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This gives the employee some security if the employer does not provide enough workin a particular period. The way that system works is that if an employee’s earnings forthe amount of units produced in the period are lower than the guaranteed amount thenthe guaranteed amount will be paid to the employee. Illustration: Fernando is paid … Read More
This is also known as payment by results or piecework. This is a direct alternative totime related pay. Employees paid under an output related pay method are paid a fixedamount per unit of output achieved, irrespective of the time spent in production. As far as an employee is concerned, payment by results means that they … Read More
This is the amount over and above the normal hourly rate that employees are paid forovertime hours worked. It is common to be paid an enhanced rate for any overtimehours worked, for example, an individual may be paid £20 per hour and any overtimehours worked can be paid at time and a half rate, this … Read More
Employees paid under a time related pay method are paid for the hours that theyspend at work regardless if the amount of production and output that they achievewithin that time. Time related pay employees can be split into salaried employeeswho may be paid monthly or weekly for a specified number of hours per week orhourly … Read More
For budgeting purposes, management need to be able to predict how costs will varywith differing levels of activity. For example, if a furniture manufacturer expected toproduce 1,000 chairs in a month, what should he budget for the costs of wood,labour, oil, selling price, factory heating, etc? How would these costs differ, if at all, ifhe … Read More
To make calculating cost per unit easier, costs are split into the following categories: Direct costs – This is an item of cost that is traceable directly to a unit of productionproduced by a manufacturing organisation or a unit of service delivered by a servicedelivery organisation. The total of all direct costs is known as … Read More
Costs can be split into three elements: Materials – these will include raw materials for a manufacturer, costs of goods to beresold in a retail organisation or service items or consumables to be used within abusiness operation. Labour – these will include all salary and wages costs to employees, includingovertime, commissions and bonuses. Other expenses … Read More
This is a classification that represents costs in respect of why the cost was incurred. For financial accounting purposes, costs are split into production and non-productioncosts: Production costs – this is also known as “cost of sales”. This category would includeproduction labour costs, materials, factory supervisor salaries, factory rent. Theseare any costs which are directly … Read More
Many businesses sell their goods and services on credit, and once a credit saletakes place it is recorded in the sales day book and then debited to the sales ledgercontrol account and credited to the sales account in compliance with the doubleentry principle and accruals concept. Credit sales give rise to the risk of one … Read More
Cash Sales These occur when a customer buys items or services and pays immediately, at thepoint of sale. These occur frequently as seen in high street stores, whereindividuals go into stores to buy items and pay immediately by cash, cheque, debitor credit card at the till and are issued a receipt printed by a till … Read More