Employee Time Tickets

Definition

Employee time tickets are records that document the time an employee spends working on a specific job or task within a job order costing system. These tickets provide the necessary information to accurately calculate the labor cost component of a job's total cost.

5 Must Know Facts For Your Next Test

1. Employee time tickets are used to record the number of hours an employee spends working on a specific job or task within a job order costing system.
2. The information collected on employee time tickets, such as the employee's name, job number, and hours worked, is used to calculate the direct labor cost for that job.
3. Accurate and detailed employee time tickets are crucial for determining the true cost of a job, as labor is often a significant component of the total job cost.
4. Employee time tickets can also be used to track the efficiency of workers and identify areas for improvement in the production process.
5. The data from employee time tickets is often used to create labor cost reports, which can be used to analyze and manage labor costs within the organization.

Review Questions

• Explain how employee time tickets are used to compute the cost of a job using job order costing.
  • In a job order costing system, employee time tickets are used to capture the direct labor costs associated with a specific job or project. The information on the time tickets, such as the employee's name, the job number, and the number of hours worked, is used to calculate the total direct labor cost for that job. This direct labor cost, along with the costs of materials and overhead, is then used to determine the total cost of the job. Accurate and detailed employee time tickets are crucial for ensuring the job cost calculations are accurate and reflect the true cost of producing the job.
• Describe how employee time tickets can be used to analyze and manage labor costs within an organization.
  • Employee time tickets provide valuable data that can be used to analyze and manage labor costs in a job order costing system. The information on the time tickets, such as the number of hours worked per employee and the specific jobs or tasks they were assigned to, can be used to identify areas of inefficiency, monitor worker productivity, and make informed decisions about staffing and labor allocation. Additionally, the data from employee time tickets can be used to create labor cost reports, which can help managers understand the labor cost structure of the organization and find opportunities to reduce or optimize labor costs.
• Evaluate the importance of accurate and detailed employee time tickets in the context of job order costing, and explain how they contribute to the overall accuracy of the job cost calculations.
  • Accurate and detailed employee time tickets are essential for the accurate computation of job costs in a job order costing system. The information captured on these tickets, such as the employee's name, the job number, and the number of hours worked, directly determines the direct labor cost component of the total job cost. If the time tickets are incomplete or inaccurate, it can lead to distortions in the job cost calculations, which can have significant implications for pricing, profitability analysis, and decision-making. By ensuring that employee time tickets are filled out correctly and promptly, organizations can improve the reliability of their job cost data, which in turn supports better financial management and strategic planning.

Related terms

Job Order Costing: A costing system that accumulates costs for each individual job or project, rather than for the company as a whole.

Direct Labor: The labor costs that can be directly traced to the production of a specific job or product.

Indirect Labor: The labor costs that cannot be directly traced to the production of a specific job or product, and are instead considered overhead.