E20-8037 General Information Manual Payroll and Labor Accounting 1962

8/2/2019 E20-8037 General Information Manual Payroll and Labor Accounting 1962

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1962 by International Business Machines Corporation

'General Information ManualPayroll and Labor Accounting


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Copies of this and other IBM publications ca n be obtained through IBM BranchOffices. Address comments conceming the contents of this publication toIBM Technical Publications Department, 112 East Post Road, White Plains, New York.


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Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Elements of Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Source Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Basic Payroll and Empl oyee Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Deduction Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Time and Attendance Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Production Time Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Regular Gross Ea rn ing s . . . . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 8Overtime Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Federal Insurance Contr ibut ion Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9State Unemployment Tax . . . . . . . . . . . . . . . , . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . .. 9Federal Unemployment Tax . . . . . . : . . . . . . . . . . . . . . ,. . . . .. .. .. .. . . . . . . . . . . . . . . 9Federal Withholding (Income) T ax . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . . 9State Withholding (Income) Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Quarterly and AnnuaLReports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Payroll Register . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 11Checks and Earnings Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Cash Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Employee History Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Bank Reconciliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Management Reports . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . 16

Payroll Procedures .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Salary Payroll. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . . . . .. . . . .. .. .. . . . . . . . . 17Day or Hourly Rate Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Exception Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . . . 23Incentive Payroll . . . . . . . . . . . . . . . . ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . 24Group Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,. .. .. .. . . . . . 24Individual Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25IBM TELE-PROCESSING@ Equipment . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 28IBM 1001 Data Transmission System.... . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 28IBM 357 Data Collection System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Employee Attendance Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Job and Production ,Reporting.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Labor Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30IBM Data Processing Systems.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32IBM 1401 Data Processing System.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32IBM RAMAC 305 Data Processing System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Advantages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36


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IntroductionPayroll and labor accounting is defined as the report-ing to the employee, the employer, and governmentalorganizations the amount of money paid for the serv-ices rendered the employer by the employee.A good relationship between management and em-ployees is one of the most impor tant elements of successin any business or organization. In addition to theprompt and accurate payment of employees, the ac-counting and analysis records of the organization playa vital role in this relationship. Modem business musttransmit to the employee an accurate record of hisearnings and should attempt to measure performanceintelligently. In the interests of employees, some em-ployers are also maintaining the records and acting ascollectors of insurance premiums, employee loans, pen-sion and retirelllent annuities, club dues, and voluntarycontributions to various organizations.Intimate knowledge of every detail a business isessential if management is to make wise'decisions con-cerning the welfare of that business. Constant studiesof rates, costs and operating efficiencies are necessaryto evaluate the financial and operating status of a busi-ness. Inasmuch as hibor is the most perishable of allcommodities or services purchased by a business organ-ization, it must not be misdirected or wasted. I t is themost elusive element of cost, and only the most carefulanalysis by management can detect its waste.

Payroll accounting is one of the most used applica-tions of IB M data processing equipment. The cost ad-vantage is easily determined from the known costs andrequired results, and the equipment meets the expand-ing needs of governmental and management require-ments.

Labor accounting is generally combined with payrollsince it uses the same source data and involves some ofthe same computations. In manufacturing companies,labor is often the largest single element of cost andlabor accounting may offer far greater advantages thanthe basic functions of calculating pay and writingchecks.ObjectivesIn addition to providing prompt and accurate pay-checks, the objectives of an IB M payroll and laboraccounting procedure are to: Develop and maintain proper records of employee

earnings. Record and report various taxes and other statisticaldata required by governmental agencies.

Provide management with labor costs for generaland cost accounting, budgets and statistics.IB M data processing equipment provides an out-standing service to management in accomplishing theseobjectives, effectively and economically.

1


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Elements of PayrollThe flexibility of methods and the many types andcapacities of IB M equipment available permit a payrolltechnique best suited for a particular size and type ofcompany. However, no matter what equipment or payroll procedure is used, basic elements, such as sourcerecords, controls, regular gross earnings, taxes, etc.,are required. Within these elements, some of which arecontrolled by law, there are many variations whichshould be considered before the procedure and equipment to be used are decided upon.

In the following section these elements are presentedas they apply in any payroll system, but are particularlyemphasized as they apply in an IB M data processingsystem.

Source RecordsSource records usually required for a complete payrol1procedure are:

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willz ' Wi I EMPL O YEE NAMEo ~ ; ! i II.S J.J 1010(. U 11' 1

Basic payroll and employee recordsDeduction authorizationsTime an d attendance recordsProduction time recordsBasic Payroll and Employee RecordsBasic payroll data should include the employee's name,number, Social Security number, tax class, occupation,department or location, and wage rate. It ma y also'include job classification, regular hours, shift, and otherrepetitive or pre-established information (Figure 1).Personnel records are even more complete, in that,besides payroll data, they include such information asbirth date, date of employment, sex, education, etc.,which is not necessary in the preparation of the payroll.When personnel records are maintained in mobile form,the master payroll data may be reproduced in whole orin part from them. There is a close relationship between payroll and personnel accounting (see IB M general information manual "Personnel Records," forinE20-B032).

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Deduction AuthorizationsThe deductions from an employee's gross earnings todetermine net pay may be grouped into two classifications: statutory and voluntary.Statutory types required by either the federal, stateor local government, include:Withholding taxes (F.I.T.)Federal insurance contribution (FICA)State unemployment compensation insurancePensions and retirement contributionsVoluntary types may include:InsuranceContributions-Red Cross, community fund, etc.Tools, uniforms, union duesU.S. savings bond purchases

IB M cards are well suited for use as the authorizationforms for both statutory and voluntary deductions (Figure 2) , offering the advantages of fast and economicalrecording, processing and filing. When deductionsource records are in card form they can serve both asthe original authorization entry and as the medium forcompiling the payroll register, employee earnings and

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deduction statements, payroll checks, and lists of employee deductions.

When deductions are the recurring type, the cardsmay be maintained in a master file and reused each payperiod. Certain positions in the card are punched toindicate automatically the pay period the deduction isto be taken, or the termination of that deduction.

Figure 3 shows a suggested proced1ne for incorporating voluntary deductions other than savings bonds intoany payroll procedure. After each pay period, deduction registers are prepared for each type of deductionthat is, hospitalization, insurance, charitable deductions, etc. A copy of the register and a check for the totalamount are forwarded to each agency by the employer.

Figure 4 outlines a suggested method for savingsbond deductions which can be used in any type of payroll procedure. During the calculation, the total of deductions to date plus the current deduction is comparedwith the purchase price. I f sufficient to purchase, anidentifying X is punched in the card and any balanceover purchase price is punched in the new deductionsto-date field.

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Figure 2.3


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EmployeeDeductionAuthorization(New or Changes)

Clerical

Prove

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Time and Attendance RecordsThe attendance time record is the basis of payroll recording under all systems of daywork or hourly work.The conditions imposed by the Federal Fair LaborStandards Act (wages and hours law) necessitate themaintenance of such records in practically all businesses. Attendance records of some form are thus indispensable in establishing proof of compliance withthe law.

These permanent time records assist in furnishingemployees and governmental agencies with the variousrecords and reports that have become necessary as theresult of such social legislation as excludable sick pay(Figure 5), FICA benefits and state unemploymentinsurance.

The principal types of time records (Figure 6) usedin modern payroll accounting are:Weekly or semimonthly attendance timecardsDaily attendance timecards

Individual job timecardsGroup job timecardsTime sheetsIndicative data such as employee's name, number,department, etc., can be automatically reproducedfrom the basic employee cards into the individual IB Mattendance cards by the IB M reproducing punch andthis information printed on the same cards by an IB Minterpreter. Cards of this type insure accurate prepunched data and, by the IB M sorter, can be arrangedinto groups for distribution to departments, clock locations, etc. When the IB M 519 Document OriginatingMachine is used, the employee serial number can alsobe printed in large figures at one end of the card. Aftertime is recorded and computed it can be sense-markedon the card and automatically recorded in the form ofpunched holes, thus completing the attendance record.

Where time sheets are required, the basic employeecards can be used to prepare these lists on the IB Maccounting machine.

o GENERAL MANUFACTURING .COMPANY oEW YORK, NE W YORKo STATEMENT OF AMOUNTS EXCLUDABLE FROM GROSS INCOME oFOR CAl F'NDAR YEAR OF 19- -oEMPL .OYEE NAME AN D A D D R E S S E M P L O Y E E S O C I A L S E C U R I T Y W E E K A M O U N T SS E R I A L N U M B E R ENDING EXCLUDABl .ELINDA WAYNER DATEo5 OLD POST ROAD 121 12114316EW ROCHELLE N, Y. 495450 9 8 100.009 15 100.00oo22 100.00oo '. o

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oOTAL . A M O U N T EXCl .UDABl .E FROM G R O S S I N C O M E FO R FEDERAL.I N C O M E T A X PURPOSES PURSUANT TO SECTION 105


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7


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Regular Gross EarningsBasically, gross pay equals hours worked times hourlyrate. In the actual computation of gross pay, there areprocedural variations among the different types of payroll-salary, hourly and incentive-and these variationswill be discussed in detail under "Payroll Procedures."Once gross pay J : t ~ s been established, however, all typesof payroll follow similar patterns .

One of the high clerical" costs of a manual payrollprocedure is the effort and time required to computeearnings. The sooner basic data can be recorded inpunched hole form and the extensions of gross pay,taxes and net pay mechanized, the more profitable andeconomical a procedure will become.

IB M calculating punches (Figure 7) offer an ideal,practical solution for the mechanization of these calculations and they are eminently adaptable to all types ofpayroll and labor extensions. Rates and work units maybe contained in each detail c'ard and extended by individual multipl.ication, or master cards containing" agroup rate may be used. Dual mulfiplication, or theextension of more than one multiplicand by a singlemultiplier, can be performed simultaneously. Thismight be the case where the production hours on a jobcard could be extended by two rates simultaneously:the wage rate and the burden rate.Simultaneous multiplication, or the recognition oftwo sets of independent factors, can also be accomplished. Direct division problems, such as the calculation of an efficiency percentage based on a comparisonof actual hours and standard hours, can ,be computed.Computations involving multiplication, addition, subtraction and division can be accomplished in one runof the cards through the calculating punch.

IBM 604 Electronic Calculating PunchFigure 7.8

Typical examples of combination payroll and costcalculations are:LABOR-BURDEN EXTENSIONBase rate X hours worked = labor amountBurden rate X hours worked = burden amountLabor amount + burden amount = gross chargesBurden is that part of the cost of producing goods andservices which cannot be associated with the item produced-that is, electricity, heat, indirect labor, etc.There are several different methods of determining theamount of burden to be applied to production. Underone method, a certain amount of burden is added foreach hour of direct labor expended on the job. Theamount to be added per hour is determined by dividingthe total manufacturing expenses of a past period bythe actual hours, o r of a prOjected period by estimatedhours.AVERAGE RATE AND NE T EARNINGSRegular" earnings + bonus earnings + shift premium = totalregular earningsTotal regular earnings --;- hours worked = average rateAverage rate X overtime premium hours = overtime earningsOvertime earnings + total regular earnings = gross earningsGross earnings - deductions = net earningsPIECEWORK COMPUTATION WITH HOURLY GUARANTEEPiece rate X pieces produced = piecework earningsBase hourly rate X hours worked = guaranteed earningsComparison is made between piecework earnings andguaranteed earnings, and the larger amount is punchedas regular gross earnings. I f the guaranteed earnings islarger, the difference between piecework and guaranteed may be computed and punched as makeupamount.

IBM 602 Calculating Punch


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Overtime EarningsOvertime labor costs have taken on a new significancesince the federal wages and hours law went into effect.Overtime, in connection with labor costs, is the extracompensation that must be paid to the employee forthe additional amount of time worked over the regularamount set by contract or other agreement.

The federal wages and hours law establishes a minimum hourly wage for all employees covered by the act.It also sets the number of hours in the work week andrequires that employers pa y one and one-half times theregular rate of pay for all hours in excess of th e workweek.Another legislation which specifies overtime requirements is the Walsh-Healey Public Contracts Act. Thisact requires that the hours worked daily in excess ofeight hours be considered overtime hours by employerswith prime government contracts.

State or local legislation, as well as company policies,should also be considered in overtime recording.There are various methods of reporting and recordingovertime hours and computing overtime payments. Insome cases, the total hours worked and the overtimehours are recorded; then gross earnings = (total hoursworked X hourly pay) + (overtime hours X hourlypay).

Another method used by many companies is calledpremium hours. Under this approach, the person responsible for reporting time halves the actual overtimehours worked an d reports this as premium hours. Grossearnings then equals hours worked times hourly payplus premium hours times hourly pay.

When it is necessary to report overtime paymentseparately, it is obtained by multiplying the overtimehours worked by Bf times the hourly pay.

TaxesManagement today is concerned not only with the problems and procedures of preparing the various payrollsbut also with the various deductions required by federaland state laws. There are two types of payroll tax deductions: (1 ) those known as social security for old-ageinsurance or unemployment, and (2 ) income tax deductions known as the withholding taxes. Inasmuch asthese taxes may vary from year to year or state to state,no formulas are given. The local agencies should beconsulted.

Specifically, these taxes are as follows:

Federal Insurance Contribution Act (FICA) TaxAll employers, employees and self-employed personsare subject to this tax unless specifically excluded by

the law. The tax is based on limited portion of earnings.After the limit has been reached, no further deductionsare made from the individual's earnings. The employerand the employee contribute equal amounts.Several different approaches are commonly used tocontrol deducting beyond the limit. Under one approach an automatic selection is made of the cumulative earnings that are nearing the limit. Th e differencebetween the deductions to date and the maximum yearly amount is computed and treated as a one-time deduction for the next payroll period.

Another plan utilizes the calculating punch to compute the difference between cumulative earnings an dthe limit subject to contribution or th e deduction to dateand the maximum to be deducted. When the limit isreached, the employee master cards are punched witha significant digit that will automatically eliminate thiscalculation in future payroll periods.

State Unemployment Tax (U-C)This tax varies from state to stat e an d in some cases theemployer must pay the entire tax. In others the employee is also taxed, bu t not necessarily at the samerate as the employer.Federal Unemployment Tax (Federal U-C)This tax is paid entirely by the employer on all wagespaid any employee in anyone calendar year.Federal Withholding (Income) Tax (F.I.TJThis is the income tax withheld each pay period froman employee's pay. Based on his gross earnings andnumber of dependents, it is calculated either throughthe use of an IB M calculating punch or with the helpof a tax table.State Withholding (Income) TaxSome states have a withholding tax similar to the federal withholding tax. This would be handled eitherthrough the use of an IB M calculating punch or with thehelp of a tax table.

Quarterly and Annual ReportsThe following are required by the Federal Government:1. On or before each April 30, July 31, October 31 andJanuary 31 a quarterly return (Form 941A, Figure 8)must be filed with the District Director of InternalRevenue, reporting the full amount of taxes due forthe previous quarter-that is, both income tax withheldfrom wages and employee and employer FICA taxespaid.

9


14/42

2. On or before each January 31 or at the terminationof employment, each employee must receive a withholding statement in duplicate on Form W -2 (Figure9) , showing (a ) the total wages subject to income taxwithholding and the amount of income tax withheldand (b ) the amount of FICA employee tax withheldand the amount of wages subject to this tax.

4. For Federal Unemployment Tax (Federal U-C) theannual return, on Form 940, must be filed.

In addition to the above, the employer must file reports and pay unemployment taxes and withholdingtaxes to the various state and local authorities.

3. On or before January 31 of each year the annualreconciliation of income tax withheld (reverse side ofForm 941) must be filed. In addition, the employermust submit a copy of all W -2 forms furnished employees for the preceding calendar year.

These reports can be prepared on IB M accountingmachines from the accumulative earnings cards whichhave been automatically produced each pay period. ByIBM'S high speed method of carrying forward balances,the previous period's earnings and taxes for each employee are picked up and new balances summarizedautomatically.

GENERAL MANUFACTURING COMPANYNe w York, New York

EMPLOYEE'S SOCIAL SECURITY Name 01 EmployeeO I ACCOUNT NUMBER(If number i. unknown. (Pl_ type or print)I le e Circular A. E. or VI)I I 1

Oat .~ ~ j : t 04306" this form Is used as I continuation ...sheet lor Form 943, please cheek here. r

p ..Number 1

READ INSTRUCTIONS CAREFULLY.Attach only original continuation aheeh to your tax return.Do' not send a carbon copy to the U. S. District Director ofInternal Revenue.WAGES TAXABLE UNDER r.LC.A.Paid to Employee inPeriod(Before deductions)o 13116810549 J O H N B R O W NI 268:54:4678 E D W A R D C R A W F O R D

1 52814311647 C . A. B L A C K .o 726:4112783 LINDA W E H N E RI 1 1 11 2 317 6 5 2

ooo

- - - - - . ~ - - - - - - - - - ------------- ---- ---- --------- --- ---- - -- - -- - ---- - --- -------1-----I IMPORTANT: DETACH THIS STUB BEFORE MAILING Io . . 1 0I I----- ---- ---- -- --- '---- -------- ----- --- ------- - -------------- ---------------Figure 8.

GENERAL MANUFACTURING COMPANYNew York, New YorkType or print EMPLOYER'S identification number. name. and address above.-

WITHHOLDING TAX STATEMENTFederal Taxes Withheld From Wages 196Copy A-For District Director

SOCIAL SECURITY INFORMATION INCOME TAX INFORMATION, 2 8 0 0 . 1 5 1 ' 8 4. 0 0 $ 2 8 0 0.15 I' 5 3 9.0 0Total F.I.C..A. Wages'" F.I.C.A. employee tax Total Wages. paid hi 196 Federal Income Tax withheld,paid in 196 withheld, if any if anyr 1 5 1 7 2 3 4 6 1C H A R L E S N O R C R O S S

1 2 0 CIRCLE B L V D EMPLOYER: See instructions on other side.G A R F I EL.D H E I G H T S 2 5 O H I O

FOR USE OF INTERNAL REVENUE SERVICE IL ~ ~ ~ ~ i ~ f ~ ~ ~ P : . ~ ~ ~ I ~ y ~ r : s . ~ ~ ~ _._.. . . . Iype or print EMPLOYEE'S social security account no., name. and address above.FORM W-2-U. S. Treasury D e p a r t m . n ~ Inlerna' Revenue Service -Before payroll deductions. eSIl--16--75678-1

Figure 9.10


15/42

Payroll RegisterPayroll and deduction registers (Figure 10) are thepermanent records of the earnings and deductions ofall employees. They provide the entry amounts to thegeneral ledger of payroll expense, tax and deductionliabilities, total funds required for deposit to properbank accounts and , in some cases, take the place of employee history records.

The form of the payroll register to be produced willvary according to the individual payroll requirements.As far as possible, all the information related to the

medium of payment, and they furnish an automaticmeans of bank reconciliation.A provision of the Social Security law requires that

the employer render the employee a statement of earnings and taxes deducted from wages at the time of eachpayment. When checks are used, this statement can bea stub of the check. Where there are many voluntarydeductions (such as insurance, union dues, rent, food,clothing and others), the deductions may either beitemized on the check stub or totaled there and itemizedon a separate accounts receivable statement.

0 PAYROLL REGISTER 00 D A T E 0

V E A R- TO- OA TE EMP I -OYEE H O U R S BASE EARNINGS D E D U C T I O N S

0 EARNINGS W I T H . T A X O E P T N U M B E R NAME OF EMPL.OYEE WORKED R A T E REGULAR OT OTHER TOTAL. F ICA W ITH.TA X M I S C . N E T P A Y 0R E M .3002138 267:68 01 20 6 W V ASTOR 44 10 2:250 99 100 4 150 i 103;50 3 111 13195 8 175 77 1690 2684130 ~ ~ ; I ~ ! 01 34 2 A F DUFFY 5010 ~ I i ; ~ 112: 50 ll: 25 I 1 ~ ~ l b 6 3171 1 ~ 1 ! ~ 3 125 101 153 043 2 171 01 51 8 B H ENGLl SH 4010 86 00 2158 4150 70146~ ~ ~ ; I ~ ~ 266122 01 61 5 F L FARELY 42 10 11500 63100 1160 4100 68160 21 06 10

101 3150 53 1030 269182 01 70 3 J E GENDER 42 10 11350 77170 1199 6100 85169 2 157 10 174 21 50 ~ ~ I ~ ~ 0231 127 342154 01 89 3 F A HARRIS 4410 11900 83160 4106 5175 93141 2 180 14147 ~ I r ~ 945178 T Y P E W H E N M A D E 4 94 16140 1061760 1870132 I - S I N G L E P E R I O D I - F I R S T W E E K 5 - I S T AN D 2ND WE E K DEDUCTION REGISTER 3138 81 70 5180 94192 02c i* ; lg Z- S P E CIF IC P E R I O D Z -S E C O N D WE E K 6 -2N D AN D 4T H WE E K 31 20 14 170 21 20 ~ ~ I ~ ~ - S T A N D I N G 3 - T H I R D WE E K 7 -E A C H W E E K4- F O U R T H WE E K D A T E ! I ~ ~ ~ ~ I ~ g 18 1400 2521 112 21 61 89147 0434161 EMPL.OVEE TOTAL HOSP I TA l . 3128 16110 7160 821362220J02 DE"OUCTIONS S A V I N G S I N S U R - GROUP C R E D I T RETIRE 3J85 25160 1 7 1 4 ~ V D E P T . N U M B E R N A M E OF E M P L O Y E E

01 206 W V ASTOR 4 3 4 8:7501 34 2 A F DUFFY 2 3 4 1 12501 34 2 A F DUFFY 4 3 4 2 10001 51 8 B H ENGLI SH 1 3 6 ~ I ~ g 1 51 8 B H ENGLl SH 5 3 401 61 5 F L FARELY 2 3 4 115001 61 5 J.-.Y'"" ---...... ..2 3 210001 70.3- "--2150Figure 10.

employee's wages should be shown on one line of thepayroll register. If the number of deductions is large,it may be advisable to group certain deductions, oreven total deductions, into one column of the reportand to supplement this total with the individual deduction registers. Form capacity of the payroll registermay be increased, when necessary, by designing theregister with two lines of printing for each employee.

Where checks are used as the means of payment, itmay be desirable to show the check number on thepayroll register so that one record serves as both acheck register and payroll register.

Checks and Earnings RecordsPayment of wages by check eliminates the problem ofhandling large amounts of cash and also satisfies theneed for an employee pay receipt. The ease with whichchecks can be distributed is particularly importantwhere the wages must be mailed or distributed to employees remote from the payroll department. IB M cardchecks serve a twofold purpose: they are an authentic

B O N D A N C E LIFE I N S . U N I O N A N N U I T Y1 I I 8:75 1I 11 25 I 1I 2 100 II I I2 100 II II I I 2 150I 1150 I I II .1 J.2150 1

IB M card checks also may be designed with attachedearnings statement stubs, in either continuous or cutcard (separate) form (Figure 11), depending upon theform-feeding carriage on the IB M accounting machineused.

When an IB M tape-controlled carriage is used, continuous-form card checks and stubs (earnings statements) can be fed automatically.

Through the use of the IB M dual-feed carriage on theaccounting machine, the continuous-form check andearnings statement can be printed simultaneously withthe payroll register.

The IB M Bill Feed Carriage on the IB M 402 or 403Alphabetical Accounting Machines and the. IB M Cardand Continuous Form Carriage on the IB M 408 and 409Accounting Machines will feed IB M card checks withattached statements automatically. These carriages canalso be equipped with comparing positions to assurepositive comparison between the punched card checkand the payroll cards used to print the checks. The IB M409 Accounting Machine permits the punching of variable information in the card being printed.

11


16/42

0 1oooooo

GENERAL MANUFACTURING COMPANYNew York, N.Y.Flli79 TOJ T ~ ' : . ~ ; ROW NI

,.",y EXACTLY X X x'xx L 4 D O L L A R S 97 CENTS

REPRESENTATIVE TRUST co.I NEW YORK, N. Y. 69

N!! 09753

O i 7 9 9 ~ THE GENERAL CORPORATION 1.222""""2i"O"TO THE ORDER OF,E V MCDONALD APRIL 30 19 - G

P A Y ~ 52.30,.AYROLL ACCOUNT.. STANDARD BANK a TRUST COMPANY JPJECIlMJEN.............. I IU'"Ol l ' l fO .'GNA'I,I"

U u"IT , D ........ '" ~ - " " . " G

Figure 11.

I]I]I]I]I]I

Information posted to the check in the form ofpunched holes normally includes check number, dateand amount. When so ordered, both individual cardchecks and continuous-form card checks may be prenumbered and prepunched with check number. Whennot prepunched, the data may be punched into thecheck by (1) summary punching as the payroll registeris produced, (2) reproducing the information from asummary or master deck, (3) manual punching, or (4)as previously stated, by the c a r r i ~ g e card-punchingfeature of the 409 Accounting Machine.

When speed of preparation is an important factor,consideration should be given to the use of a one-linecheck and earnings statement.

Card checks can be prepared fast and economicallyon the IB M 557 Interpreter. The 557 permits printing in.anyone of 25 positions on the check form and allowsprinting of the check from another card (Figure 12).

Pay receipts may be the endorsement of the IB Mcheck. I f a separate receipt form is required, the checkmay be designed with a stub receipt on the oppositeend from the earnings statement stub. In some cases,this extra stub is used as an identification for the employee to present the following week to receive hischeck, rather than as a receipt for that particular check.

Cash PaymentsThe payment of wages in cash requires considerableeffort to (1) denominate the payroll so that the properselection of currency. will be available, (2) safeguardthe cash, (3) fill the envelopes, and (4) prepare payreceipts. The IB M method greatly facilitates the first12

GENERAL MANUFACTURING COMPANYNew York, N.Y.

67 0;0 aTHIS I S YO UR RECORO OF EARNINGS AN D OED U C TION S

P LE A S E OETACH BEFORE CASHING

STATEMENT OF EARNINGSNOT NEGOTIABLE

THIS IS A STATEMENT OF YOUR EARNINGS AND DEDUCTIDNSDETACH AND RETAIN FDR YDUR PERSONAL RECORDS

. " ' ~ L . O " ' : I I 1010 .oc ...o ~ . " ' O O lI"'OING 'OT.p-.le .A. y" . TOO . ..... ,. , , ' . TOOA ' IWT229 11240087 b3125/- 116.501 824.72 . 118.04

.OHD ....... Olto WiTH' ... "".c.Plle S.UI P. IC." NETr-AY

1 1 63.441 10.711 1 .1611.90 52.30.-c .n . TO . . . . . . c: . . .uO , . . . . . . "' .. OO.THE GENERAL CORPORATION

NQ 09753 ooooo

and last requirements, as explained in the followingparagraphs.Payroll denomination-that is, determining the necessary number of bills and coins of each denomination- is performed so that cash payroll envelopes may

be filled efficiently. Where net pay is punched in onecard, the denomination can be performed by machinein one of the following ways:1. Master denominating cards can be prepared withthe bill and coin requirements, together with the totalamount for each net pay expected. By sorting thesemaster cards ahead of the earnings cards containing thecorresponding net amounts, the number of each denomination can be totaled on the accounting machinewhen the cards are run.

,2. The card-counting sorter or the IB M 101 ElectronicStatistical Machine can be used to summarize the number of various d e n o ~ i n a t i o n s by sorting on each digit ofnet pay. Manual adjustments must be made for quarters, fifty-cent pieces, and five-dollar bills.3. Th e accounting machine, equipped with split column control 5 and 6 and digit selector A, can be usedto denominate through a process of counter digit selec-tion. At the end of the operation, a total of all earnings,as well as a total of each denomination, will be obtained.Payroll receipts may be automatically prepared incontinuous form by the accounting machine, or theymay be IB M cards prepared on the automatic bill feed.The pay receipt may be inserted in a window envelopewith the cash. Under another plan the statement ofearnings and deductions is printed directly on the faceof the cash envelope (Figure 13), and the envelope Hapis used as the pay receipt.


17/42

NE W YORK. N. Y..fay to the order of MO' , DAY, YR.

03 15 6-B HOWARDEMPLOYEE NO. WEEK

12 1 41 17

REPRFjENTATlVE TRUST COMPANYNE W YORK. N. Y.I

1-22221 0

DOLLARS I CENTS$X125 ~ 3 5

PAYROLL ACCOUNT.........UTHORIZED SIGN ..TURE

I " - " " ~ '-.;:I: ._.LV. ~ ' . - . l I' ';a' --::r-1t r. :__. ; ," ' : - - - - _.__ . .igure 12.IBM 557 Interpreter

o Ii\I ( 'I 00 I I 00 I I 0I GENERAL MANUFACTURING COMPANY I0 I ! 0I E. B .... GROUP ME rO ! SUN ! GARAGE FED. INS. SALARY I0 , , , 0I I I I, IMISC.

BOrS AETNA OVERTIME CONTRIB. INCOME. TAX

NT0 I I I I I I 0I , ,o 1/ \ 10- - - - - - - 1 \ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ - - - - -o .f 1 00 I I 00 I I 0I GENERAL MANUFACTURING COMPANY I0 I I 0I E.B.A . GROUP METRO SUN GARAGE FED. INS. SALARY I0 , ., , I 0I , , . II I I I ,MISC. BOrOS AETNA OVERTIME CONTRIB. INCOME-TAX

N!0 j I ! I , I , I 0, , , !, , ,. , I ,i/ . I. I0 \ 0IFigure 13.

1


18/42

ControlEvery accounting procedure should be built on a foundation of eHective controls-that is, detailed recordsan d reports should be balanced against a c()ntrollingaccount; and one result must agree with that obtainedby a corresponding operation. This is especially truein financial control procedures .

IB M procedures eliminate common errors of accounting. A single recording in punched hole form, onceverified, need not be checked as it appears successivelyin many reports. Special journals, manually postedledgers, worksheets, and other forms of intermediaterecords are eliminated.

I f the payroll source data is automatically recordedfrom master cards, key verifying is not necessary. Variable information that has not been prepunched may be

MO T H L Y SAL ARY 1-----,----'----,---,----/

SALARY SHIFT AND OVERTIME

C O M ~ U T I E : O TAXIES -- - MI A

ST . L DC.CHG. "IN"

T AX ADJUST M I :NT CAI :DIT S

key-verified or verified by listing an d balancing to predetermined controls. The control sheet (Figure 14)establishes the predetermined totals to which all s u b ~ sequent accounting entries must balance. In this manner, errors that arise from lost or misplaced documentsare immediately detected.

The degree of checking an d balancing that is necessary for control depends upon the nature of the application to be processed as well as the equipment and procedures employed in processing it. Controls are notsuperimposed on a previously established procedure .Rather, good controls should be built into and becomean integral part of every procedure during the planningphase. The series of checks and balances which makeup these controls must begin with the entry of transactions into the data processing installation an d continue throughout processing.

Current Payroll Control

COMMISSIONS OTHERR E GI lit

~ _ - + ~ E A O = V A ~ N C O ~ " = A V = M ' = N T ~ ' ~ _ - + ~

..---t---i T. L OC. CHG. 'N "'lET

I=TO=TA-C.-----:.-=-=.O-=-=--t---+-t----+--+---+--1I----t--t-----t---r---r--t----- '--- l : ; : T ; ~ U ~ ~ ~ ~ : : I O N S RI [DE " O' IT I I :D CHE CK .

'T . L DC. CHG " O U T -

T O T A L REDII!:"OSITED C H I ! : C K S - N E T - - - - - - ------------ I I__ _ _ _ _ ~ T O ~ T A C O . ~ O U C T I O ~ N . - - - ~ - - - - ~ - - - - - ~ - - - - - - ~ - - - - - ~ - - - - - ~ - - ~ ~ ~ - - ~ tIT D T A L ' - f " I N A L I I I I I I I I

I A.O COUNT 11 . _ ..1Of" CHE CK' Cot .. 00"': I II:D TOTAL

I

Figure 14-Front.14


19/42

I::::CC ......... ,.

ISlCKNEO. AND ACCDENT Ace DAV' I ICOCATON TOAN,.E. 'I'CE C'TV TAX IITATE T.AN .,CE

IQT.-.TAn_G.O1 .TAT< GRO.. I STATE TAX I I:: : ~ : : : : : : ~ : O A T E I I: :: : ~ ~ : : ; - T O DATE I: :: : ~ ~ : : ; - T O - O A T E I I I :TRAN ER' OUT : : VEA.-TO-DATE. . l-!VE=AR=-T=O-=OAT=._.L.__ -J.L- . . .L.___ L ...J.___ ..1..--'-.___ ......l

V."-TO-OAT. I"R"NOO CONT.OC 1

I ~ ~ ) j [ ~ ~ ~ : : ''T "'C"""C'II g ~ : ~ ~ : I II


20/42

EARNINGS RECORD

PAY I-_Y_EA_R---,T,-O-_DA_T_E_ -+ - _EM..._LO_YE_E--/PER. EARNINGS WITH. TAX DEPT 'NUMBER

I Ir 9 0, 0 a 1 lI S Z 1 Z a 6I 1Z 1 B 010 a Z 310 4 1 Z a 6I 3 Z 70:0 0 3415 6 1 Z 0 64 36 010 0 4610 8 1 Z 0 6I I5 4 6 315 0 6 010 :5 1 Z 0 6I 6 5 5 31s 7,1:5 5 1 2 0 67 6 4 315 0 B ': 0 7 1 Z 0 6

NAME OF EMPLOYEE

W V ASTURW V ASTURW V ASTURW V A S TU RW V ASTURW V ASTURW V A'STURI I8 7 4 9 ~ 0 9 ~ O Z 1 Z06 W v ASTUR

HOURS BASEWORKED RATE

ZIZ 5 0Iz:z 5 aZIZ 5 0

zlz 5 0Izlz 5 aI21Z 5 0Iz\z 5 0zlz 5 0

, , : ; ~ " ' " ,;:;.. I

REGULAR9 ala aI9 0. 0 aI90 10090100I99 10 09 0100I90:0 0

I9910 a

EARNINGSOTPREM1I,I

III,

4150II,III415 0

OTHERIII1II,IIII,I,

zlo 0

DEDUCTIONSFICA WITH.TAX MISC. NET PAY PAYPER.TOTAl

9 ~ ~ - - ~ I _ ~ ~ - - - - - - - L _ ::--: I ======= 1 2 61 9: 1 4 8 3 I, 20 6 W:V, A ST U R50 I II I51 I II I52 I IFigure 15.

Management ReportsOne of management's problems is to control labor costsso that business operations will be more profitable. Theunique contribution of the IB M method is its ability toextract the vital management data hidden in the mazeof details.

Applying the IB M method to payroll and labor costroutines gives management at all levels the data neededfor reviewing critically and constructively the activitiesof the organization. Original documents used to fulfillthe recordkeeping requirements (timecards, payrollrecords, etc.) are used to produce this data. The records are completely flexible and lend themselves to easyand rapid classification, reclas'sification and summarization to provide management the answers to such questions as:What is the average number of hours worked by ouremployees?How many employees, by age group, do we have?

16

g 4 gig g mg2 0 6 4 0:0 0 2:2 5 02 0 6 4 0:0 0 2:2 5 02 0 6 4 4' 0 0 2'2 5 02 0 6 4 010 0 2:2 5 0g : ~ : g g in gi !: :,, ,, ,i !,, .,! I

~ g : g g gigg99:0090 '0090:00

T!What is our labor turnover? Number hired? Numberseparated?In what departments is our labor turnover excessive?What is our average hourly earnings rate by occupation?How many man-hours do we have available by de-partment? .How much idle time have we by department?Is our absenteeism excessive? Where? Why?What are our average hourly earnings by employee,sex, age, marital status, etc.?What are our average incentive and overtime earnings?Are our actual expenses for indirect labor conformingto the anticipated or budgeted amounts?What is our daily employee and departmental efficiency as compared with standards?For what were our payroll dollars spent?What are our machine and manpower requirementsfor the planned production schedule?


21/42

Payroll ProceduresThere are basically three types of payroll procedures-salary, day or hourly r a t e ~ and incentive. In a salarypayroll procedure, the employee is paid a fixed amountfor a specific pay period. In the day or hourly rate system, he is paid according to the amount of time hespends in his employer's place of business. In the incentive system, he is paid on the basis of both his performance an d his time.

The basic difference among the three procedures isthe manner in which gross pay is determined; beyondthat point the procedures may follow similar patterns.There will, however, be variations because of companypolicies, type of industry, location, etc., as well as thetype of equipment used.Salary PayrollIn regard to salary payrolls, the following generalizations can be made:1. The employee is paid a fixed amount for a specificpay period.2. The employee is not penalized for normal absencesor latenesses.3. Th e employee mayor may not be paid for overtime.In general, employees in supervisory capacities or earning over a specified amount are exempt from paymentfor overtime.4. Th e principal exception from the fixed payment results from additional overtime earnings.5. Vacation time is given with pay.6. The time of each employee is generally charged toonly one expense or clearing account.In a salary payroll a high percentage of earnings,tax withholdings, voluntary deductions and 'other factors remain constant from one pa y period to the next.These factors tend, on the whole, to keep the operationsimple and economical.

It should be noted, however, that in some cases thereare variations which should be considered. For onething, salary payrolls may in some companies include apension plan (as a payroll deduction and/or a c o m p a ~ y contribution), a stock purchase plan, a per sonal savingsplan or a bonus plan based on gross salary. Then again,it may be necessary to accumulate absences (e.g., incivil service) or to account for th e number of vacationdays taken. Furthermore, in a sales organization, commissions may be p ~ i d in addition to the base salary.

Each of these variations represents either a deduction from the regular gross salary, an addition to theregular gross salary, a detailed attendance record, orsome other factor which can be recorded in punched

card form and included in a salary payroll procedure.For this reason, all elements must be considered beforea company decides on the type of equipment to be usedand procedure to be followed.

A basic salary payroll procedure is shown in Figure16. The bond an d other deductions procedures outlinedon page 4 have been followed and the procedurewhich created the overtime file is outlined in Figure 19,which will be discussed later.

The employees' year -to-date earnings. file from theprevious pay period is collated with employees' current earnings cards. The current earnings cards can bereproduced from master earnings cards or the masterearnings cards themselves can be used. Th e tax deductions are precalculated and punched into the earningsand overtime cards. The pay period deductions andbond masters, combined with overtime details, are collated with the year-to-date and current earnings file(Figure 17). The combined file is used to prepare thepayroll register on the accounting machine. As a byproduct, employees' year-to-date earnings cards for thispay period are created through the use of a summarypunch connected to the accounting machine.

The payroll check an d statement is a double cardand, when folded, is processed on the reproducer topunch net pay, employee number and pay period in thecheck for reconciliation purposes. (The card feedmechanism of the machine must be adjusted to feedthis type of card. )

A variation to this procedure is shown in Figure 18.This procedure can be used where the federal income,FICA and state taxes have not been precalculated.These calculations are made in the new year-to-dateearnings cards and the payroll register is prirtted afterthe calculations. While preparing the payroll check andstatement, the IB M 409 Accounting Machine with CardPunching Feature is used to punch employee number,net pay and pay period into the check.

In the previous salary payroll procedures, the overtime payments were included in each pa y period. However, in some companies, the overtime payments aremade weekly and the salary payroll is processed semimonthly reflecting the overtime payments. This is donebecause of the time element between the closing of thepayroll and the receipt of overtime data. That is, in ascattered operation where employees are at outlyinglocations, overtime hours may not be received in timeto be included in the current pay period.

Figure 19 outlines the procedures for both overtimeapproaches (during the calculation of gross overtimesalary, income tax, FICA and ne t payment are also calculated and punched) :

17


22/42

A. For use when overtime is included with regularsalary. The overtime detail cards are collated into thesalary payroll procedure (Figure 16).B. Fo r use when overtime payments are made weekly

Current Earningsand Previous PayPeriod Year-to-DateEarnings Swnmaries

LaborDistribution

CheckReconciliation

Analysis

DeductionRegistersand File

Proved

File

PayrollRegister

Bond Register I ondand Issue Procedure.. . - ' - - -1 ...D_ed_u_c_tl_o_ns___ ....Figure 16.18

Acctg.Mach.

Acctg.Mach.

and reflected in the semimonthly payroll statement. Onthe regular payroll statement, the overtime gross income tax and FICA amounts are reflected in the yearto-date amounts for each.

Overtime FileProved

Prove Acctg.~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ Mach.

PayrollCheck

Foldr - - . . . . . . r . = = = = = = = = ~ . - - Statement

PayrollCheck

_ _ _ ----. To Employee


23/42

o0 0 0 0 0 0 0 01 0 I 01 02 4 5 I I I 110 1 I 1 l 1 1 1 4 1 5 1 1 1 1 1 1 1 1 2 0 2 1 ; - . . . . : . . . . . . . . . : . . . . . . . . . : . . . . . . . . . . . . : . . . . . . . . : . . - - . . : - - : . . - - : . . - - : . . - - - - : : . . . . . . . . . ; ~ - : . . . . . . . . . ; ~ ! . . - - . : . . . . : . ~ - . : : : . . . . : : . . : . . . . : . . . . - ~ ~ - - - . . ! : : . . . . . . . ! . - - - - ! - - - - - - - - - - - , I 11 11 1 1 1 1 1 1 111 1 111 1 1r. r-r---.- ,---.--1Ir-.--a----. ._------,----,-----------r-----.--. .. . I 1"1---=.cu:.::;:=; T o o. -----I1212 2 2 2 2 2 2 2 2 2 2112 212 2 I f ~ ' r " " ' A ~ ' I ,u,"CT ' .


24/42

OvertimeAttendanceRecords

Clerical qI

Add.Mach.TotalHours

Acctg. : : o ~ _ -.JMach.

IIII1===1=----II1 - - -1IIII1I

(A)

Acctg.Mach.

== ==

Acctg.Mach.

Acctg.Mach.

(B)

OvertimeRegister

OvertimeChecks

L _______ _____ __Salary PayrollProcedure

Figure 19.

Day or Hourly Rate PayrollIn a day or hourly rate payroll, the employee is paidaccording to the amount of time spent in the employer'splace of business. This system can include both salariedemployees and labor hired at an hourly rate. However,because salaried employees' wages are relatively .fixed. nd do not vary unless a legal limit of hours is exceeded,the terms "day rate" and ''hourly rate" are interpretedin practice as referring to labor hired on an hourly basis.There are two general methods of deciding hourly20

EmployeeOvertimeDetail

To Salary Payroll Procedure andCheck Reconciliation

To Employee

rates-by occupation (usually in larger industries) andby the individual. Under the occupational-rate method,no matter who works at an occupation, the hourly rategoes with the job. Under the individual-rate method,the hourly rate is set for the i n d i v ~ d u a l , no ~ a t t e r whatjob he performs. Since gross pay in either case equalshourly rate times hours worked, either method may beused in the typical procedure charted in Figure 20 .(This procedure, incidentally, can be varied innumerable ways-not only in the IB M equipment used, bu talso in the documents and sequence of steps.)


25/42

PayrollSummary

EmployeeWeeklyWorkRecord

Acctg.Mach.

Acctg.Mach.

Labor Distributionand Other Reports -File

Figure 20.

P r o v ~

Gross Pay

Prove

lIIIIIIIII-.J

Add.Mach.Total

I\

Year-to-DateSummary(This Week)

Acctg.Mach.

J

Prove

Ta x Reports EmployeeEarnings Record

"...""( I

Acctg.Mach.

Acctg.Mach.

Acctg.Mach.

Deductions

Deduction Resumes

PayrollRegister

Payroll.Checks GStatements

Register

Check Reconciliation. G Next Week Payroll

21


26/42

An employee work record (Figure 21) is filled indaily by the foreman for each job performed. Th e basicform can be prepared on the accounting machine whenit is known in advance what jobs are to be performed.(Note: I f the hourly rate in this illustration were basedon occupation, it would vary for each job.) These records are audited by the payroll department and batchedfor card punching. An adding machine total of hoursworked accompanies each batch. The importance ofsetting up and balancing to control figures has beenpreviously discussed under "Controls." Some of theproof steps in this procedure are included in the flowchart in Figure 20.A work record card (Figure 22) is punched andverified for each line on the employee record. Thesecards no t only serve as the basis for determining the

~ 3 1 W E E K A N D I N G_ b L ~ M P L O Y E E N A M E[b . 3 ~ / 8 '

GROUP N O. E M P L O Y E E NO .

III a: a::J I- W W M AC H I N E III OCCUPATION ORI-I. I- Z I-ID OR III W D E S C R I P T I O N O F D U T I E SZ :E:r 0( 5 D. JO B 0( 0I- :J W: J .J 0III III D. III U Z N U M BER U UI I I ). 0 1)..- 0501 6 1).- ...JJJJvK-I I I )- 0 /)..- /00/ 7 IS fJ.J.L;I I / ),.0 /).- )...oIS 10 >-/ Po..cMt; - -

Figure 21.

/ 1.]6P31 lE 321:':: '11 11 2C OlE 0501 OE 121 22pC ':;750 IDATE I f H ~ ~ ~ ~ H T >. C E N T E !uNUMBER. 0" , , .. H O U R S0 , JO , Z o. MO DA Y Y. 0 . O'. 0 i d

employee's gross pay, bu t are also used in the laboraccounting procedure. Any variation, such as bonuspayments, adjustments and vacation payments, is recorded in this card form and included in the automaticcalculation of gross pay.

Figure 23 shows deduction cards, weekly earningssummary card, and year-to-date earnings summary cardwhich can be used in this procedure. The weekly earnings card which is summary-punched contains the firstnet pay (gross minus total deductions). The field inthe year-to-date earnings summary card labeled Exemption Amount reflects the number of exemptionsmultiplied by the exemption amount allowed in eachcase. This is done to save program steps in the calculation of taxes and net pay.

EMPLOYEE WORK RECORD

!I


27/42

CII:..:Uz0f:u::JCWC

CII:..:Uz0f:u::JCWC

' ---

-

RLUEDEDUCT IO' " AG E CROSS I'" SU R CC

MO OAV V.. i Bel 0100000 0 0 0 0 01.00:1 II 0 O ~ O 01.0:1.1 I O!I 10 .1 O!I. 00 0 DiD 0 0O!O 0 ODD D !O DD I DII. DDDDDDDDDDDDDDDDDDDD~ D A T < ~ M " ~ ~ O V O ~ N U . ~ H O U O ~ V . T O M - T O T A ~ ~ F D . A ~ ~ . T A ~ T - F O C A ~ . T . A ~ ' G H T ~ ..~ S T ~ . " ~ 5 NUMBCR AMOU " ' T P ... IO AMDU T ~ : : ~ I : ~ . I N ~ ~ ~ E T ... X ... MO U T (GROSS _ ~ A Y MO . D .. Y VR . Z TOTAL .

DEDUCT IONS)

~ ~ 0DOD DOD DOD DID DII DDIIiI. D ID l i l l lO I D T O I ~ 1 1 D ID DIIIIDIO DII DID DDDDDDDill D 111 DD0111 DDl n liD ~ I D 1 ~ I I

r = , ~ ~ = = ~ = o N I T - - - ' ~ I I ' - I ~ I I ~ - - - - - - ' - - - - - - - - - - - - v A - . _ - T o - _ D A - T E - T o - T A - ~ ' - - - - - - - - - - ~ - - ~ ~ - - ~ ~ - - ~ J)o E M ~ L O Y E ......MEE i i I I ~ : ~ : : G ' " : : : A ~ ' ~ ~ : E ..cA H D U O . 2 CHECK ~ ~ ~ : ~ i ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ! ~ ~ ~ ~ ~ ~ ~ ~ ~ ! ! ~ ~ ! : ~ ! ! ! ! ~ ~ : ~ ~ ! ! ~ ~ : ~ ~ I ! ! ! ~ I ~ ~ I ! ! ! ~ ~ ~ : ! ! ~ ~ ~ ~ ~ ~ ~ ~ ! ~ ~ ! ~ ! ! ~ ~ I l I ! ~ !i >- 1 1 1 1 1 1 11 1 1 1 1 1 1 1 .1 1 1 1 1 1 1 1 1 1 1 1 1 11111 1 1 1 1 1 1 1 1 1 1 1 111 1 1 1 1 111 1 1 1 11 1 111 1 1 1 1 1 11 11 1 1 1 11 1 1 1 1 1 1

w I I I I22 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 212 2 2 2 2 2 212 2 2 2 2 212 2 2 2 2 212 2 22 2 2 2112 222 222 2 212 2 2 2 2 2 2 2 212 2I:l I I I~ ~ 31 3 i31 3 3 3 3 3 31 3 3 3 3333333333333313313 3 3 33131313 3 3 313 3 3 3 3 31113 3 3 31 313 3 3 3 3 3 31 3 3 333313331133~ (( ( ( ( ( ( 1 ( 41 4 44441444444444444444:4444441/444444:444444:4444444414 4 4444444441444444 +

!;( 5 5 5 5 5 5 5 5 515 515 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 51 5 5 5 5 5 515 5 5 5 5 515 5 5 5 5 515 5 5 5 5 5 5 515 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 515.! 66666 6 6 6 6 6 6 6 6 6 6 6 66 6 6 6 6 6 6 6 6 6 6 6 6 6116 6 6 6 6 6 6:6 6 6 6 s slls s s s SiS s s s sS 6 S:S 5 S 5 S S S S S S S S S S S S Ss sis sI I I I. I>- 7777777777777 7777777777777777771777777? 7 7 7 7 717 7 7 7 7 717 7 77777717777777777777777777177

8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 18 8 8 8 8 8 8 8 8 8 8 8 8 818 8 8 8 8 8 8 . 8 8 8 8 818 8 8 8 8 818 8 8 8 8 8 8 818 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 81 818 89919919 91 9 9 9 9 91 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 919 9 9 9 9 9 919 9 9 9 91 191 9 9 91 19 9 9 9 9 9 9 919 9 9 9 9 9 9 9 9 9 9 91 9 9 9 9 9 919 91 2 3 4 5 7 10 1112 13 14 15 1. 11 1. 1. 20 21 22 23 24 25 2S 27 21 29 30 31 32133 34 35 36 31 38 39148 41 424344 45146 41 48 49 50 51152 53 54 55 56 51 5159160 61 62 63 64 65 66 61 61 69 10 11 121314151611 71h9 10

Figure 23.

Exception PayrollIn either a salary or hourly payroll procedure, i f earnings for the majority of employees can be ascertainedin advance of a pay period, an exception plan may befeasible. Under this plan, the earnings, taxes, deductions and net pay for each employee are calculated inadvance for a pay period. A variation constitutes anexception and, since advance calculations are involved,there should be a minimum of exceptions.

In an hourly procedure, the foreman schedules theemployees under his jurisdiction on a work schedulereport for the ensuing week in accordance with theplanned production. From the schedule report, weeklytime books, attendance cards, occupational earningscards and predetermined payroll and labor distribution

When the employee works the scheduled hours at hisregular occupation, he is paid the precalculatedamount. I f the employee does not work as scheduled,the predetermined earnings are adjusted.

In a salary procedure, in addition to overtime payments, there are such exceptions as leaves of absencewithout pay, salary changes, separations, etc. The de-partment manager or personnel department submitsthese exceptions on a special form to the payroll de-partment. They are calculated, proved and punchedin a new card (replacing the employee's salary card)before the payroll is processed.

are automatically prepared. .Th e attendance cards are forwarded to the variousstations along with the time record. At the end of the

week the total attendance hours are gang-punched intothese cards and they are used to audit the payroll hoursautomatically.

When the employee does not work as scheduled, thetimekeeper makes ou t an exception card with theproper information to ad just all records involved. Thesecards are forwarded to the data processing departmentat the close of each shift.

Predetermined controls are adjusted daily for plusand minus exceptions to schedules, so that at the endof the week a payroll control of hours and earnings isestablished to which the details of employees' weekly

23


28/42

earnings cards are balanced. A daily listing of all exception cards, in sequence by department number, provides information and supporting detail reference datato adjust the payroll and labor control records. Exception cards can then be analyzed as . o the incurredresponsibility, operation and exception code.

In some cases the predetermined payroll may behandled in such a way that the employee's card is usedweek after week. This can be done if most of the employees are working on the same job each week and thenumber of exceptions is not too great.Incentive Payrol!A wage incentive system is one that has been devisedto increase production per unit of time by rewardingthe worker for his extra effort. Experience has shownthat the decrease in cost pe r manufactured unit undera good wage incentive system brings about a savingfar in excess of the cost of the system. In effect, theincentive to the worker is.a portion of the saving whichhis extra efforts have made possible.

While there are many types of wage incentive systems, these plans are usually modified accord ing to particular or unusual conditions encountered in individualplants. As a result, it is often difficult to find two organizations in any community that have identical wagepayment plans.

In an incentive payroll, the employer agrees to paya money inducement other than regular or overtime

HENRY Bz: w!

wages for the accomplishment of definite standards.Incentive pay plans fall into hvo general types:1. Group.-The earnings of each in a group of severalemployees are increased in proportion when productionby that group exceeds the standard.2. Individual.-The earnings of an employee are increased when his individual production exceeds thestandard for the operations on which he is working.Group IncentiveDaily timecards are created for each employee (Figure24), on which the starting and stopping time for eachjob is recorded. As a job is assigned to an employee, the.job number or description is noted in the next availableposition. At the end of the shift, the timekeeper writeson the card the elapsed time for each job, and sensemarks indirect time, attendance time and overtime. Inthis particular procedure, the time allowance for changing to and from working clothes (dressing time) is alsorecorded. Th e cards'are sent to the data processing department, where dressing, indirect, attendance andovertime records are mark-sense-punched.

The card is. then punched with th e distribution datafor the first recorded job-that is, hours an d group number of the first group in which the employee worked.For additional jobs, an extra card is punched with thehours and group number and clock number; date andbase pay are gang-punched into the extra job cardsfrom the daily timecard .

MARK TOTAL TIME IN EACH COLUMN

INDIRECT ATTENDANCE OVERTIME I-TIME TIME :J0~ : x : + -6 ~ * = t : T I I 0I 0 40 41 4243 45 46 41 48149 50 51 ~ c O ~ 1 i 52 1115111 I 616263116566l x l35 36 31 38 39 1 1 ::lC 1 ::jC1 l:::lclxl > zc 1 1 11 1 I I I II I I I I Do2 2:::lc 2=E2 2 : : : l c 2 ~ 2 2=*=2:t 8I- 22222 3 : : : l C 3 ~ ! 3 , I' g C)z CLOCK 3 3:::lc 3=t=3 3x3 zMAR S 16.0 13313 , I I 04 : : : l C 4 ~ C 4 4 : : : l C 4 ~ C 4 I-LlJ CARD *- 4=r=4 ug MAR 5 15.8 IL44444 I 5 ~ C 5 ... :J5 5:::lc55 5:::lc55 ,., zAND u t::fg 55551 6 : ) C ~ ~ ~ , \1.1U 6 6:::lc66 6=*=6 :tJOB I-61666 I 1 , N I-7 7:::lc77 7:::lc77 77 c :JCARD t:::I 07 7 7 7 7 I , ,8 8::Jc8:::jC8 8 : : : l ~ x 8 8=t=8 :ISII I:::lcg ......

Figure 24.

24


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The group production summary cards and job cardsare combined and sorted in group-number sequencefor automatic summarization of actual time and earnedhours for each group. The percentage of efficiency(hours earned divided by job time) is calculated foreach group and punched into the corresponding newgroup production summary card. Actual hours on thejob cards is multiplied by group percentage of effi-ciency to calculate and punch earned hours in eachcard.

The earnings cards (Figure 25) are summarypunched weekly from the job carqs. Th e earnings summary cards are completed by the calculating punchwhich automatically computes and punches the regular and incentive earnings. A second pass through thecalculating punch computes and punches the appropriate taxes. The earnings summary cards are thenready to be used in the preparation of payroll and alliedreports.

The procedure may be varied by maintaining a reservoir of prepunched product cards at each group workcenter. As units are produced, they are associated withthese prepunched cards, which are summarized to determine group production.

Individual IncentiveIn this plan the efficiency of an employee is determinedby comparing performance or productivity with presetstandards. The procedure in this plan is similar to that

of the group incentive plan, except that the productionfactors are assembled, computed and applied on anindividual rather than a group basis.

In the following example of an incentive payroll, theincentive portion of the employee's earnings is basedon the conversion of quantity produced into allowedhours. The earned hours are paid for at an occupationalrate per hour determined by the nature of the work.The employee is guaranteed earnings at either the occupational rate for the time actually spent on each job,or for each day. When the guaranteed amount exceedsthe amount earned on the incentive basis, the differenceis classified as makeup pay. This amount is charged tothe expense class and department where it occurred.A standard weekly clock card is used as the attendance record for each employee. The hours worked areposted and totaled weekly by the timekeeper.

Th e timekeeper also makes out an employee workrecord similar to the one in Figure 21 except that theincentive rate is also included. Data is compiled fromthe work assignment sheets, which contain directionson the work to be performed and receive notations during the day about good and ba d pieces inspected andcounted, machine used, etc. W h e ~ an employee is operating several machines, the time worked is proratedbetween jobs. I f an employee works on the same jobat several periods during the day, the time and quantityare accumulated on the work assignment sheets and oneentry only is made on the work record for that job inorder to reduce the volume of entries to be handled.

C L O C K B A S E A TTE ND- JOB EARNEC W A M O U N T I N D I R E C T C) REGULAR O V E R T I M E G RO S . " ' l e A , .EDE ..... L. STATE NET DATIE l1lN U M B E R R" TE ANCE T I M E HOURS ""'0 l EARNED T I M E EARNINGS EARNINGS E RNING . W I T H WITH- ~ A Y 8

AT EARNI NOS a 5 E> I N C E N T I V E ... .. H O ~ : ~ N G H O ~ : ~ N C I ~ MO . DA V Y!i= ~ ! ~ 0( c

Figure 25.

25


30/42

The department timekeeper completes the workrecord (Figure 26) by applying the incentive rates,equivalent quantity, and hours for overtime and shiftdifferential in the designated blocks. The reports areforwarded to the data processing department.An adding machine total is made of the total hoursfor the reports for each group, after which a card (Fig

ure 27) is punched for each different job for each employee. The cards are key-verified and proved on theaccounting machine to the adding machine totals.The following calculations are performed for each

card on the IB M calculating punch:

Pay quantity X allowed time per M = allowed hours for operation

Number of setups X allowed time per setup = setup allowedtime

Setup allowed time + operation allowed time = total allowedhours

Total allowed hours X job rate = earningsHours worked X job rate = guaranteed amountGuaranteed amount - earnings = makeup amountI f makeup amount is negative-that is, the earnings exceed the guaranteed-:-the calculator automatically eliminates the punching of the makeup field on the card.

The daily payroll is prepared by listing these cards,securing totals for each employee and group. The report is made in triplicate: one copy is sent to the indus-

DA T E I/JfIL 50 LABOR RE PORT PAUL SWEETSTJ GROUP NO . ___ N A M EM A L E V F E M A L EC L O C K N O . fo'.t D I R E C T LA B O R T O T A L HO URS 0

O R D E R " O M M . O P E R. rr JOB HOURS P A Y R O L L E Q U I V - I N C E N T . l i . ~ SE T 0: M A T E CUS T O ME R S I Z E OR0 0;:) O .N U M B E R CODE CODE Z C L A S S Q U A N - A LE N T RA T E ,,- U P .z R I A L P A R T N U M B E R::E RA T E T I T Y Q U A N T . P ER M OW RA T E rr -Ztf) :t::E

500 .30 903 050 oS / .55 .3.8 /8/7 /8/7 ,g.0" I .12- 5(0)" ,..6 5 0 x l l A C J i t t . ~ 1 I 5(}0.3l-- '1():J 050 oK /.55 ".9 1).51 1)..51 3.)..1 / .J)... 5(0) . . l-7 II 3 If5ox)..Sx9..57.5}.t 95/ 050 og /.55' .6 .306 30 ' ). . . /). . / './).. 575'0 )... "1 It.soxlZx9 / I ~

\

I N D I R E C T LA B O RCONTROL S'RCE CLASS OPER. MINOR JO B ~ O U R S F O N ' S O , CLASS OPER NO . HO URSRA T E/.3/ ()3 ()96 001 00 I.SS .3 131 03 064 00 M A L ~ O V E R T I M E1.31 03 040 050 (JO I/.SS .11- 131 03 065 00 F E M A L E O V E R T I ME

131 03 06 6 00 M A L E S H F T 01 F F R N T L131 03 067 00 F M A L E S H F T D I FF R N T L

Figure 26.

26


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C O M M JOB HOURS P A Y E Q U I V . A L L W D T I M E S E T - U P S A LL-WO EARNINGS M " ' K E - U ~ .J se E CODE 0 RATE W O R K E D Q U A N T I T y Q U A N T I T Y PE R M HOURS-== x I u: 0 B ALLWD. I I I

! i NO TIME E .... I10 0 0 0 10110 I 0 0 0 0 0 0 0110 10 10 110 110 DID 0 1:1 ~ I O III ~ I . O 0 0 0 0 DID 00.11 011 0II I 01110 0I 0 I ~ I O 0 I DID II DID 0 0 0 0 01 2 3 4 5 6 7 9 10 11 121314 15 16 17 18 1920 2122 23 24 25 21 21 28 29 30131 323334 35

130 3118 39 40,41424344 45 40141 48 49 SO 51 5253154 55 56 51 58 59 60161 62 6l 64 65 66

161 68 69 10

1"71 72 13 14',5 16 111.79 eo11111 111111111111111111111111 11 111 1111111 1111 11 11111 11111111111111111111111111111

221222222222222222222222222222:22222:22222:222222:22 2 2 2 2 2:2222222:212222122221222112222223 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 13 3 31 3 3 3 3 3 313 3 3 3 3 3 3 3 313 3 3 3 3 313 3 3 3 3 3113 3 3 3 3 3 313 3 3 3 3 3: 3 3 3 313 3 3 313 3 3 3 3 3 44 4 44 4 4 44 41444444444 4 44444444414444* 4 4+4 4 4 4:4 4 44444144 44444144 4 4 441444 41444+4 44 455551555555555551555555551555 51115 5 515 5 5 5 515 55 5 5 515 5 5 5 5 5 5:5 5 5 5 5 5 515 5 5 5 51155551555515555556 6 6 66 6 6 6 66 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 616 6 6 6 616 6 6 6 616 6 6 6 6 616 66 6 6 6 61616 6 6 6 616 6 6 6 6 6116 6 616 6 6 616 6 6 6 6 6777777777777777777777717717717 11'1117111111 111117 1b 1 711 7 717 11 1 7 1 711 7 7 7 1 717 7 7 117 7 71h 111118 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 1S:8 8 8 8 8:18 8 8 8:. a8 8 8 818 a8 8a8 8:8 8.8 a8 8 a: 8 8a8 88: 81 8 1 ~ 8 88:8 8 8 8 8 a91919999199999999999919999999919999919999919999991999 9 9 9 919 9 9 9999199999919999199991999991 2 3 4 5 7 10 11 12 13 14 15 11 17 11 19 20 21 22 23 24 25 21 21 28 29 30 31 32 33 34 35 30 31 38 3'. 40 41 42 43 44 45 40141 48 49 SO 51 52 53 54 55 56 51 58 59 60 61 62 6l 64 65 66 61 68 69 10 71 72 13 14175 16 111' 79 eo

Figure 27.

trial engineering department, where it is reviewed forearnings and makeup pay;. another copy is sent to thetimekeeper for the group, where it is available for em-ployees to check their earnings; and the third copy isretained in the payroll department.Cards are punched from the daily payroll for allmakeup allowances, charging the amount to the properexpense class and department. Overtime is paid at theaverage hourly earnings rate for the day on which theovertime occurred. Each day, the daily payroll cardsare sorted to select overtime cards, and the averagehourly earnings and overtime allowance amounts arecomputed and punched for the employee.

The original labor cards, the overtime allowancecards and the makeup cards used in the daily payrollare held until the cards for the last day of the week

have been processed. At that time all the cards aresorted by group and clock number and a payroll listingis prepared showing the hours worked and total earn-ings for each employee. Grand totals for each group areaccumulated and balanced to the sum of the controltotals set up each day. As a final check, the total hoursworked for each employee as shown on the list ischecked to the hours worked as shown on the weeklyattendance clock card.At the time the weekly gross payroll listing is made,a summary card is automatically punched for each em-ployee, showing his total earnings for the week andtotal hours worked. These summary cards are extendedfor income tax and FICA amounts and combined withmaster and deduction cards to prepare the final netpayroll register, earnings statement and payroll checks.

27


32/42

IBM TELE-PROCESSING EquipmentThere are many occasions when payroll and labor accounting data is sent from remote locations to a centralprocessing point. The nature of any centralized accounting operation requires that data be consolidatedfrom many different and sometimes widespread locations. For years this data has been sent from these locations to the central processing point by mail, messengerservice, telephone or telegraph. Frequently, a tightmachine load schedule resulted or the information wasreceived too late to be of any value to management.

IB M TELE-PROCESSING equipment makes it possible to send data automatically and economically, using data transmission equipment in conjunction withtelephone or telegraph facilities. Organizations whoseaccounting functions are decentralized may now findcentralization faster, more convenient and more economical.

L E WEAVERI . . I[MPLOYEE NAMEII I DATE HouRS TYPE

/0 '1/ 4'..2.5 /I I

I I . .

Figure 28.

28

IBM 1001 Data Transmission SystemThe IB M 1001 Data Transmission System (Figure 28)combines an IB M 1001 Data Transmission Terminal andan IB M 24 or 26 Card Punch, modified by a data translator, with telephone company equipment and l i n e s ~ Information to be sent is read automatically from acard, or is keyed on a ten-digit keyboard and transmitted to the card punch.Payroll data, such as hours worked for each employee at remote points, is forwarded daily to the dataprocessing center. Prepunched cards for each employee, which contain man number, job location andpay rate code, are maintained at remote locations. Thisinformation is transmitted and the hours worked keyedon the keyboard. The cards received at the data processing center are processed daily, thus eliminating peakloads, and a centralized payroll schedule is maintained.


33/42

IBM 357 Data Collection SystemThe IB M 357 Data Collection System (Figure 29) isdesigned to speed the availability of input data for adata processing system on an intra-plant basis. I t iscomposed of card input stations which are installedin strategic locations near work areas. Prepunchedcards are fed into the stations and, i f required, variabledata may be entered through the manual entry. Information is transmitted to the data processing centerand automaticaIIy punched into IB M cards on the cardoutput station. For timekeeping purposes, the read-outclock simultaneously transmits the time. This systemprovides the missing communication link for on-thespot gathering of factory data for immediate processing.

Figure 29.

Employee Attendance ReportingThe IB M 357 System can be used to report attendancein lieu of attendance r e ~ o r d e r s , either through the useof a badge reader (a n optional feature) for insertion ofdata punched in an identification badge, or an IB M prepunched employee card.An employee clocks in and out on the 357 Input Station by inserting his identification card or badge (Figure 30). Note that laminated badges must be a specificsize and can be punched with up to ten columns ofidentifying information. The date and time are punchedin the card at the receiving station, eliminating the

need for manually reading and computing clock cardsand recording the information in punched hole form.

EMPLOYEE SIGNATURE IEmployee No .

87895Department #

801

r:!1,-,I

W.C. Collins

ITERM CROW COM PAN Yo I I IFigure 30.

Job and Production ReportingIn a previous section, the use of production or job timerecords was discussed. Th e information from these records is essential to payroll and labor accounting andthe timeliness of this data enables management to exercise effective control over direct and indirect labor.

The 357 Data Collection System provides an automatic means of reporting. Job cards, punched andverified, are attached to orders before they are releasedto the first manufacturing department. At the start ofeach job, the employee selects the most convenient inpu t station to transmit using these job cards. An employee identification card or badge is used to transmitthe employee number, and the start time is entered

Iautomatically by the system. At the completion of thejob, the employee transmits the same information, asweII as the quantity completed. Th e cards punched atthe receiving station are available for immediate processing.

29


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Labor AccountingIn the introduction to this book, payroll and labor accounting was defined as the reporting to the employee,the employer, and governmental and other related organizations, the amount of money paid for the servicesrendered the employer by the employee. I t can also bedivided into two phases-financial and cost accounting.

Financial accounting is that phase which refers to thepreparation of payroll records and which has previously been discussed. Cost accounting refers to theforms and records used. to compute and allocate payroll charges to the various jobs, departments and overhead. The manner in which costs are finally distributedvaries according to the industry, nature of the product,manufacturing operation, etc. This phase is covered inthe general information manual, "Cost Accounting,"formE20-8038. However, the records kept of the timeworked by each employee on each job or in a givendepartment, and the costs thereof, are used in thepreparation of labor reports for cost accounting distribution. The source records in most cases are the jobcards which are initially used to prepare payroll records. They may be either individual job, daily time,continuous job or gang job cards.

These cards, in combination with other cards, areused in the preparation of the various labor cost accounting reports which are required.

Distribution cards punched for each job are balanced with the payroll controls by department. Theyare then listed by man number on a report which isgenerally called the labor distribution register. This isllsed for reference and to balance to control totals.

Direct labor job cards are HIed with the w o r k - i n ~ process cost file behind the heading cards, and showthe order number, product number or operation number, depending on the basis for determining costs. Periodically, or when an order is complete, this file is usedto prepare detailed cost statements (Figure 31).

Indirect labor job cards are filed in the expense fileby date and account number. At the end of the accounting period, they are used to prepare a report ofindirect labor by account and' department.

Estimates on jobs are usually made before production is started, and management needs to determinewhether these estimates are met. Management alsoneeds to furnish the department heads with performance reports (Figure 32) in order that they may do aneffective supervisory job.

10 LABOR DISTRIBUTION 0W E E K ENDING 8- 18- 6 -0 ORDER F M P ~ ~ . Y U Q T V . P A R T S STANDARD A C T U A L DOLLAR 0C C O U N T NO . NO . DEI"T. P'ART NUMBER COMPo T IME DOLLARS TIM . n m ..... VARIANCE CR .a 87412-002 12175 00 1 00659 1 - 4832- 1 68 3 .4 7 .65 3 .7 8 .33 .68CR 01983 80 1 32895 1 - 9768-203 15 0 4 .5 10 .13 4 .3 9 .68 . 4512344 00 1 69431 1 - 1001- 5 50 0 14.1 31 .73 18 .5 41 .63 9.90CR0 10267 50 2 57469 2-21248-131 65 2 .2 4 .95 2 .0 4 .50 . 45 01552 80 1 93735 2-22705-501 90 7 .6 17 .10 6 .9 15.53- 1 . 57

10836 00 1 43279 2-23112- 7 15 0 4 .2 9 .45 4 .6 10 .35 .90CRa 10728 00 2 10122 2-28259- 14 1 ,500 32 .5 97 .50 32 .0 96 .00 1 . 50 a1619 03 0 77949 4-14053- 88 27 7 10 .3 25 .75 9 .9 24 .75 1 .00a a PART SHOP ORDER COST WGT. CODE Q U A N . C O D E 0- C A S T IRON- CA S T S T E E L " - F E E T] - W E L D M E N T 5 - 0 U N C ES

0 a " - S T E E L ----0-- 0J",T\.. A S S E MbL. Y I P A R T SHOP ioUANT'T' ~ : T A H ~ ~ MA T E R I A L. ORDEROR S H I P P I N GCOD[ ! M A T E R I A L D E S C R I P T I O N P A R T N U MB E R O R D E R N O . ORDE'R NO . O R D E R E O 8: WE I G H T C O S T C O ST0 0 H E C C S H A F T 6 1 0 P S QIO 8 1 36 1 11859810 l10978 4 4 I I I 0F S 2 L O C K N U T N 1 1 0 24941070 I I 4 : 1 :48 IRK C R O T P 3 1/20 10407078 1 9 3 3 0000 1 1 6 2 1 3 7 I0 a J2 2 ORO C O S T M O O 3 2 8 4 9 I I 4174 0I I II I I'---!. a I I I 00 ' (0 . O['T. MA CH. M A C H . SE T OAT .Oft" p i E C E S pes. '% EFFI- T O T A L T O T A L P R E M .U S E D TO LO A D U P F TO F OIlt"ftEMIUM GOOD BA D C I E N C V A LLO W E D A CT UA L A M T . LA B O R C O S T B U R D E N D A T EH O U R S HO RSa 5M 0 5 1 1 U 0 2 8 U 028 2 0 0 4 1 0 0 18 18 : 1 :41 316 2 7 3 1 05 4 1 0 1 3 L014 3 0 6 6 P 4 8 1 310 316 16 6 614 8 1 910 4 7 3 1a 5 4 1 5 1 3 L014 9 0 1 3 5 P 4 1 0 0 61 3 613 212 7 1

Documents

E20-8037 General Information Manual Payroll and Labor Accounting 1962