LABOUR COST CONTROL - Cost Acounting

Notes 6 Pages

Bengaluru City University

Bachelor of Business Administration

Contributed by

Tabeed Malpani

Cost Accounting
Labour Cost Control (B.Com & BBA)
UNIT 3
LABOUR COST CONTROL

Problems on Measurement of Labour Turnover

1)The following information is collected from the Personnel Department of ST Ltd., for the year
ending 31
st
March.
Number of workers at the beginning of the year 8000
Number of workers at the end of the year 9600
Number of workers left the company during the year 500
Number of workers discharged during the year 100
Number of workers replaced due to left and discharges 700
Additional workers employed for expansion during the year 1500
Calculate Labour Turnover Rate by using Separation Method, Replacement Method and Flux
Method

2)Number of workers on 1st January is 7600 and Number of workers on 31st December is 8400.
During the year, 80 workers left while 320 workers were discharged. 1200 workers were
recruited during the year. Of these, 300 workers were recruited because of exits and the rest were
recruited in accordance with expansion of plants. From the given information, calculate Labour
Turnover Rate under various methods.

3)The Cost Accountant of Y Ltd., has computed labour turnover rates for the quarter ended 31st
March, 2013 as 10%, 5% and 3% respectively under "Flux Method', 'Replacement Method' and
'Separation Method respectively. If the number of workers replaced during that quarter is 30,
find the number of:
(a) Workers recruited and joined, and
(b) Workers left and discharged

Problems on Calculation of Labour Cost

4)From the following particulars ascertain the labour cost per day of 8 hours.
Basic Pay 8,000 per month
Dearness Allowance 800 per month
Leave Salary 650 per month
Employers Contribution to RPF 10% of Basic Pay
Employers Contribution to ESI 2.5% of Basic Pay
Pro-rata amenities per worker per month 275
No. of working hours in a month 200

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Cost Accounting
Labour Cost Control (B.Com & BBA)

5)The following details are supplied to you relating to a worker in a factory
Monthly salary Rs10,000
Dearness Allowance 25%
Leave Salary-one-month salary every year
Employers Contribution to RP 8% of Basic + DA
Employers Contribution to ESI 2.5% of Basic + DA
The employer maintains a canteen on which he spends Rs43,500 per month. There are 250
workers in the factory and the factory works for 200 hours in a month.
Prepare a statement showing labour cost per day of 8 hours.

6)Calculate labour cost per day of 8 hours from the following information
Basic Salary 12,500 per month.
Dearness Allowance Rs15 for every point over 50 cost of living index for working class. Current
cost of living index for working class is 523.
Leave Salary 5% of Basic and DA
Employers Contribution to RPF and ESI 8% of Basic and 2.5% of Basic, respectively
Expenditure on amenities to workers Rs475 per worker per month
No of working days in a month 25, No. of working hours in a day 8

7)A worker is paid 8000 per month as basic pay and in addition he is paid DA of Rs750 per
month. He is entitled to bonus at l0% on basic pay. Employer's contribution to RPF and ESI is
8% and 2.5% respectively on Basic Pay and DA. The employer maintains a canteen where
subsidized food is provided to the employees
and a monthly subsidy of Rs60,000 is provided to the canteen. The total number of employees
working in this company is 430.The employees are entitled to 15 days earned leave. The factory
works for 300 days of 8 hours each in a year. Normal idle time is 20%. Find out the labour cost
per hour.
Normal idle time is 20%. Average working days in a month are 25 days of 8 hours each.

8)Find out the labour cost per hour if the worker is paid Basic Salary Rs12,000per month and
DA of Rs4500 per month. He is entitled to a bonus of 2 months' salary per annum. Employers
Contribution to RPF and ESI is 8% and 2.5% respectively on, Basic + DA. The worker is
entitled for leave on pay for l/20th day per week. The employer maintains a canteen where
subsidized tea and lunch is provided to all the workers and a monthly subsidy of Rs25,000 is
provided to the canteen. There are totally 475 workers taking the benefit of this canteen.
Normal idle time works out to 20%. The average working days in a month are 25 days of 8 hours
each.

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Cost Accounting
Labour Cost Control (B.Com & BBA)

Calculation of Overtime Wages
9)From the following details calculate total wages payable to a worker.

Normal working hours in a week is 44 hours (i.e., 8 hours per day except on Saturday where the
Normal working hours is 4 hours). Labour cost per normal hour is Rs27. Overtime wages is to be
calculated as under.
(1) Up-to one hour per day at single rate and over one hour per day at double rate or (2) Up-to a
total of 4 hours in a week at single rate and over 4 hours in a week at double rate; whichever is
beneficial to the worker.

10)Calculate total wages payable to a worker from the following data
Normal working hours 8 per day; Normal wage rate Rs25 per hour; Overtime wages (1) Up-to 1
hour per day at single rate and over 1 hour per day at double rate or (2) Up-to 4 hours in a week
at single rate and over 4 hours in a week at a double rate; whichever is beneficial to the worker.
The number of actual working hours of the worker is as follows:
Days
No. of Hours Worked
Monday
13
Tuesday
10
Wednesday
13
Thursday
08
Friday
12
Saturday
05

Problems on Wages and Incentive Systems

11)Calculate the earnings of Mr. A and Mr. B on Straight Piece Rate System and Taylor's
Differential Piece Rate System.
(a) Standard production 8 units per hour
(b) Normal piece rate 20 per unit
(c) Differential piece rate to be applied:
(i) 80% of piece rate below standard and
(ii) 120% of piece rate at or above standard
Days
No. of Hours Worked
Monday
12
Tuesday
11
Wednesday
09
Thursday
08
Friday
13
Saturday
06
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Cost Accounting
Labour Cost Control (B.Com & BBA)
In a day of 9 hours, Mr. A produces 56 units and Mr. B produce 76 units.
12)Calculate the earnings of Mr. A and Mr. B on Straight Piece Rate System and Taylor's
Differential Piece Rate System.
(a) Standard production 8 units per hour
(b) Normal time rate 80 per hour
(c) Differential piece rate to be applied:
(i) 80% of piece rate below standard and
(ii) 120% of piece rate at or above standard.
In a day of 9 hours, Mr. A produces 70 units and Mr. B produce 75 units.

13)Following details are available with respect to a job performed by two workers Mr. A and Mr.
B. You are required to calculate earnings of Mr. A and Mr. B under Straight Piece Rate System,
Taylor's Differential Piece Rate System and Flat Time Rate System.
(a) Time rate Rs24 per hour
(b) Standard time per unit 30 seconds
(c) Normal time per day 8 hours
(d) Production per day Mr. A 950 units and Mr. B 1,200 units.
(e) Differential piece rate to be applied:
(i) 80% of piece rate below standard and
(ii) I20% of piece rate at or above standard

14)Following particulars are available with respect to the performance of three workers Mr. A,
Mr. B and Mr. C. You are required to calculate the wages of these workers under Straight Piece
Rate System, Taylor Differential Piece Rate System and Merrick's Multiple Piece Rate System.
(a) Normal piece rate 12 per piece
(b) Standard production 960 units
(c) Actual production: Mr. A 970 units; Mr. B 950 units and Mr. C 790 units.

15) From the following information, calculate the total earnings of a worker under Time Rate
System, Piece Rate System, Halsey Plan and Rowan Plan.
(a) Wage rate per hour Rs20
(b) DA per hour Rs10
(c) Standard hours 80
(d) Actual time taken 50 hours.

16)From the following information calculate the total earnings and effective rate of earnings of
two workers Mr. A and Mr. B under Halsey Plan and Rowan Plan.
(a) Standard time for producing 100 articles 50 hours
(b) Wage rate Rs15 per hour
(c) Actual time taken for producing 100 articles - Mr. A 42 hours; Mr. B 32 hours.
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Cost Accounting
Labour Cost Control (B.Com & BBA)
17) From the following data calculate the total earnings and effective rate of earnings under
Halsey Plan and Rowan Plan
(a) Standard time 48 hours
(b) Time rate Rs20 per hour
(c) Actual time taken 40 hours

18) From the following information calculate the total earnings and effective rate of earnings of a
worker under Halsey Plan and Rowan Plan.
(a) Standard time per unit 30 minutes
(b) Time rate per hour Rs24
(c) Time worked 18 hours
(d) Actual output obtained 48 units

19) A worker is allowed 10 hours to complete a job. His hourly rate is Rs16. He gets Rs12 as
bonus under Halsey Plan. Calculate his earnings under Rowan Plan.

20) The details of a job performed by three workers Mr. A, Mr. B and Mr. C are as under. You
are required Calculate the total earnings of each worker, effective rate per hour for each worker.
a) Time allowed 30 hours
b) Hourly rate Rs18
c)Time taken - Mr. A 30 hours; Mr. B 20 hours and Mr. C 14 hours.

21) A worker's wages for a guaranteed 44 hours a week is 25 per hour. The estimated time to
produce one unit is 30 minutes and under an incentive plan, the time allowed is increased by
20%. During a week, a worker produced 100 units. Calculate the wages under the following
methods:
(a) Time Rate System
(b) Halsey Plan and
(c) Rowan Plan.

22). From the following particulars, calculate earnings of a worker under
1) Straight piece rate
2) Differential piece rate
iii) Halsey Bonus Plan (50% sharing) and
iv) Rowan Premium Scheme
Weekly working hours - 40
Piece rate per piece-Rs. 6
Hourly rate of wages - Rs. 15
Normal time taken per piece -20 minutes
Normal output per week 120 pieces
Actual output of the worker per week - 150 pieces
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Cost Accounting
Labour Cost Control (B.Com & BBA)
Differential piece rate
a) 80% of piece rate for output below normal output
b) 120% of piece rate for onut above normal output

23) A worker produced 200 units in a week's time. The guaranteed weekly wage
payment for 45 hrs is 7 81. The expected time to produce one unit is 15 minutes
which is raised further by 20% under the incentive scheme. What will be earnings
per hour of that worker under Halsey (50% sharing) and Rowan bonus schemes?

24) Following information is available with respect to a particular type of labour
a) Monthly salary
i) Basic pay Rs 2,000
ii) DA 75% of Basic Pay
b) House Rent Allowance 400 per month
c) Leave salary earned 3500
d) CCA 200 per month.
e) Interim relief 10%of Basic + DA
f) Employer's contribution to PF 5% of Basic + DA
g) Employer's contribution to ESI 2 % of Basic + DA
h) Pro-rata expenses on amenities t 25 per month
i) Number of working hours in a month 200 Hours.
Calculate the Cost of Labour per day of 8 Hours.

25) From the following particulars calculate earnings of a worker under Halsey and Rowan plan.
Standard time 10 hrs.
Time taken 6 hrs.
Hourly rate?

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