LABOUR COST

1. Standard production @ 20 units per hour, general wage rate Rs. 2.00 per hour,
wage rate if work executive below standard: 80% of general rate, wage rate on execution
of work equal to standard 80% of general rate, wage rate on execution of work equal to
standard 120% of general rate; production in 8 hours in one day by Mr. A : 150 units and
Mr. B: 200 units. Compute the total remuneration payable to Mr. A and B under the
Taylor plan.

2. The following particulars apply to a particular job:

Standard production per hour – 6 Units
Standard Working Hours – 8
Normal Rate per hour – Rs. 1.20
Mohan produced 32 units
Ram produces 42 Units
Prasad produces 50 units
Calculate the wages of this workers under Merrick Differential Piece Rate System.

3. The following are the particulars applicable to a process:

Time Rate – Rs. 8 per hour
High Task – 200 units per week
In a 40 hour week, the production of the worker was:
A – 180 units, B – 200 units, C – 205 units
Production above standard-high piece rate of Rs. 2.00 per unit
Calculate the total earnings of the workers under Gantt’s Task Bonus System.

4. In a manufacturing concern the daily wage rate is Rs. 2.50. The standard output in
a 6 day week is 200 units representing 100% efficiency. The daily wage rate is paid
without bonus to those workers who show upto 66 2/3% of the efficiency standard.
Beyond this there is a bonus payable on the graded scale as below:
82% efficiency – 5% bonus
90% Efficiency – 9% bonus
100% Efficiency – 20% bonus
Further increase of 1% of every 1% further rise in efficiency. In a 6 day week A produced
180 units, B 164 units, C 200 units, D 208 units and E 130 units
Calculate the earnings of these workers.

5. Rate per hour = Rs. 1.50

Time allowed for the job = 16 hrs.
Time Taken – 12 hrs
Calculate the total earnings of the worker under Halsey Premium Plan. Find out
effective rate of earning also.
6. Calculate Bonus payable under Rowan Plan where time allowed is 24 hours, time
taken is 18 hours and time rate is Rs. 20 per hour.

7. Calculate normal overtime and total wages payable to a worker from the particular
given below:
Days Hours Worked
Monday 10
Tuesday 9
Wednesday 8
Thursday 12
Friday 9
Saturday 4
Normal working hours = 8 per day.
Normal rate = Rs. 50 per day.
Overtime rate = Up to 9 hours per day-single rate; beyond 9 hours a day-double rate

8. From the following data prepare a statement showing the cost per day of 8 hours
of engaging a particular type of labour:
a) Monthly salary (basic + dearness allowance) – Rs. 200.
b) Leave salary payable to the workman – 5% Salary.
c) Employer’s contribution to P.F. – 8% of salary (item a and b)
d) Employees contribution to State Insurance - 2½% of salary (Item a + b)
e) Expenditure on amenities – Rs. 17.95 per head per month
f) No. of working hours in a month – 200

9. 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 D.A. @ 120% of basic. He is allowed to take
30 minutes off during his 8 hours shift 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 Hrs
Job Y 12 Hrs
Job Z 13 Hrs
The time not booked was wasted while waiting for a job. In cost accounting, how would
you allocate the wages of the workers for the week?

10. Calculate the earning of A and B from the following particulars for a month and
allocate the labour cost to each job X,Y and Z.
Particulars A B
i) Basic Wages Rs. 100 160
ii) Dearness Allowance 50% 50%
iii) Contribution to Provident Fund (on Basic Wages) 8% 8%
iv) Contribution to Employees State Insurance (on Basic 2% 2%
Wages)
 v) Overtime Hours 10
The normal working hours for the month are 200. Overtime is paid at double the total of
normal wages and dearness allowance. Employer contribution to state insurance and
provident fund are at equal rates and employees contributions. The two workers were
employed on Jobs X, Y and Z in the following proportions.
Jobs
X Y Z
Workers A 40% 30% 30%
Workers B 50% 20% 30%
Overtime was done on Job Y.
 OVERHEADS
1. A factory has 3 production departments (P1, P2,P3) and 2 service departments (S1
& S2). The following overheads and other information are extracted from the books for
the month of January 2014
Expense Amount Expense Amount
Rs. Rs.
Rent 6,000 Supervision 9,000
Repair 3,600 Fire Insurance for stock 3,000
Depreciation 2,700 ESI contribution 900
Lighting 600 Power 5,400

Particulars P1 P2 P3 S1 S2
Area sq.ft 400 300 270 150 80
No. of Workers 54 48 36 24 18
Wages 18,000 15,000 12,000 9,000 6,000
Value of Plant 72,000 54,000 48,000 6,000
Stock Value 45,000 27,000 18,000
Horse Power of 600 400 300 150 50
Plant
Allocate or apportion the overheads among the various departments on suitable basis.

2. The following information is supplied from the costing records of a company:

Particulars Rs. Particulars Rs.
Rent 2,000 Insurance (Stock) 1,000
Maintenance 1,200 Employer’s Contribution to 300
P.F.
Depreciation 900 Energy 1,800
Lighting 200 Supervision 3,000

Particulars Departments
A B C D
Floor space (sq. mtr.) 150 110 90 50
Number of Workers 24 16 12 8
Total Direct Wages (Rs.) 8,000 6,000 4,000 2,000
Cost of Machinery (Rs.) 24,000 18,000 12,000 6,000
Stock of Goods (Rs.) 15,000 9,000 6,000 -
Prepare a statement showing appointment of costs to various departments.

3. The modern company is divided into four departments: A,B and C are production
departments and D is a service department. The actual costs for a period are as follows:
Particulars Rs. Particulars Rs.
 Rent 10,000 Fire Insurance (Stock) 5,000
Repairs to Plant 6,000 Power 9,000
Depreciation of Plant 4,500 Light 1,000
Supervision 15,000 Employer’s Insurance 1,500
Liability
The following information are available in respect of the four departments:
Particulars Departments
A B C D
Area (Sq. Feet) 1,500 1,100 900 500
Number of Employees 20 15 10 15
Horsepower of Machines 800 500 200 -
Total Wages (Rs.) 60,000 40,000 30,000 20,000
Value of Plant (Rs.) 2,40,000 1,80,000 1,20,000 60,000
Value of Stock (Rs.) 1,50,000 90,000 60,000 -
Light points (Nos.) 40 30 20 10
Apportion the costs of the various departments by the most equitable method.

4. The following cost information for a period is available for a small engineering
unit:
a) Allocated Expenditure
Allocated
Total (Rs.) Production Departments Service Departments
Machine Assembly General Stores
Shop Plant
Services
Indirect 29,300 8,000 6,000 4,000 11,300
Wages
Stores 6,700 2,200 1,700 1,100 1,700
Consumed
Supervisory 14,000 - - 14,000 -
Salaries
Other Salaries 10,000 - - 10,000 -
b) Expenditure to be apportioned
Power and Fuel 15,000
Rent 15,000
Insurance 3,000
Depreciation 1,00,000
c) Additional Information available:
Floor Area H.P. hrs. No. of Investment
(Sq. ft.) Employees (Rs.)
Machine Shop 2,000 3,500 30 6,40,000
Assembly 1,000 500 15 2,00,000
General Plant 500 - 5 10,000
 Stores 1,500 1,000 10 1,50,000
You are required to prepare an overhead primary distribution statement in detail.

5. Small company Ltd. has three production departments and four service
departments. The expenses for these departments as per Primary Distribution Summary
were:
Particulars Rs. Rs.
Production Departments:
A 15,000
B 13,000
C 12,000 40,000
Service Departments:
Stores 2,000
Time-keeping 1,500
Canteen 500
Power 800 4,800
Total 44,800
The following information are also available in respect of the production dpaments.
Particulars Dept. A Dept. B Dept. C
Horsepower of Machines 300 300 200
Number of Workers 20 15 15
Value of stores requisitioned (Rs.) 2,500 1,500 1,000
Apportion the cost of the various service departments to the production departments.

6. In an engineering factory, the following particulars have been extracted for the
year ended 31-12-2013:
Particulars Production Dept. Service Dept.
A B C X Y
Direct Wages (Rs.) 30,000 45,000 60,000 15,000 30,000
Direct Materials (Rs.) 15,000 30,000 30,000 22,500 22,500
Staff Number 1,500 2,250 2,250 750 750
Electricity (Kwh) 6,000 4,500 3,000 1,500 1,500
Asset Value (Rs.) 60,000 40,000 30,000 10,000 10,000
Light Points 10 16 4 6 4
Area (Square Metres) 150 250 50 50 50
The expenses for the period were as follows:
Particulars Rs. Particulars Rs.
Power 1,100 Depreciation 30,000
Lighting 200 Repairs 6,000
Stores Overhead 800 General Overheads 12,000
Welfare to Staff 3,000 Rent and Taxes 550
Apportion the expenses of service department Y according to direct wages and those of
service department of X in the ratio 5:3:2 to the production departments. You are
required to prepare an Overhead Distribution Summary.

7. Calculate the machine hour rate from the following details.

Brought Machinery Rs. 45,000
Installation Charges Rs. 5,000
Life of Machine 5 years
Working hours per year 2,500
Repair Charges 75% of depreciation
Electric Power Consumed 10 units per hour @ 15 paise per
unit
Lubricant Oil Rs. 4 per day of 8 hours
Consumable Stores @ Rs. 10 per day of 8 hrs.
Wages of Machine Operator @ Rs. 8 per day of 8 hrs.

8. The following particulars relate to a new machine:

Rs.
Purchase Price 4,00,000
Installation Expenses 1,00,000
Rent per quarter 3,750
General lighting for the total area 1,000 per month
Foreman’s Salary 30,000 per month
Insurance premium for the machine 3,000 per annum
Departmental overheads for the machine 5,000 per annum
Consumable Stores 4,000 per annum
Power – 2 units per hour at 50 paise per unit
The estimated life of the machine is 10 years and scrap value at the end of 10th year is Rs.
1,00,000. The machine is expected to run 20,000 hours in its lifetime. The machine
occupies 25% of total area. The foreman devotes 1/6th of his time for the machine.

9. From the following information, compute machine hour rate:

Cost of Machine Rs. 44,000
Scrap Value Rs. 4,000
Rent for the workshop Rs. 25,000 per annum
General Lighting for the Workshop Rs. 160 per month
Power consumption 20 units per hour @ Rs. 20 per every 100 units
Administratve expenses allocated to the machine Rs. 4,000 per annum
Repairs and Maintenance 75% of Depreciation
Workshop Supervisor’s Salary Rs. 3,000 per month
Estimated working time per year 50 weeks of 40 hours each
Setting up time which is regarded as productive 200 hours per year
time
 Effective life of the machine 10 Years
The machine occupies 1/4 area of the workshop. The supervisor is expected to devote
th

1/3rd of his time in supervising the machine.

10. Compute the machine hour rate from the following data:
Rs.
Cost of Machine 1,00,000
Installation charges 10,000
Estimated Scrap Value after the expiry of its life (15 years) 5,000
Rent & Rates for the shop per month 200
General Lighting for the shop per month 300
Insurance premium for the machine per annum 960
Repairs and maintenance expenses per annum 1,000
Power Consumption – 10 units per hour -
Rate of power per 100 units 20
Estimated working hours per annum – 2,200 -
(This includes non-productive setting up time of 200 hrs).
Shop Supervisor’s Salary per month 600
The machine occupies 1/4th of the total area of the shop. The supervisor is expected to
devote 1/5th of his time for supervising the machine.

11. Particulars of three machines used in the factory are as under (six week period,
160 hours working)
Particulars Machine X Machine Y Machine Z
(Rs.) (Rs.) (R
Cost of Machine 10,000 15,000 20,000
No. of Workers 2 5 10
Direct Wages Rs. 300 Rs. 800 Rs. 1,200
Power Rs. 45 Rs. 80 Rs. 150
Light Points 2 4 6
Area Occupied 100 sq.ft 250 sq. ft 400 sq.ft
The expenses incurred during the period were as follows:
Rs.
Power 275
Lighting 48
Rent and Rates 450
Depreciation 1,350
Repairs 1,800
Indirect Wages 460
Canteen Expenses 51
Sundries 300
Total 4,734
Compute the machine hour rate for each machine.