EMPLOYEE COST

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....etermination of the Cost of product or service, and the presentation and disclosure in cost statements. 2 Objective The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Employee cost with reasonable accuracy. 3 Scope This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Employee cost including those requiring attestation. 4 Definitions The following terms are being used in this standard with the meaning specified. 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 productio....

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....s 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. • Leave encashment. • Other ....

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....and distribution overheads. 4.12. Overtime Premium: The extra amount payable beyond the normal wages and salaries for beyond the normal working hours. 4.13. Production Overheads: Indirect costs involved in the production of a product or in rendering service. The terms Production Overheads, Factory Overheads, Works Overheads and Manufacturing Overheads denote the same meaning and are used interchangeably. 4.14. Selling Overheads: Selling overheads are the expenses related to sale of products or services and include all indirect expenses incurred in selling the products or services. 4.15. Standard Cost: A predetermined cost of a product or service based on technical specifications and efficient ope....

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.... by the hourly rate applicable to the idle employee or a group of employees. 5.7. Where Employee cost is accounted at 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....

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....manner. However unamortised amount related to discontinued operations, shall not be treated as employee cost. 6.5. Recruitment costs, training cost and other such costs shall be treated 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 whi....