Page 62 - Essentials of Payroll: Management and Accounting

Accumulating T ime W orked
decision, it is best to review the following section, which describes the
various types of data that can be collected through a timekeeping system.

Information to Collect through Timekeeping

The most obvious item that must be collected through a timekeeping
system is the number of hours worked by each employee. This single
data element actually involves the collection of two other data items:the
employee’s name (or identifying number) and the date on which the labor
was completed.This set of information is the minimum required to do
nothing more than calculate payroll for direct labor employees.

The next highest level of information that can be collected includes
the identifying number of the job on which an employee is working.
This additional data allows a company to accumulate information about
the cost of each job. In some companies, where employees man a single
workstation and perform processing on a multitude of jobs each day,
the amount of data collected may be from 5 to 10 times greater than when
only the direct labor hours per day are collected.This level of data col-
lection is most necessary when customer billings are compiled from the
number of employee hours charged to their jobs.

A higher level of detail that can be collected includes the workstation
at which an employee is working.This data is collected when a company
wants to track the amount of time spent on each of its machines, so that
it can tell which ones are being utilized the most frequently. This infor-
mation is of the greatest importance when a facility either has bottleneck
operations or very expensive equipment whose utilization is an important
factor in the determination of capital efficiency. However, this informa-

tion can also be obtained by multiplying labor routings by production vol-
umes, which yields an approximate level of machine utilization, or simply
by visually examining the flow of production through a facility.Thus, this
additional level of detail will be worth collecting only in select situations.

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