LABOUR

LABOUR TURNOVER
1.From the following data provided to you, find out the Labour
Turnover Rate by applying :
(a.i.a) Flux Method (b) Replacement Method ; and (c)
Separation Method
No. of workers on the payroll :
At the beginning of the month 500
At the end of the month 600
During the month of, 5 workers left, 20 persons were discharged and 75
workers were recruited. Of these, 10 workers were recruited in the
vacancies of those leaving, while the rest were engaged for an expansion
scheme.

2.MHK Ltd. Has an average of 42 workers in one of its factories in a

period during which 7 workers left and were replaced. The company
pays a rate of Rs. 46 per hour to all its direct employees. This is used
as the standard rate. In addition, a factory - wide bonus scheme is in
operation. A bonus of half of the efficiency ratio in excess of 100% is
added as a percentage to the basic hourly rate. During the period
1,14,268 units of the companies single product were manufactured in
4,900 hours. The standard hours is 22 units.
You are required to:
1. Calculate the Labour Turnover Percentage for the period;
2. Calculate the hourly wages rate paid for the period :
3. Calculate actual gross pay.

3.The management of In and Out limited are worried about their

increasing labour turnover in the factory and before analysing the
causes and taking remedial steps, they want to have an idea of the
profit foregone as a result of labour turnover in the last year.
 Last year sales amounted to Rs. 83,03,300 and the 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 delays by the Personnel
Department in filling vacancies due to labour turnover, 1,00,000
potentially 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 cost incurred consequent on labour turnover revealed on
analysis the following :
Settlement cost due to leaving Rs. 43,820
Recruitment cost Rs. 26,740
Selection cost Rs. 12,750
Training costs Rs. 30,490

Assuming that the potential production lost a consequence of labour

turnover could have been sold at prevailing prices, find the profit
foregone last year on account of labour turnover.

OVERTIME AND IDLE TIME :

4.The following details relate to the labour in a production cost

centre for a period :
Direct Indirect worker
worker
(Rs.) (Rs.)
Hourly rate of pay :
Basic 10.00 7.00
Overtime 13.00 9.10
Payroll hours : Hours Hours
Productive 310 118
Idle 18 4
328 122
 Additional Information:
I. Basic rates of pay apply to a normal working week of 38 hours.
II. There are 8 direct workers and 3 indirect workers in the cost
centre.
III. Overtime is worked from time to time to meet the general
requirements of production.
IV. Idle time is regarded as normal.
You are required to calculate :
i. The total amounts to be paid to the direct workers and indirect
workers respectively.
ii. The total amounts to be charged as direct wages to work-in-
progress and indirect wages to overheads respectively. (Show
clearly the make-up of the indirect charges.)

5.In a factory, 20 workers are employed in the production of a goods.

From the following particulars, compare the Wage Bill for the
workers for the month of January, 2021:
Basic wage @ Rs. 1,000 p.m. per worker ;
Dearness allowance @ Rs. 900 p.m. per worker ;
Bonus for the month @ 20% of basic wages plus D.A. ;
Other allowance @ Rs. 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 Rs. 20 p.m.

6.A company operates a factory which employed 40 direct workers

throughout the four week period just ended. Direct employees are
paid at a basic rate of Rs. 40 per hour for a 48-hour week. Total
hours of the direct workers in a four week period were 8,128.
Overtime, which is paid at a premium of 50%,is worked in order to
meet general production requirements. Employee deduction total
30% of gross wages. 188 hours of direct worker’s time were
registered as idle.
You are required to pass journal entries to account for labour costs
of direct workers for the period.

7.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 and remained idle for the remaining 5 hours due to
machine break down.
Normal rate per hour is Rs. 5. Overtime rate is 150% of the normal
and the rate of wages for the Idle times is 80% of the normal.
Calculate total wages payable to the worker.

WAGE PAYMENT AND INCENTIVE SCHEME

8.In a factory, wages are paid on a weekly basis (40 hours per week)
at a guaranteed hourly rate of Rs. 10. A study has revealed that
standard output per hour is 40 units. During a particular, week, A
produced 1400 units and B produced 1800 units.
Calculate the earning and labour cost per 100 units in case of each
of the two worked under :
(i) Straight Piece Rate ; and
(ii) Piece Work with a Guaranteed Weekly Wage.
9.From the following particulars, you are required to work out the
earnings of a worker for a week under :
(i) Straight Piece Rate; and
(ii) Differential Piece Rate.
a)Weekly working hours 48
 b) Hours wage rate (Rs.) 7.50
c) Piece rate unit (Rs.) 3.00
d) Normal time taken per piece 24 min
e) Normal output per week 120 pieces
f) Actual output for the week 150 pieces
Differential piece rate is 80% of piece rate when output is below
normal and 120% of piece rate when output is above normal.

10.Time allowed for the production of 100 ‘Bolt’ is 2 hours and

hourly rate of wages payment is Rs. 12. M and N produced 600 and
500 pieces of ‘Bolt’ respectively in a particular day of 8 hours.
Calculate their earnings under Halsey Premium Bonus and Rowan
Premium Bonus Method.

11.During first week of April, 2020 the workman Mr. Kalyan

manufactured 300 articles. He received wages for guaranteed 48
hours week at the rate of Rs. 40 per hour. The estimated time to
produce 1 article is 10 minutes and under incentive scheme the time
allowed is increased by 20 %. Calculate his gross wages according to
: (a) piece work with a guaranteed weekly wages ; piece rate is Rs. 8;
(b) Rowan Premium Bonus Plan ; and (c) Halsey Premium Bonus
plan 50% to workman.

12.P and Q are machine operators in a company which manufactures

components for electric motor cars. The company operates a Halsey
Bonus Scheme (50%). The basic wages rate is Rs. 40 per hour.
The following details relate to two jobs completed during the week :
P Q
Job M20: 110 units Job M21: 160 units
Component D225 Component D226
Hours worked on 38 hours Hours worked on job 43 hours
Job M20 M21
Hours booked to 2 hours --------- --------
Idle time
Hours attended to be 40 hours Hours attended to be 43 hours
paid paid
Time allowed per 24 Time allowed per unit 18 minutes
unit of D225 minutes of D226

All units produced has paid for, although, on inspection, P had 8 units
rejected and Q had 6 units rejected.
Required :
Calculate separately for both P and Q:
(ii.a) The amount of bonus payable ;
(ii.b) The total gross wages; and
(ii.c) The direct wages cost per good unit produced.

13.In a factory, S took 30 hours to complete a job. The factory cost

of the job is Rs. 5,200, raw materials cost of the job is Rs. 4,000.
Hourly rate of wages Rs. 20. Works overhead is recovered on the job
at Rs.15 per labour hour worked. S is entitled to receive bonus
according to Rowan Plan. Calculate standard time for completion of
the job.

14.Two workmen, Vishnu and Shiva, produce the same product

using the same material. Their normal wage rate is also the same.
Vishnu is paid bonus according to the Rowan System, while Shiva is
paid bonus according to the Halsey System. The time allowed to
make the product is 100 hours. Vishnu takes 60 hours while Shiva
takes 80 hours to complete the product. The factory overhead rate is
Rs.10 per man- hour actually worked. The factory cost for the
product for Vishnu is Rs. 7,280 and for Shiva it is Rs. 7,600.
You are required to :
(a.i.b) Find the normal rate of wages ;
(a.i.c) Find the cost of materials
(a.i.d) Prepare a statement comparing the factory
cost of the product as made by the two
workmen.

15.In a factory bonus system, bonus hours are credited to the

employees in the proportion of time taken, which time saved bears to
time allowed. Jobs are carried forward from one week to another. No
overtime is worked and payment is made in full for all units worked
on, including those subsequently rejected.
From the following information you are required to calculate for each
employee :
1. The bonus hours and amount of bonus earned ;
2. The total wages costs ; and
3. The wages cost of each good unit produced.

Particulars Worker A Worker B Worker

C
Basic rateperhour Rs. 10 Rs. 16 Rs. 12
Units produced 2600 2200 3600
Time allowed for 2 hours 30 3 hours 1 hour 30
100 units minutes minutes
Time taken 52 hours 75 hours 48 hours
Rejects 100 units 40 units 400 units

16.A factory pays its workers under Rowan Premium Scheme.

Workers also get dearness allowance of Rs. 250 per week of 48
hours. A worker’s basic wages is Rs. 100 per day of 8 hours and his
time schedule for a week is summarised below :
Job Number Time Allowed Time Taken
103 25 hours 20 hours
107 30 hours 20 hours
Idle time — 8 hours
48 hours

Calculate the gross wages he has earned for the week and indicate the
account to which wages amounts will be debited.

17. A worker, whose day-work wages is Rs. 25 an hour, received

production bonus under the Rowan Scheme. He carried out the
following work in a 48-hour week:

Job 1 1500 items at 4 hours per 1000

Job 2 1800 items at 3 hours per 1000
Job 3 9000 items at 6 hours per 1000
Job 4 1500 items for which no standard time was fixed and
it was arranged that the worker would be paid a bonus
of 25%. Actual time on the job was 4 hours.
Job 5 2000 items at 8 hours per 1000,each item was
estimated to be half-finished.

Job 2 was carried out on a machine running at 90 per cent efficiency and
extra allowance of 1/9th of the actual time was given to compensate the
worker.
4 hours were lost due to power cut.
Calculate the earnings of the worker, clearly stating your assumptions
for the treatment given by you for the hours lost due to power cut.