costing and control of labour,

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abour constitutes the second important element of cost and in some cases, it is the most important and major element of cost. Therefore, proper control and accounting for labour costs is one of the most important areas, which can be tapped for reducing the cost of production. Labour is the most sensitive element of cost. Labour performance affects not only wages but also has a direct effect on all other elements of cost. For example, a low labour efficiency will not only increase labour cost per unit but will also give rise to high incidence of defectives, scraps and spoilage and result in high overhead cost due to spread over of fixed overhead over a low volume of output.

            The control of labour cost presents certain practical difficulties unlike the control of material cost. The human element in labour makes difficult the control of labour cost whereas materials, being inanimate in nature, could be subjected to a rigid control. Labour is the most perishable commodity and all such should be effectively utilised immediately. Labour, once lost, cannot be recouped and is bound to increase the cost of production. On the other hand, materials, being durable, can be used all and when required and can be stored without having to incur immediate loss.

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