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Reviewer - Accounting FOR Labor Reviewer - Accounting FOR Labor

This document discusses accounting for labor costs, including compensation income such as salaries, wages, bonuses, and tips. It describes different types of labor costs such as regular time, overtime, idle time, make-up pay, overtime premiums, and shift premiums. It provides guidance on how to classify these costs, including whether to charge them to work in process, factory overhead, or other accounts. It also defines key terms related to labor accounting such as gross pay, withholding tax, and net pay.

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Juan Frivaldo
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1K views3 pages

Reviewer - Accounting FOR Labor Reviewer - Accounting FOR Labor

This document discusses accounting for labor costs, including compensation income such as salaries, wages, bonuses, and tips. It describes different types of labor costs such as regular time, overtime, idle time, make-up pay, overtime premiums, and shift premiums. It provides guidance on how to classify these costs, including whether to charge them to work in process, factory overhead, or other accounts. It also defines key terms related to labor accounting such as gross pay, withholding tax, and net pay.

Uploaded by

Juan Frivaldo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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lOMoARcPSD|10895444

Reviewer - Accounting FOR Labor

Accountancy (Polytechnic University of the Philippines)

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lOMoARcPSD|10895444

ACCOUNTING FOR LABOR

COMPENSATION INCOME
- Gain derived from labor, especially employment (earned from employer-
employee relationship
- Ex: salaries, wages, holiday pay, sick leave pay, night shift
differential, tips, bonus, etc.
- Minimum Wage Earners are not subject to WHT

Regular time – charged to jobs (debit to WIP)


Overtime – may be charged to job (WIP), to Factory Overhead, or allocated
partly to jobs and partly to FOH
Overtime premium – additional rate allowed for extra hours worked (if
silent, premium rate is 25%)

OVERHEAD CLASSIFICATION
1. Waiting time/Idle time
2. Make-up Pay
3. Overtime premium
4. Shift premium
5. Employer’s payroll contribution

1. Waiting time/Idle time


- Non-productive hours of direct labor
Work in Process (productive hrs. x rate) xx
FOH Control (idle hrs. x rate) xx
Salaries and wages payable (total hrs x rate) xx

2. Make-up pay
- output multiplied by piece rate < guaranteed wage = difference is
charged to factory overhead
- output multiplied by piece rate > guaranteed wage = employee is paid the
amount earned.
- Whichever is higher, ‘yun ang ibabayad sa employee

Work in Process (output x piece rate) xx


FOH Control (difference) xx
Salaries and wages payable (guaranteed wage) xx
or:
Work in Process (output x piece rate) xx
Salaries and wages payable xx

3. Overtime premium
- Amount paid in excess of regular rate
- If silent, 25%

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lOMoARcPSD|10895444

- OT Premium is charged to Factory Overhead


 Exception: Rush order (charged to Work in process)
Work in Process (entire hrs. x rate) xx
FOH Control (ot hrs x prem. rate)
Salaries and wages payable xx

4. Shift premium
- Less desirable evening shift (2 pm to 10 pm)
- Night shift (10 pm to 6 am)
 10% if silent
- Charged to Factory overhead

Work in Process (entire hrs. x reg. rate) xx


FOH Control (entire hrs. x prem.rate) xx
Salaries and wages payable xx

Gross pay – basic pay, overtime, bonuses, etc.; wala pang deductions
Withholding tax – based on taxable income (gross pay minus deductions)
Net pay – (take home pay) may deductions na ng SSS, PhilHealth, PagIBIG etc.,
including WHT

Night premium – 10pm to 6 am

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