TMI BlogEmployee CostX X X X Extracts X X X X X X X X Extracts X X X X ..... product or service, and the presentation and disclosure in cost statements. Objective 2. The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Employee cost with reasonable accuracy. Scope 3. This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Employee cost including those requiring attestation. Definitions 4. The following terms are being used in this standard with the meaning specified. 1 [ 4.1 Abnormal cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/ or due to some abnormal situation of the production or operation .] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bour Cost. ] Explanation : 1. Contract employees include employees directly engaged by the employer on contract basis but does not include employees of any contractor engaged in the organisation. 2. Compensation paid to employees for the past period on account of any dispute / court orders shall not form part of Employee Cost. 3. Short provisions of prior period made up in current period shall not form part of the employee cost in the current period. Employee cost includes payment made in cash or kind. For example: Employee cost Salaries, wages, allowances and bonus / incentives. Contribution to provident and other funds. Employee welfare Other benefits Employee cost - Future benefits Gratuity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd salaries paid is called overtime premium. 9 [ 4.13 Production Overheads: Indirect costs involved in the production process or in rendering service ] The terms Production Overheads, Factory Overheads, Works Overheads and Manufacturing Overheads denote the same meaning and are used interchangeably. 10 [ 4.14 Selling Overheads: Selling Overheads, also known as Selling Costs, are the expenses related to sale of products and include all Indirect Expenses in sales management for the organization ] 4.15 Standard Cost: A predetermined cost of resource inputs for the cost object computed with reference to set of technical specifications and efficient operating conditions. Standard costs are used as scale of reference to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standard cost, variances due to normal reasons related to Employee cost shall be treated as part of Employee cost. Variances due to abnormal reasons shall be treated as part of abnormal cost. 5.8 Any Subsidy, Grant, Incentive or any such payment received or receivable with respect to any Employee cost shall be reduced for ascertainment of cost of the cost object to which such amounts are related. 5.9 Any abnormal cost where it is material and quantifiable shall not form part of the Employee cost. 5.10 Penalties, damages paid to statutory authorities or other third parties shall not form part of the Employee cost. 5.11 The cost of free housing, free conveyance and any other similar benefits provided to an employee shall be deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as overheads and dealt with accordingly. 6.6 Overtime premium shall be assigned directly to the cost object or treated as overheads depending on the economic feasibility and the specific circumstance requiring such overtime. 6.7 Idle time cost shall be assigned direct to the cost object or treated as overheads depending on the economic feasibility and the specific circumstances causing such idle time. Cost of idle time for reasons anticipated like normal lunchtime, holidays etc. is normally loaded in the Employee cost while arriving at the cost per hour of an Employee/a group of Employees whose time is attributed direct to cost objects. 7. Presentation 7.1 Direct Employee costs shall be presented as a separate cost head in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be made only where material, significant and quantifiable. 8.4 Disclosures shall be made in the body of the Cost Statement or as a foot note or as a separate schedule. ---------------------------- Notes:- 1. Adapted from CAS 1 paragraph 6.5.19 2. Adapted from CAS 1 paragraph 6.3.5 3. Adapted from CIMA Terminology 4. Adapted from CAS 1 paragraph 6.3.9 5. Adapted from CAS 1 paragraph 6.2.4 (Direct labour cost) 6. Adapted from CAS 1 paragraph 6.1.4 7. Adapted from CAS 1 paragraph 6.5.13 8. Adapted from CAS 1 paragraph 6.2.10 9. Adapted from CAS 1 paragraph 6.3.3. 10. Adapted from CAS 1 paragraph 6.3.7 11. Related party as per the applicable legal requirements relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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