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To analyse and minimize the man idle time, machine idle time and breakdown of machinery. To suggest ways and means to minimize the indirect expenses such as Factory overheads, Stores overheads and Administrative overheads and to ensure reduction in cost of Production wherever possible.
Classification of Expenses
Direct Expenses
The costs which are directly identifiable to the manufacture. Example: Direct Labour & Direct Material
Expenses that cannot be charged direct to the cost of manufacture is called indirect expenses. Example: Shop supervision, consumables, Power, Depreciation, Administrative department expenditure etc.
OVERHEADS The indirect expenses of a Production Shop together with the share of expenses of the Service Departments apportioned to the Production Shop are termed as Overheads and are classified as: 1. Factory overheads (FOH) 2. Administrative Overheads (AOH) 3. Stores Overheads (SOH) & 4. Township Overheads (TOH)
FACTORY OVERHEADS
(FOH)
FOH of the Production shop comprise of The Indirect Expenses of Shops The proportionate share of expenses in respect of repairs and maintenance of Civil Assets inside workshop transferred from the total expenditure of the Engineering Department. The proportionate share of Service Departments except Works - Personnel outside Workshops apportioned to it and The proportionate Share of Service Departments inside the Workshops apportioned to it except 25% of the expenses of Transport & Yard.
ADMINISTRATIVE OVERHEADS
(AOH)
AOH of the Factory comprise of the expenditure of General Departments of a Factory except for a portion of (10%) expenditure of Accounts Department transferred to Stores Overheads and for a portion of expenditure of Engineering Department (repairs and maintenance of Civil Assets inside the Workshops) transferred to Factory overheads and include (a) 10% of the expenses of Transport & yard transferred from FOH (b) The entire expenditure of Works- Personnel
STORES OVERHEADS
(SOH)
SOH of a Factory comprise of the expenditure of Stores Department and 10% of the total expenditure of the Accounts Department, plus 15% of the expenses of Transport & Yard transferred from AOH and FOH respectively
LEVY OF OVERHEADS The Overheads are levied on jobs on the basis of predetermined percentages FOH is calculated at a separate percentage for each Production Shop on the Direct Labour Cost for that shop. The AOH is calculated at a common percentage for all shops and levied as such on the Direct Labour Cost of each shop. The SOH is levied as a uniform percentage applicable to all Production Shops on the cost of Direct Stores.
The total estimated FOH is prorated on the shop wise actuals of FOH for the previous year and shopwise estimated FOH for the current year is arrived at. Similarly the total Direct Labour as per Budget is prorated on the basis of shopwise actuals for the previous year. Then the shopwise factory overhead percentage is worked out. These percentages are taken for levy purpose till such time the next review on similar lines is made. These percentages help to workout the cost of shop manufactured items for quoting of rates for Railway/Non-Railway customers.
Direct labour, 10
Direct Stores, 58
WMS contd..
The funds required for achieving a particular Production Target in a year is assessed and asked for under the following heads: Payment of Shop labour etc. Material and Stores (from Stores Suspense) Materials by direct purchase and adjustment Outlay for works charged to Workshop Manufacture Suspense Miscellaneous Charges
Documents in Costing
As and when Batch Orders and Work Orders are authorized, following documents are released by the Planning and Production Control organization for execution and for actual accountal of labour and material.
Route Card - This contains the information regarding the operation to be carried out in the various sections and load centers in sequence together with the tooling particulars and the setting up time and time per piece;
Progress Card The dates of commencement and completion of the operation and inspection particulars are recorded so as to keep a watch on the progress of the job. contd
Documents contd.
Job Cards - When the Route Card is issued to shops for a particular job, job cards are issued for the various operations and distributed to the respective shops responsible for the operations. Squad Job Cards accompanied by individual job cards will be used when a gang of workers are required to work on a particular job. Job cards serves as a bench document for collecting Direct Labour for each Batch Orders.
The direct labour amount is arrived at by adopting the average labour hourly rate for each shop/each grade, which is revised monthly based on the previous month actuals.
Incentive payment is also collected batch orderwise based on the actual amount paid which is based on the Time saved at the rates fixed by Railway Board for each trade. Contd.
Documents contd.
Raw material/Parts requisition(RMR Card) This document is for drawing the Raw materials/parts required for each Batch Order/Work Order. The raw materials and semi-finished parts purchased and stored in stock are drawn for each batch order thro RMR cards.
The raw materials in the RMR cards are priced at the book average rate.
The monthly booking of Man hours, Direct Labour, Incentive, and Direct Material, FOH, AOH, SOH, Total bookings, Credit and Net balance are brought out in the WGR in respect of each batch orders and work orders separately.
In addition to for the month bookings shop wise, opening balance as well as cumulative booking to end of the month is also exhibited. This enables to monitor the booking under each batch order and work order.
The source documents for the above register are Job Cards, RMR Cards, Cash, JE and AM transactions.
Completion certificate
On completion of the manufacture of Batch Order quantity or work order quantity, completion certificate is issued by the Production Control Organisation Along with the Completion Certificate, Write Back Order will also be issued which indicates the adjustment of raw material between the batch orders, and the details of delivery.
The bookings under the Batch order under finalisation are compared with the Cost documents of the previous Batch order/Estimates and are reconciled with WGR. The Cost Reports for each Batch order are approved by General Manager and data submitted to Railway Board as and when called for.
Incentive Scheme
Dates back to Pre Indpendence Days Piecework incentive system followed in Jamalpur, Kanchrapara & Perambur workshops A common incentive scheme was planned in 1950 First formal incentive Scheme introduced by Railway Board for Chittaranjan Locomotive Works in December 1954. Extended to other Shops Implemented in ICF in 1960 Known as CLW pattern incentive scheme in Railway parlance. Also known as Payment by results
Objective
Better
utilisation of man-power Better utilisation of Machinery & Plant and Covered area Better control of activity More systematic flow of work & More effort by individual worker Improve efficiency
CategoryofWorkers
W ork m enin in W ork m en Producti o nand and Producti o n S ervi c eShops Shops S ervi c e
S upervis ors
Tec hnicians
H elp ers
Classification of Workers
Workmen in in Workmen Production and and Production Service Shops Shops Service
Salient Features
Basic wages are guaranteed to all workers. Time is the yardstick for measuring work. Various operations are subjected to time study in accordance with the standard practices of work measure. Time study? a reliable technique for assessing the necessary time to carry out a given activity at a defined standard of performance through some trials and past performances. The llowed Time? as the term denotes, is the time allowed within which a worker shall complete an operation and earn bonus. Allowed Time is so fixed that the average workman of normal ability would complete an operation in 75% of the allowed time for that operation and thereby get 33 1/3 % bonus over and above his basic wages in respect of the time taken to complete that operation.
Allowed time includes allowances for handling, gauging fatigue and production bonus allowance. Separate timings are fixed for constant and variable elements. Set up time for preoperational works viz., collection and drawl of tools, raw materials etc and obtaining necessary instructions is also fixed. Allowed time per operation is per piece, preoperational time is per batch (total no. of pieces per batch order). Extra time over and above allowed time allowed for excessive machining work on castings, forgings, bars etc., hard material, machine defects not attributable to workers, change in batch quantity against a work order.