Semester 2

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GOBIND KUMAR JHA Labour Cost 9874411552

2. Labour Cost

1. Wage negotiations are going on in a company with the Recognised Labour Union and the
Management requests you as the Cost Accountant of the company to formulate an incentive
wage scheme with a view to increasing productivity. The case of three representative X, Y and Z
– who produce respectively 1,500 units; 1,200 units; and 900 units in a normal week of 40 hours
is taken up for study. Assuming that day wages would be guaranteed at ` 5 per hour and the
piece rate would be based on a standard hourly output of 25 units, calculate the earnings and
labour cost per 100 pieces of each of the above three workers under: (i) Piece-work with
Guaranteed Weekly Wage Plan; (ii) Halsey-Premium Plan; and (iii) Rowan-premium Plan. Also
calculate the average wage cost for the company to produce 100 pieces under each of the
above methods. [1995]

2. From the following data, calculate Work Cost of the jobs performed by Ajay and Saurav:
Ajay Saurav
Time allowed (per 100 units) 40 hrs. 42 hrs.
Rate per unit `3 `4
Rate per hour `8 ` 12
Actual time taken 48 hrs. 70 hrs.
Actual units produced 150 units 200 units
Material Cost for jobs ` 668 ` 1,020
Bonus Plan Halsey Rowan
Factory Overhead 150% of Wages 100% of Wages
[1998]

3. A worker produced 180 units in a week. The guaranteed weekly wage payment for 44 hrs. is `
77. The expected time to produce one unit is 16 minutes which is further raised by 25% under
the incentive scheme. What will be the earnings per hour of the worker under the Halsey and
Rowan Scheme? [2000]

4. Time allowed for the production of 100 Bolts’ is 2 hours and hourly rate of wage payment is `
12. M and N produced 600 and 500 pieces of Bolts’ respectively in a particular day of 5 hours.
Calculate their earnings under the Halsey Premium Bonus and Rowan Premium Bonus Plans.
[2003]

11 Special thanks to Mr. Jay Rudra Jha for his efforts.

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GOBIND KUMAR JHA 9874411552
5. In a factory wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly rate
of ` 10. A study has revealed that standard output per hour is 40 units. During a particular
week, A produced 1,400 units and B produced 1,800 units. Calculate the Earnings and Labour
Cost per 100 units in each of the two workers under: (i) Piece work with a Guaranteed Weekly
Wage Plan; (ii) Halsey Premium Plan; and (iii) Rowan Premium Plan. [2006]

6. In an organization, where Halsey Plan is in operation, Shrameek Babu can earn ` 27.00 on a job
for which he takes time 8 hours. Rate of wages is ` 3.00 per hour. Calculate what will be his
earnings if Rowan Plan is adopted. [2010]

7. In a factory, Sudhir took 26 hours to complete a job. The standard time for this work was 40
hours. He was paid at ` 10 per hour. He worked under Halsey Scheme. Find out: (a) Effective
hourly rate of wages of Sudhir; (b) Employer’s savings amount from this work. [2014]

8. In a factory a job can be executed either through workman Pradip or Arindam. Pradip takes 32
hours to complete the job while Arindam finishes it in 30 hours. The standard time to finish the
job is 40 hours. The raw material input cost and hourly wage rate are same for both the
workers. Pradip is entitled to receive bonus according to Halsey Plan with Arindam is paid
bonus as per Rowan Plan. Works overheads are recovered on the job at ` 15 per labour hour
worked. The factory cost of the job comes to ` 5,200 irrespective of the workmen engaged.
Find out Hourly Wage Rate and Cost of Raw Materials input. [2001]

9. In a factory S took 30 hrs. to complete a job. The Factory Cost of the job is ` 5,200. Raw
Material Cost of the job is ` 4,000. Hourly rate of wages ` 20. Works Overhead is recovered on
the job at ` 15 per labour hour worked. S is entitled to receive Bonus according to Rowan Plan.
Calculate Standard Time for completion of the job. [2007, 2011]

10. In a factory standard time for a job is 84 hours. The hourly rate of wage is ` 50.00. Halsey
premium plan is in operation at the factory. Jayanta, a worker, completed the job at less than
standard time and his effective hourly rate of wage was ` 60.00. What will be his earnings if he
worked under Rowan Premium Plan? [2016]

11. In a factory job can be executed either by workman X or Y. X takes 32 hours to complete the job
while Y finishes it in 30 hours. The standard time to finish the job is 40 hours. The raw material
input cost and normal rate of wages are same for both the workers. X is entitled to receive
bonus according to Halsey Plan while Y is paid bonus under Rowan Plan. Works overhead is
recovered in the job @ ` 15 per labour hour worked. The factory cost of the job comes to `

12 Special thanks to Mr. Jay Rudra Jha for his efforts.

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10,400 irrespective of the workman engaged. Find out the normal rate of wages per hour.
[2017]

12. An employee working under a bonus scheme saves 12 hours in a job for which the standard
time is 60 hours. Calculate wages payable to the employee if incentive bonus of 10% on the
hourly rate is payable when 100% efficiency is achieved, and a further incentive bonus of 1% on
hourly rate for 1% in excess of that 100% efficiency is payable. Assume that the normal rate of
wages is ` 10.00 per hour. [2005]

13. Sunshine Ltd. employs its workers for a single shift of 8 hrs. for 25 days in a month. Details of
Wages payable to the workers are as follows:
(i) Basic Wages per unit ` 2 (subject to a guaranteed minimum wage of ` 60 per day),
(ii) Dearness Allowance ` 40 per day,
(iii) Standard output per day per worker – 40 units,
(iv) Incentive Bonus:
 Upto 80% efficiency: NIL
 Above 80% Efficiency: ` 50 for every 1% increase above 80%.
The details of performance of three workers for the month of January, 2009 are as follows:
Workers No. of days worked Output (Units)
A 25 820
B 18 500
C 25 910
Calculate the Total Earnings of each of three workers. [2009]

14. Pradip Kar working under a bonus scheme saves 12 hours in a job for which the standard time is
60 hours. Calculate the rate per hour worked and wages payable to Pradip Kar if incentive
bonus of 10% on the hourly rate is payable when standard time (namely 100% efficiency) is
achieved, and a further incentive bonus of 1% for each additional percentage in excess of that
100% efficiency is for each additional percentage in excess of that 100% efficiency is payable,.
Normal rate of wage is ` 5.00 per hour. [2013]

15. Calculate total monthly remuneration of workers A, B and C on the basis of the following
information for the month of March, 2017:
 Standard production for each worker – 2,000 units,
 Rate of Wages – ` 5 per unit,
 Bonus – ` 100 for each 2% increase over 90% of the standard,
 Dearness allowance – 50% of piece wage,

13 Special thanks to Mr. Jay Rudra Jha for his efforts.

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 The units completed by the three workers were as under: A – 1,900 units; B – 1,760
units and C – 2,120 units. [2017]

16. In an assembly shop four workmen A, B, C, and D work together as a team and are paid on
group piece rate. They also work individually on hourly rate jobs. In a 44 hour week, the
following hours have been spent by them on group piece work: A – 40 hours, B – 40 hours, C –
30 hours and D – 20 hours. The balance of the time in the week has been booked by each
worker on day work jobs. Their hourly rates are as follows: A - ` 3.00, B - ` 4.50, C - ` 6.00 and D
- ` 6.00. The group piece rate is ` 6.00 per unit and the team has produced 150 units. Calculate
the gross weekly earning of each workman taking into consideration that each individual is
entitled to Dearness Allowance of ` 50 per week. [1993]

17. In an assembly shop of a Motor Cycle factory, 4 workmen, P, Q, R and S work together as a
team. They are paid on group price rate and they also work individually on day-rate jobs. In a 46
hours week, the following hours have been spent by P, Q, R and S on group piecework, viz P –
40 hours, Q – 40 Hours, R – 30 hours and S – 20 hours. The balance of the time has been
booked by each worker on day rate jobs. Their hourly rates are: P - ` 5.00, Q - ` 7.50, R - `
10.00, S - ` 10.00. The group piece rate is ` 10.00 per unit and the team has produced 180
units. Calculate the gross weekly earnings of each worker is entitled to dearness allowance of
25% of time wages. [2015]

18. The normal working hours per week are fixed at 44 hours in a factory. An analysis of the time
card of a worker shows that during a week he actually worked 43 hours (including 4 hours
overtime) on production are remained idle for the remaining 5 hours due to machine break
down. Normal rate per hour is ` 5. Overtime rate is 150% of the normal and the rate of wages
for idle time is 80% of the normal. Calculate total wages payable to the worker and show how
the Total Amount be treated in Cost Accounts. [1994]

19. From the following particulars you are required to calculate according to ‘Average Wage Rate’
the labour cost chargeable to Job No. P – 301 which was completed in 1998: Basic wage rate is
` 15 per hour and overtimes rates: Before or after working hours – 150% of basic wage rate,
Sundays and other holidays – 200% of basic wage rate. During the year 1998 the following
labours were worked: Normal time 4,00,000 hours; Overtime before or after working hours
50,000 hours; Overtime on Sundays and holidays 40,000 hours. For Job No. P – 301, 4,000 hours
were spent as: Normal time 3,000 hours; Before or after working hours 700 hours; Sundays and
holidays 300 hours. [1999]

14 Special thanks to Mr. Jay Rudra Jha for his efforts.

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GOBIND KUMAR JHA 9874411552
20. A factory pays its workers under Rowan Premium Bonus Scheme. Worker also get dearness
allowance of ` 250 per week of 48 hours. A worker’s basic wages is ` 100 per day of 8 hours
and his time schedule for a week is summarized below:
Job No. Time Taken Time Allowed
103 25 hours 20 hours
107 30 hours 20 hours
Idle time (waiting) - 8 hours
48 hours
Calculate the Gross Wages he has earned for the week and indicate the accounts to which the
wage amounts will be debited. [2008]

21. From the particulars given below, calculation earnings of two workers: Satyen and Goutam
under differential piece rate system:
Standard time allowed – 40 units per hour
Time rate wage - ` 4.00 per hour
Differential piece rate to be applied – 75% of piece rate when below standard/125% of piece
rate when at and above standard.
The workers have produced in a day of 8 hours as follows: Satyen – 400 units, Goutam – 240
units. [2012]

22. In a factory, 20 workers are employed in the production of a goods. From the following
particulars compute the Wage Bill for the workers for the month of January, 2002: Basic Wages
- @ ` 1,000 p.m. per worker; Dearness Allowance - @ ` 900 p.m. per worker; Bonus for the
month - @ 20% of Basic Wages plus D.A.; Other Allowances - @ ` 200 p.m.; Own and
Employer’s Contribution to P.F. - @ 10% of Basic Wages; Own and Employer’s Contribution to
ESI - @ 2% of Basic Wages; Professional Tax deducted from salary - ` 20 p.m. [2002]

23. From the following particulars, calculate the Gross Earnings and Net Earnings for the month of
March, 2013 of Sri Netai Ghosh:
Basic Wages - ` 10,000
Dearness Allowance – 50%
Own Contribution to Provident Fund – 8% on basic wage
Own contribution to ESI – 2% on basic wage
Overtime – 10 hours.
The normal working hours for the month of March, 31 is 2,000 hours. Overtime is paid at
double rate of normal wages and dearness allowance. [2014]

15 Special thanks to Mr. Jay Rudra Jha for his efforts.

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24. A time study was conducted for a worker in a factory. The observations are as under: Observed
time – 40 hours week; Output – 120 units; Time for which worker could not work – 20%;
Performance Rating – 125%. It is also thought appropriate to make the allowance: Fatigue –
10%; Personal needs – 7%; Unavoidable work delay – 3%. You are required to determine:
 Productive Time
 Normal Time
 Standard time if above allowances are applied to standard time. [2008]

25. The following information is available from the records kept by the personnel department of a
company. You are required to calculate Labour Turnover Rates using different alternative
methods:
No. of workers on the pay-roll – At the beginning of the month 4,200
At the end of the month 4,800.
During the month 160 workers left the factory while 80 workers were discharged. 840 workers
were recruited during the month, of whom recruitment of 180 workers was in the vacancies of
those who were separated from the firm while the rest were appointed in accordance with an
expansion plan of the company. [2009]

26. From the following data, calculate the Labour Turnover Rate by applying:
(a) Separation Method
(b) Replacement Method
(c) Flux Method
(i) Number of workers at the beginning of the year – 900.
(ii) Number of workers at the end of the year – 1,100.
During the year 10 workers left and 40 workers were discharged and 150 workers were
recruited. Of these, 25 workers were recruited in the vacancies of those left, while the rest
were engaged for an expansion. [2013]

27. From the following data, calculate the labour turnover rate by applying:
a) Separation Method
b) Replacement Method
c) Flux Method
Number of workers on the payroll: At the beginning of the year – 1,800
At the end of the year – 2,000.
During the year, 20 workers left, 80 workers were discharged and 300 workers were recruited
of these 50 workers are recruited in the varlances of those left, while the rest were engaged for
an expansion scheme. [2015]

16 Special thanks to Mr. Jay Rudra Jha for his efforts.

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