USA Cost accounting


May 22, 2012
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We are a manufacturing company who has traditionally recorded time by machine or function. We have taken the total time and multiplied by our shop rate, for argument sake let's say $100 per hour. The issue we are having is when tasks are performed simultaneously. Can anyone enlighten us on how to accurately capture this information. We also have instances where the same function can be performed by one operator on as many as four machines simultaneously. This would not be a primary, secondary function but quadruple primary functions. We could use $25 per hour, but then the recording of time becomes burdensome for our machine operators as they would have to record how many hours at single machine, two machine, etc. Similarly, if we record 1/4 hour for each machine, we are not truly capturing the real amount of time necessary to run this job unless we can repeat the four machine effort each time this job is ran.

I greatly appreciate any help or advice anyone could offer.



John Baker

...when tasks are performed simultaneously...
Are these tasks performed on the same machine, or different machine(s)/workstation(s)?

...where the same function can be performed by one operator on as many as four machines simultaneously...

In this instance you have what's called "Multi-spindle" type of operation. In this instance, your Method's Engineer, usually called a Time Study Engineer, goes down on the floor and takes a "task" rate in increments - usually using a method called a "continuous" method, or a "snap-back" method, to .. time... in increments, the seconds of each "task." The task is a assumed, or experienced necessary, to not only operate the machine (separate from setups) but to perform each task. Task for any machine have levels of difficulty, trade competency, and other factors in the mix to come up with a number.. say #1 being the highest and #10 being the lowest. By the way, departments can have workstations that accommodate this assigned number(s). So, to begin with you have a number by which an operator is being paid - piece work, or day work, individually or as part of a group labor. Take that assigned task rate and extend it by the time study that each operation is being performed and you have a cost of labor - individually or collectively for the operation or combined operations. This method depends on the accuracy of your Time Study (Method Engineers) to not only use the negotiated pay rates for you labor force, but also use the right methods to approach each machine be considered. For example, manually operated machines like drill presses with different bits to accomplish different operations,
are very different than a single machines where one piece of stock is rotated around and fed to different bits, jigs, holders, etc. The process of accumulating, recording and summarizing labor cost is to dictate ahead of time, the processes to be performed on a shop routing sheet. On that sheet, folder, packet, etc., are each department and workstation that the part will proceed to. Usually a job ticket is included in the packet that the operator pulls out, or is assigned to by his/her foreman, and work starts and stops at the assigned point on the labor ticket. As each operation is
performed and completed, the foreman signs off on the pieces complete, that document is sent to your timekeeping, then timekeeping collects all the job labor tickets for the day, and then onto payroll for a "first pass".
This first pass is a gross summary of the days work and either approved or adjusted as necessary. Authorized time summaries are part of the total factory work paid for the pay period - weekly and/or some other method. Off the payroll shop floor records, your inventory values are charged by job, buy make orders Vs sales orders, and so forth. Also in the shop packet are Move to Stock tickets for the complete production authorized by the shop packet/folder/envelope.
This shop packet is one of the most important documents on the factory floor. Careful review of how easily it flows and informs the factory supervision can not be overstated.
By the way, continuous operations that are normal for a proprietary product shouldn't experience vast changes in the way its produced. Sometimes, different approaches will be experiences for various reasons - but by exception. When labor is charged to "alternate" methods on a regular basis for product that's made every day routinely, poor cost allocation, year end inventory shrinkage dollars, poor factory allocation of assets, outdated machinery, and inventory shrinkage in dollars at year end, are usually the norm.
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