ACCOUNTING FOR LABOUR COST - TUTORIAL QUESTIONS

ACCOUNTING FOR LABOUR COST-TUTORIAL QUESTIONS

QUESTION ONE

Discuss the accounting treatment of idle time and overtime wages  

QUESTION 2 

Distinguish between Direct and Indirect labour  

QUESTION THREE

Calculate the total earnings from the following data under Halsey plan and under Halseyweir plan. Standard Time: 100 hours; Time taken: 80 hours; Time rate: Tshs.25,000 per hour

QUESTION FOUR

A skilled worker in XYZ Ltd. is paid a guaranteed wage rate of Tshs. 30,000 per hour. The standard time per unit for a particular product is 4 hours. Mgonasipapune, a machine man, has been paid wages under the Rowan Incentive Plan and he had earned an effective hourly rate of ` 37,500 on the manufacture of that particular product. 

What could have been his total earnings and effective hourly rate, had he been put on Halsey Incentive Scheme (50%)?

QUESTION FIVE

The finishing shop of a company employs 60 direct workers. Each worker is paid Tshs. 400,000 as wages per week of 40 hours. When necessary, overtime is worked up to 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 up to the specified limit although no premium on incentives 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 Tshs 11,000 per unit and the direct Material Cost is Tshs. 8,000 per unit. The variable overheads amount to Tshs. 500 per direct labour hour and the fixed overhead is Tshs. 9,000 per week. 

Prepare a Statement to show the effect on the Company’s weekly Profit of the proposal to introduce (a) Halsey Scheme, and (b) Rowan Scheme. 

QUESTION SIX

What do you understand by overtime premium? What is the effect of overtime payment on productivity and cost? Discuss the treatment of overtime premium in cost accounts and suggest a procedure for control of overtime work. 

QUESTION SEVEN

X Ltd has recorded the following cost for direct workers for month of Dec. 

                                                            Tshs 

Basic Pay                     4,000,000

Overtime premium    300,000

Holiday pay       100,000

Idle time       50,000 Sick pay        50,000

Prepare Journal Entries to record the above transactions 

QUESTION EIGHT

From the following information prepare a payroll for the month of May 2013

Clock No.	Name	Number of hours worked	Rate per hour Tshs	Advance
5012	A. Robert	180	10	500
5016	S. Mwangi	200	14	700
5011	J. Alex	190	12	600
5015	R. Josphet	210	10	800
5013	P. Wachira	200	16	800
5014	G. Paul	170	13	500

Additional information

(a)    Normal working hours per month are 180. Overtime payable for extra hours at the rate of 50% above normal rate.

(b)   PAYE to be deducted at the rate of 10% of gross wages

(c)    NSSF to be deducted Tshs.80 for each employee

(d)   NHIF to be deducted Tshs. 20 for each employee