Professional Documents
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Labour
Labour
1. Calculate the number of hours worked as overtime by the following workers in a week.
Ram
Shyam
Monday
Tuesday
Wednesday
4.5
Thursday
Friday
10
Saturday
46.5
50
b. Dearness Allowance
c. Bonus
d. Other allowances
X works for 2,400 hours per annum, out of which 400 hours are non productive and
treated as normal idle time. You are required to find out the effective hourly cost of the
employee.
Study Material 1
4. In a factory working six days in a week and eight hours each day, a worker is paid at the rate
of Rs. 100 per day basic plus DA @ 120% of the basic. He is allowed to take 30 minutes off
during his hours for meals-break and a 10 minutes recess for rest. During a week, his card
showed that his time was chargeable to :
Job X
15 hours
Job Y
12 hours
Job Z
13 hours
The time not booked was wasted while waiting for a job. In Cost Accounting, how would
you allocate the wages of the worker for the week?
Study Material 24
5. In a factory, the basic wage rate is Rs. 10 per hour and overtime rates are as follows:
Before and after normal working hours
100,000 hours
20,000 hours
5,000 hours
125,000 hours
1,000 hours
100 hours
25 hours
1,125 hours
You are required to calculate the labour cost chargeable to job Z and overhead in each of the
following instances:
a. where overtime is worked regularly throughout the year as a policy due to the labour
shortage.
b. Where overtime is worked irregularly to meet the requirements of the production.
c. Where overtime is worked at the request of the customer to expedite the job.
Study Material 3
6. Calculate the earnings of A and B from the following particulars for a month oand allocate
the labour cost to each job X, Y and Z:
A
i)Basic wages
Rs. 100
50%
160
50%
8%
2%
v) Overtime
8%
2%
10 hours
The normal working hours for the month are 200. Overtime is paid at double the total of
normal wages and dearness allowance. Employers contribution to State Insurance and
Provident fund are at equal rate to employees contribution. The two workers were
employed on jobs X, Y and Z in the following proportions:
Jobs
X
Worker A
40%
30%
30%
Worker B
50%
20%
30%
7,600
8,400
During the year, 80 workers left while 320 workers were discharged. 1500 were recruited
during the year, out of this, 300 workers were recruited because of exits and rest were
recruited in accordance with extension plans.
Cost Compilation Q. N 39
9. The management of Earth Ltd. were worried about their increasing labour turnover in the
factory and before analyzing the causes and taking remedial steps, they want to have an
ideal of the profit foregone as a result of labour turnover in the last year.
Last year sales amounted to Rs. 8,303,300 and P/V ratio was 20%. The total number of
actual hours worked by the Direct Labour force was 4.45 lakhs. As a result of the delay by
the Personnel Department in filling vacancies due to labour turnover, 100,000 potential
productive hours were lost. The actual direct labour hours included 30,000 hours
attributable to training new recruits, out of which half of the hours were unproductive.
The costs incurred consequent on labour turnover revealed, on analysing, the following:
Settlement cost due to leaving
Rs. 43,820
Recruitment cost
Rs. 26,740
Selection cost
Rs. 12,750
Training cost
Rs. 30,490
Assuming that the potential production lost as a consequence of labour turnover could have
been sold at prevailing prices, find the profit foregone last year on account of labour
turnover.
Study Material 5
10. Using Taylors Differential piece rate system, find the earnings of Amar, Akbar and Anthony
from the following particulars.
Standard time per piece
20 minutes
Rs. 9.00
In a day of 8 hours
Amar produced
23 units
Akhar produced
24 units
Anthony
30 units
Study Material Q. N 7
11. In a factory the standard time allowed for completing a given task ( 50 units ) is 8 hours.
The guaranteed time wages are Rs. 20 per hour. If the task is completed in less than the
standard time, the high rate of Rs. 4 per unit is payable. Calculate the wages of a worker,
under the Gantt task and bonus system, if the worker completes the task in
(i) 10 hours
(ii) 8 hours; and
(iii) 6 hours
Also ascertain the comparative rate of earning per hour under three alternatives.
Study Material Q. N 8
12. From the following information you are required to calculate the bonus and earnings under
Emerson Efficiency System. The relevant information is as under:
Standard working hours
8 hours a day
Rs. 50
25 units
Worker B
40 units
Worker C
45 units
Study Material Q. N 9
13. Calculate the earning of workers from the following information under Bedeaux system:
Standard time for a product A 30 seconds plus relaxation allowance of 50%
Standard time for a product B 20 seconds plus relaxation allowance of 50%
During 8 hours a day
Actual output of the product for A
500 units
300 units
Wage rate
Study Material Q. N 10
14. Wage negotiation are going on with the recognized Labour Union and the Management
wants you as a Cost Accountant of the company for formulate an incentive scheme with a
view to increase productivity.
The case of three typical workers Amar, Akbar and Anthony who produce respectively 180,
120 and 100 units of the company product in a normal day of 8 hours, is taken up for study.
Assuming that day wages would be guaranteed at 75 paisa per hour and the piece rate would
be based on a standard hourly output of 10 units. Calculate the earnings of each of the three
workers and the labour cost per 100 pieces under a) Day wages; b) Piece rate; c) Halsey
Scheme; and d) Rowan Scheme.
Also calculate under the above schemes the average cost of labour for the company to
produce 100 pieces.
Cost Compilation Q. N 24
15. Bonus paid under the Halsey Plan is equal to the bonus paid under Rowan Plan. When this
statement hold good? ( Your answer must contain the proof)
Study Material 14
16. A skilled worker in ABC Ltd. is paid a guaranteed wage rate of Rs. 30 per hour. The
standard time per unit for a particular product is 4 hours. P, a machine man , has been paid
wages under Rowan Incentive Plan and he had earned an effective hourly rate of Rs. 37.50
on the manufacture of that particular product.
What could have been his total earning and effective hourly rate, had he been put on Halsey
Incentive Sheme?
Study Material Q. N 19
17. Mr. A is working by employing 10 skilled workers. He is considering to introduce some
incentive scheme either Halsey or Rowan scheme of wage payment for increasing the labour
productivity to cope with the increased demand for the product by 25%. He feels that if the
proposed incentive scheme could bring about an average 20% increase over the present
earnings of the workers, it could act as sufficient incentive for them to produce more and he
has accordingly given this assurance to the workers.
As a result of the assurance, the increase in productivity has been observed as revealed by
the following figures for the current month:
Hourly rate of wages (guaranteed)
Rs. 2.00
2 hours
25
1,250 units
Required:
1. Calculate effective rate of earnings per hour under Halsey Scheme and Rowan Scheme.
2. Calculate the savings to Mr. A in terms of direct labour cost per piece under the
schemes.
3. Advise Mr. A about the selection of the scheme to fulfil his assurance.
Study Material 15
18. The finishing shop of a company employs 60 direct workers. Each worker is paid Rs. 400 as
wages per week of 40 hours. When necessary, overtime is worked upto a maximum of 15
hours per week per worker at time rate plus one-half as premium. The current output on an
average is 6 units per man hour which may be regarded as standard output. If bonus scheme
is introduced, it is expected that the output will increase to 8 units per man hour. The
workers will, if necessary, continue to work overtime upto the specified limit although no
premium on incentive will be paid.
The company is considering introduction of either Halsey Scheme or Rowan Scheme of
Wage Incentive System. The budgeted weekly output is 19,200 units. The selling price is
Rs. 11 per unit and the direct material cost is Rs. 8 per unit. The variable overheads amount
to Rs. 0.50 per direct labour hour and the fixed overhead is Rs. 9,000 per week.
Prepare a statement to show the effect on the companys weekly profit of the proposal to
introduce (a) Halsey Scheme; (b) Rowan Scheme.
Cost Compilation 48
19. A job can be executed either through workman A or B. A takes 32 hours to complete the job
while B finishes it in 30 hours. The standard time to finish the job is 40 hours.
The hourly wage rate is same for both the workers. In addition workman A is entitled to
receive bonus according to Halsey Plan sharing while B is paid bonus as per Rowan plan.
The works overheads are absorbed on the job at Rs. 7.50 per labour hour worked. The
factory cost of the job come to Rs. 2,600 irrespective of the workman engaged.
Find out the hourly wage rate and the cost of raw material input. Also show cost against
each element of cost included in the factory cost.
Cost Compilation 42
20. A company is undecided as to what kind of wage scheme should be introduced. The
following particulars have been compiled in respect of three systems, which are under
consideration of the management.
Workers
A
38
40
34
Rs. 6
Rs. 5
Rs. 7.20
Production in units
Product P
21
60
Product Q
36
135
Product R
46
25
Piece work earning basis, but the guaranteed at 75% of basic pay
( guaranteed hourly rate) if his earning are less than 50% of basic pay.
iii.
Premium bonus basis where the worker receives bonus based on Rowan
Scheme.
Cost Compilation 35
21. The standard hours of job X is 100 hours. The job has been completed by Siris in 60 hours,
Ramesh in 70 hours and Manoj in 95 hours.
The bonus system is applicable to the job is as follows:Percentage of time saved to time allowed
Bonus
The rate of pay is Rs. 1 per hour. Calculate the total earning of each worker and also the rate
of earnings per hour.
Cost Compilation 50
22. The existing Incentive System of Alpha Limited is as under:
Normal working week
Rate of Payment
120 articles
: 5 hours
Premium Bonus
Required:
(i) Prepare a statement showing hours worked, weekly earnings, number of articles
produced and labour cost per article for one operator under the following systems:
a. Existing time-rate
b. Straight piece-work
c. Rowan system
d. Halsey Premium system.
Assume that 135 articles are produced in a 40-hour week under straight piece work, Rowan
Premium system, and Halsey Premium system above and worker earns half the time saved
under Halsey Premium system.
Cost Compilation 55
23. A company uses an old method of machining a part manufactured for sale. The estimates of
operating details for the year 2007-2008 are as under:
No. of parts to be manufactured and sold
: 30,000
: 10 kg @ Rs. 2 per kg
: 60%
: 2 hours
The company has a suggestion box scheme and an award equivalent to three months saving
in labour cost is passed on to the employee whose suggestion is accepted. In response to this
scheme suggestion has been received from an employee to use a special Jig in the
manufacture of the aforesaid part. The cost of the Jig, which has life of one year is Rs. 3,000
and the use of the Jig will reduce the standard time by 12 minutes.
Required:
i. Compute the amount of award payable to the employee who has given the suggestion.
ii. Prepare a statement showing the annual cost of production before and after the
implementation of the suggestion to use the Jig and indicate the annual savings.
24. A, B and C were engaged on a group task for which a payment of Rs. 725 was to be made.
As time basis wages are Rs. 8 per day, Bs Rs. 6 per day and Cs Rs. 5 per day. A worked
for 25 days; B worked for 30 days; and C for 40 days. Distribute the amount of Rs. 725
among three workers.
Study Material 17
25. In a unit, 10 men work as a group. When the production for the group exceeds the standard
output of 200 pieces per hour, each man is paid an incentive for the excess production in
addition to his wages at hourly rates. The incentive is at half the percentage, the excess
production over the standard bears to the standard production. Each man is paid an incentive
at the rate of this percentage of a wage rate of Rs. 2 per hour. There is no relation between
the individual workmans hourly rate and the bonus rate.
In a week, the hours worked are 500 hours and the total production is 120,000 pieces.
(a) Compute the total amount of the bonus for the week.
(b) Calculate the total earnings of two workers A and B of the group:
A worked 44 hours and his basic rate per hour was Rs. 2.20
B worked 48 hours and his basic rate per hour was Rs. 1.90
Cost Compilation 18
26. In a manufacturing concern 20 workmen work in a group. The concern follows a group
incentive bonus system whereby each workman belonging to the group is paid a bonus on
the excess output over the hourly production standard of 250 pieces, in addition to his
normal wages at hourly rate. The excess of production over the standard is expressed as a
percentage and two-third of this percentage is considered to be the share of the workman
and is applied on the national hourly rate of Rs. 6 (considered only for purpose of
computation of bonus). The output data for a week are stated below.
Days
Man-hours worked
Monday
160
48,000
Tuesday
172
53,000
Wednesday
164
40,000
Thursday
168
52,000
Friday
160
46,000
Saturday
160
42,000
Total
984
281,000
Work out the amount of bonus for the week and the average rate at which each
workman is to be paid the same.
ii.
Compute the total wages including bonus payable to Ram who worked for 48 hours at
an hourly rate of Rs. 2.50 and to Annie who worked for 52 hours at an hourly rate of
Rs.3