Page 63 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
Another factor to track is the activities of each employee, in the
absence of an identifying workstation.For example,an employee could be
repairing faulty products,manning a machine as the primary operator,sub-
stituting for other workers during their lunch breaks, and sitting in on a
quality circle—all in the same day. This added level of detail is quite use-

ful if a company wants to track activities for an activity-based costing sys-
tem, which in turn can be very useful for activity-based management or
for tracking quality costs. But this represents a highly detailed level of data
tracking that in many situations is not appropriate: picture a large number
of employees moving through a facility, spending large parts of their day
either writing down what they are doing at any given moment or trying
to locate a data entry terminal into which they can enter this information.

In many cases, it is more efficient to conduct a study that results in esti-
mates of employee time spent in various activities; this is a much more
cost-effective way to collect information.
In sum, a timekeeping system can collect information at the fol-
lowing levels of detail:
• Hours worked
• The jobs on which hours were worked
• The workstations used to work on jobs

• The activities used at each workstation to work on jobs

Each of these levels of data collection represents an increasing level
of detail that can overwhelm the timekeeping system. For example, at
the first level, there may be just one record per day that identifies the
hours one employee worked. At the next level, an employee may work

on five jobs in a day, which would increase the number of records to
five. For each of those jobs, the employee might use two workstations,
which would increase the number of records to 10. Finally, there may
be three activities performed at each workstation, which would result in
a total of 30 records per employee per day. It is evident that each level

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