
ASRS
Automated Storage and Retrieval System
AGV
Automated Guided Vehicles
FMS
Flexible Manufacturing System
CIM
Computer Integrated Manufacturing
ERP
Enterprise Resource Planning
DNC
Direct Numerically Controlled
MIS
Management Information System
MBO
Management By Objectives
EOT
Electric Overhead Travelling
MTM
Method Time Measurement
VA
Value Analysis
SRAC
Short Run Average Cost
CBA
Cost Benefit Analysis
AOQ
Average Outgoing Quality
ICICI
Industrial Credit and Investment Corporation of India
ABC
Always Better Control
ISO
International Standards Organization
PPC
Production Planning and Control
SPMT
Special Purpose Machine Tools
VAT
Value Added Tax
USP
Unique Selling Proposition
ILO
International Labour Organization
CPU
Central Processing Unit
BIT
Binary Digit
URL
Uniform Resource Locator
UPC
Universal Product Code
DDP
Distributed Data Processing
MODEM
Modulator Demodulator
ISP
Internet Service Provider
EDI
Electronic Data Interchange
SDLC
System Development Life Cycle
PC
Personal Computer
LAN
Local Area Network
WAN
Wide Area Network
MAN
Metropolitan Area Network
KBMS
Knowledge Based Management System
MBMS
Model Based Management System
DBMS
Data Base Management System
DSS
Decision Support System
WWW
World Wide Web
HTML
Hyper Text Markup Language
DHTML
Dynamic Hyper Text Markup Language
TCP/IP
Transmission Control Protocol/ Internet Protocol
SMTP
Simple Mail Transmission Protocol
RAM
Random Access Memory
ROM
Read Only Memory
MS-DOS
Microsoft Disk Operating System
OS
Operating System
DGMS
Data Grid Management System
EIS
Executive Information System
DFD
Data Flow Diagram
IT
Information Technology
HTTP
Hyper Text Transfer Protocol
FAQ
Frequently Asked Questions
CD-ROM
Compact Disk Read Only Memory
HR
Human Resource
CAG
Comptroller and Auditor General
COBIT
Control Objectives for Information and Related Technology
ISACA
Information System Audit and Control Association
EDP
Electronic Data Processing
EDPAA
Electronic Data Processing Auditors Association
CASE
Computer Aided Systems Engineering
RADIUS
Remote Authentication Dial In User Service
TACACS
Terminal Access Controller Access Control System
SAP
Standard Auditing Practices
GIGO
Garbage In Garbage Out
JIT
Just In Time
BPR
Business Process Re-engineering
SSA
System Software Associates
CIMA
Chartered Institute of Management Accountant
OLAP
On-Line Analytical Processing
OLTP
On-Line Transaction Processing
AI
Artificial Intelligence
DSL
Digital Subscribers Line
WAIS
Wide Area Information System
XML
Extensible Markup Language
ASP
Active Server Page
DSN
Domain Name Server
NSF
National Science Foundation
FTP
File Transfer Protocol
ARPANET
Advance Research Project Agency Network
MAC
Medium Access Control
VSLI
Very Large Scale Integration
DOD
Department of Defense
SNA
System Network Architecture
GUI
Graphics User Interface
CUI
Command User Interface
ODBC
Open Database Connectivity Driver
API
Application Programming Interface
RDBMS
Relational Data Base Management System
DDL
Data Definition Language
DML
Data Manipulation Language
ISAM
Indexed Sequential Access Method
SQL
Structured Query Language
FAT
File Allocation Table
ORDBMS
Object Relational Data Base Management System
OLE
Object Linking and Embedding
VB
Visual Basic
PL
Procedural Language
ALGOL
Algorithmic Language
FORTRAN
Formula Translation
BASIC
Beginner's All Purpose Symbolic Instruction Code
COBOL
Common Business Oriented Language
RPG
Report Program Generator
HLL
High Level Language
MVS
Multiple Virtual Storage
WORM
Write Once Read Many
DASD
Direct Access Sector Device
ASCII
American Standard Code for Information Interchange
EBCDIC
Extended Binary Coded Decimal Interchange Code
MDA
Monochrome Display Adapter
CGA
Color Graphics Adapter
EGA
Enhanced Graphics Adapter
VGA
Video Graphics Adapter
SVGA
Super Video Graphics Adapter
XGA
Extended Graphics Adapter
VDU
Visual Display Unit
OCR
Optical Character Reader
OMR
Optical Mark Reader
MICR
Magnetic Ink Character Recognition
ABA
American Bank Association
CRT
Cathode Ray Tube
POS
Point of Sale
PDA
Personal Digital Assistant
DRAM
Dynamic Random Access Memory
SRAM
System Random Access Memory
PROM
Programmable Read  Only Memory
EPROM
Erasable Programmable Read Only Memory
EEPROM
Electrically Erasable Programmable Read-Only Memory
ALU
Arithmetical and Logical Unit
UNIVAC
Universal Automatic Computer
ENIAC
Electronic Numerical Integrator And Computer
IBM
International Business Machine
CU
Control Unit
LMP
Lines Per Minute
CPS
Characters Per Second
DPI
Dot Per Inch
BPI
Bits Per Inch
CPI
Characters Per Inch
IRG
Inter Record Gap
BOT
Beginning Of Tape
EOT
End Of Tape
ZIP
Zicxac Inline Pin
ADA
Automatic Data Acquisition
PIXEL
Picture Element
DEC
Digital Equipment Corporation
CDC
Control Data Corporation
EDP
Electronic Data Processing
CBIS
Computer Based Information System
BIS
Bureau of Indian Standards
VOH
Variable Overhead
MTBF
Mean Time Between Failures
BPE
Bureau of Public Enterprises
IFCI
Industrial Finance Corporation of India
LOB
Line Of Business
ABFS
Alternative Basic Feasible Solution