Written by Inventory valuation involves determining the value of goods and services held by a company for sale.
There are three methods of inventory valuation, namely; First-In-First-Out(FIFO), Last-In-First-Out(LIFO), Weighted Average Costing (WAP).
The Halsey Bonus Scheme was invented by an American engineer and efficiency expert F.A Halsey, in the early 1900s.
Under the Halsey Scheme, workers are paid a bonus on the basis of time saved.
Standard time is fixed for a job and if the actual time taken is less than the standard time, the worker becomes eligible for a bonus equal to 50% of the time saved.
Overtime is the hours worked above the normal time. It is the time spent beyond the normal working hours.
Overtime is the additional hours worked by an employee beyond their regular working hours.
It is that extra time spent beyond the working hours which is usually paid higher than the normal time rate.
The extra amount payable beyond the normal wages & salaries for work beyond the normal working hours is called overtime premium, and overtime premium is typically calculated as 150% of the normal wage rate.
For accounting purposes, overtime premium is usually recorded separately from the regular pay.
Cost classification is the process of grouping costs according to common characteristics.
It is a method of organizing costs based on specific characteristics.
A piece rate system is a form of remuneration where workers are paid on the basis of the number of units produced.
It is a remuneration structure where employees are paid for each unit of output they produce, rather than for the number of hours they work.
In this system, employees are paid a fixed amount for each unit of work they complete, regardless of how much time it takes them to finish the work.
Unlike the time rate system where employees are paid based on time worked, the piece rate system involves paying workers based on the number of outputs produced.
The basic principle of a piece-rate system is that the workers are paid for their productivity, rather than the number of hours they work.
This means that if an employee produces more units, he earns more money, and if he produces fewer units, he earns less.
This type of wage structure provides incentives for employees to work more efficiently and effectively, as they are directly rewarded for their efforts.
The formula to calculate wages under the piece rate system is the number of units produced multiplied by the piece rate.
One major difference between cost accounting and financial accounting is the use of Generally Accepted Accounting Principles (GAAP).
Financial accounting follows GAAP to ensure consistency in reporting financial statements for external stakeholders such as investors, creditors, and regulators.
Cost accounting, on the other hand, does not follow GAAP since its primary focus is to provide internal decision-makers with relevant cost data for decision-making purposes.
Another name for the time rate system is Time work, Day rate, Day work or Day wages system.
In a time rate system, the employer determines an hourly rate for the employee’s work, and the employee’s wages are calculated based on the number of hours worked multiplied by the hourly rate.
The formula to calculate gross pay under the time-rate system is the number of hours worked multiplied by the rate per hour.
