Timekeeping in Cost Accounting | Free Cost Accounting Articles

Timekeeping in Cost Accounting

Timekeeping in Cost Accounting
Timekeeping in Cost Accounting

Timekeeping in Cost Accounting

Time Keeping means recording the attendance of the workers and time spent by them (idle time, overtime, etc.) on actual work.

Importance of Timekeeping

a) Payment of Wages:
Timekeeping is important while computing wages due to them which depends upon the time spent by the workers on work.

b) Legal record of attendance / Service:
The record of attendance of the workers is important at the time of computation and determination of legal benefits such as Provided Fund, Bonus, Workmen’s Compensations, Maternity Leaves, Pension, etc.

c) Discipline:
Record of Time of workers acts as a check on the movement of the workers. It ensures punctuality and regularity among the workers and avoids idle time or waste of time.

d) Calculation and Control of labour Cost:
Time Keeping helps the department in:
a) Calculating Labour Cost
b) Controlling Labour Cost.
It helps in finding the time spent by the worker on work/job. Hence the labour cost allocation to job is possible. Sometimes Labour overheads are also apportioned to each job on the basis of labour hour rate. It helps in fixing the labour hour rate.

Procedure of Timekeeping

Each and every organization has its own procedure of recording the attendance and timekeeping produce covers the following aspects:

1) Who Maintains the Time Keeping Records:
The timekeeping department keeps the records of timekeeping depends upon the number of workers size of organization, method of payment of wages.

2) Place of Time Keeping record:
The Time Keeping is recorded at the factory gate or at each department of the factory.

3) How Time Keeping records are kept:
The Time Keeping is recorded manually or mechanically by the following methods.
a) Manual Time Keeping Records:
This method covers the following method of maintaining timekeeping records:

i. Attendance Register:
Under this method, the details of the attendance of the workers are recorded in the attendance register or muster. It may be kept at the gate of the factory or at each department. The entries, in the register, of workers, is made by an assistant or the employee themselves who signs the register whenever they enter and leaves
the premises. This method is simple to understand and to operate. It does not create complications while operating the punching cards. It creates misuse and fraud in records of timekeeping.

ii. Token, Disk or Check Method:
In this method, each employee is given a Token or a Metal Disk on which identity number is printed or written. At the opening time of the office, all disks or tokens are hung on the board at the factory gate. And when an employee arrives at the gate, he/she pick up their taken and hangs on another board. This indicates that
the employees have arrived in time in the factory. The remaining all tokens or disks are collected from the box and assumed that all the employees are late or absent. They will be recorded as late or absent on the daily attendance register/sheet.

The same procedure is followed at the lunch breaks or departure time. Sometimes workers take the taken with them in the department, instead of putting the taken box at the factory gate. Then he/ she hangs the token on the board at the factory gate. It indicates that they are present at his department Further checking movement of the employees is done within the factory premises. This is called the check system of timekeeping. This method is simple to understand. It leads to mistakes and fraud in the record. It is not possible to mark overtime, Idle time under this method.

b) Mechanical/Time clock Method:
In this method, the Time of arrival and department is recorded mechanically i.e.Time Clock. Each worker is given an identifying number. All cards are kept on the board at the entrance of the factory gate. Every time a worker arrives and leaves the factory gate, they take cards from the box and insert them into the time clock. As soon the card inserts into the Time Clock, the clock mechanically prints or records the time on the card. Some cards may print late arrivals in red ink. The cards still having on the board after the scheduled time are treated as absent.

It is a very accurate system of recording time. It avoids recurring expenses on remuneration payable to the assistants. It doesn’t open fraud or misuse. This provides Printed evidence of record of attendance. This method is useful in obtaining legal benefit of P.F., Maternity benefit, leave enhancement, etc without any problem.

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