A Hours lost because of delayed C Sales on 20000 man-hours lost i.e.
Replacements 15,000 Sales lost on account of LABOR TURNOVER
(500/475000)*20000 = 21.05 Lakhs
Unproductive Hours IT IS 4.21% of Rs.500 Lakhs i.e. ACTUAL SALES.
(50% of 9,000) 5,000
Total 20,000
WORKING: Direct Labor cost per man hour=4800000/480000=Rs.10
B Productive Hours:
Actual Man-hours Available 480,000
Less; Unproductive 5,000 0.001053
Total 475,000 21.05263
0.042105
Comparative Statement of Profit (Rs, In Lakhs)
PARTICULAR ACTUAL ADDITIONS IF NO Labor turnover
Sales 500.00 21.05 521.05
Direct materials 150.00 6.315 156.32
Direct labor 48.00 150000 49.50
Other Variable Expenses 70.00 2.947 72.95
Fixed Overheads 90.00 90
Cost due to separation & Replacement 5.00 0
Total Cost 363.00 368.76
PROFIT 137.00 152.29
NOTE: Thus loss suffered by the company due to labor turnover= 152.29-137=Rs.15.29 Lkhs
Solution
available working hours in a month 200 break-up of idle time is as follows:
Standard capacity expected 160 Hours
Waiting for job 5
Unavoidable Idle time Hours 40 break-down 4
Waiting for tools 3
Capacity Utilization Ratio 90%
Actual Hours Worked 144 Total 12 Hours
Unutilized capacity on idle facilities 16
Avoidable Idle time facilities 4
IDLE TIME REPORT
Time Amount (Rs.)
A Unavoidable Idle time facilities 40 320 Normal Idle time
B Avoidable Idle time facilities:
Waiting for job 5 40
break-down 4 32
Waiting for tools 3 24 Overheads
Total 12
Idle facilities= Economic cause 4 32 costing profit and Loss Account
Total 16
C Total Idle Time 56 448
Delta Corporation Ltd. is experiencing a high la
recent years and the management would like y
report on the loss suffered by the company du
turnover. Following figures are available for your co
Sales 600 lakhs
Direct materials 150 Lakhs
Direct Labor 48 Lakhs on 4,80,000 man hou
Other variable expenses 60 lakhs
Fixed Overheads 80 Lakhs
The direct man-hours include 9000 man-hours sp
and replacements, only 50% of which were prod
during the year 12000 man-hours of potential wor
availed of because of delayed replacements. Th
due to separations and replacements amounted t
the basis of the above data, prepare a compar
showing actual profit vis-à-vis the profit which w
realized had there been no labor turn over.
ing a high labor turnover in
would like you to submit a
company due to such labor
ble for your consideration:
000 man hours
man-hours spent on trainees
ch were productive. Further,
potential works could not be
acements. The cost incurred
s amounted to Rs.1 lakh. On
re a comparative statement
rofit which would have been
over.
From the following information,
calculate labor turnover rate and la
flux rate: No. of workers a
01-01-2000 = 7,600
No. of workers as on 31-12-2000 =
8,400
During the year, 80 workers left wh
320 worker discharged, 1,500 work
were recruited during the year. Of
these, 300 workers were recruited
because of exits and rest were
recruited in accordance with expan
plans.
ation,
SEPARATION METHOD
ate and labor LTR
workers as on
REPLACEMENT METHOD
LTR
2-2000 =
FLUX METHOD
LTR
ers left while
,500 workers
year. Of
recruited
were
ith expansion
5.00% HR-POLICY MAKERS
3.75% TRAINING MANAGER
8.75% PRODUCTION MANAGER
COMPENSATION
