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Explain Controllable and non Controllable Labour Costs

      

Explain Controllable and non Controllable Labour Costs

  

Answers


Wilfred
a) Controllable labour costs are costs which can be influenced by the actions of a person in whom authority for such control is vested. e.g. supervisory cost.

b) Non controllable labour costs are costs of labour which can not be influenced by actions of a person in whom authority for such control is vested.

- The following examples illustrate the degree in to which control of labour costs may be exercised.
1. Where the employee is paid on straight piece work bases. A fixed rate per product unit then the time taken per product will be influenced by a number of factors such as efficiency of the employee, degree of supervision, efficiency in the follow of materials used etc. Such factors are controllable to varying degree by different management members and functions.

2. Where the employee is paid a fixed weekly wage there is no control over the wage paid to the employee. The control will focus on ensuring the product or a service is achieved as efficiently as possible. E.g. in case of production of quality limited models, emphasis will be on quality rather the speed of output.

3. Where the employee is in a service department e.g. a fitter in the maintenance department paid at a rate per hour worked. The basic working week may be agreed as part of employer -employee negotiation e.g. through working hour per day for 5 day week. The control over the use of this time will be the responsibility of the engineer in charge of the maintenance department. He can direct the fitter to carry out maintenance work of a routine nature or in the event of a machine breakdown. In some extent however, the control of over the use of filter time will be in the hand of others. A manager in the production department may require agent repair and may necessity working extra at a premium rate of pay.
Wilfykil answered the question on August 5, 2019 at 12:47


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