Cost Accounting Department

The cost accounting department is responsible for recording separately the entries in respect of wages paid to direct and indirect labour. The direct costs are taken as basic or prime cost of production and indirect labour costs as overhead expenses. Analysis of labour costs into direct and indirect helps in exercising control over labour costs. The primary responsibility to report to management regarding any loss of labour time, wastage and inefficiencies etc. lies with the cost accounting department. The costing department has also to compare the actual labour costs with pre-determined standard or budgeted costs and show the causes of any variances to the management.

Wages abstract

It is a statement prepared by the costing department wherein the distribution of wages by department, jobs, work-orders or process is analysed. The wages related to a particular week and the data about wages paid to each workman for the different cost units or activities like jobs, work orders etc. are incorporated therein. The sources from which figures are extracted are wages sheet, time cards, piece work cards, job cards etc. It may be necessary for the costing office to divide the gross wages payable to the workers between direct and indirect. In such an event two wages analysis sheets may have to be prepared: one for appointment of wages between direct and indirect and the other for allocation of direct wages. The former may be prepared on the basis of time cards.

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