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Management suffers two types of costs;
1.Direct or Insured or Tangible costs
2.Indirect or Uninsured or Intangible (hidden) cost
Direct Costs:
►This includes compensation paid to the injured person, or insurance premium, medical and hospital charges, transport charges directly paid by the employer.
►Direct cost is easy to calculate as their money value is directly available.
►If hospital charges, doctor’s bill, medicine bill or other expenditure is paid by insurance company, only premium cost should be considered.
►Direct cost includes insured expenditure and direct payment only.
INDIRECT COST:
►They are of many types and need careful consideration to determine their ‘equivalent money value’.
►They include following;
1.Cost of wages paid for working time lost by injured workers, other than workers’ compensation payments
2.Cost of wages paid for working time lost by workers, other than injured worker(s).
3.The net cost to repair, or replace material or equipment that was damaged in accident.
4.Extra cost due to overtime work necessitated by accident.
5.Cost of wages paid to supervisors for their time required for activities necessitated by accident.
6.Wage cost due to decreased output of injured worker after return to work.
7.Cost of learning period and preparation of new workers.
8.Uninsured medical cost borne by the company.
9.Cost of time spend by higher officers, outsiders and clerical workers on investigation or in restarting the production in processing compensation application, procedure and other administration.
10.Cost of work interruption due to idle machine, work stoppage or spoilage.
11.Cost of property (including material and equipment) damage due to accident.
12.Uninsured other costs and the miscellaneous unusual costs.
