Page 57 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
is when a company has such a small amount of direct labor cost that a
more elaborate timekeeping system would not be worth the effort to
implement.This system yields no information whatsoever regarding how
the cost of labor is being charged to various jobs. It has the singular ben-
efit of being very inexpensive to maintain,but at the cost of providing no

costing information to management.
A slightly more complex system is to have direct labor employees fill
out time cards that itemize their hours worked each week. These time
cards are reviewed by their supervisors for accuracy and then forwarded to
the payroll staff,to compile the information and keypunch it into the pay-
roll system.This approach is most useful when there is a significant amount
of variation in the number of hours worked per week, resulting in con-

tinuing variations in employee pay from week to week. This approach
requires considerably more administrative labor because of the large
amount of data entry involved;additional labor is also needed to verify the
entries made by employees and to investigate and correct any errors.
One step up from this entirely manual system is the addition of a time
clock. In its simplest form, a $100 to $500 time clock can be mounted
on a wall, into which employees can insert their time cards to have their
“in” and “out” times recorded.This approach makes time cards easier to
read and controls the recording of time worked, so that there is less

chance of any deliberate alteration of time worked. This approach is
highly recommended, since the additional cost is minimal and is easily
justified by the increased level of data accuracy.
The next step up in system complexity involves the use of a com-
puterized time clock. Like the time clock just described, this device is
also mounted on a wall for employee access,but it contains two additional
features. One is the use of a bar-coded or magnetically coded employee

card that is “swiped” through a channel on the side of the clock when-
ever an employee clocks in or out. This card contains the employee’s

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