Years Exam Question. ` 5.40 Standard time per unit

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1 CA R. K. Mehta Labour Costing CA Past Years Exam Question Question : 1 (May,1998) Calculate the earnings of workers A, B and C under straight piece rate system ad Merrick s multiple piece rate system from the following particulars: Normal rate per hour ` 5.40 Standard time per unit 1 minute Output per day is as follows: Worker A 390 units Worker B 450 units Worker C 600 units Working hours per day are 8. Question : 2 (May, 1996) An article passes through five hand operations as follows: Operation No. Time per article Grade of worker Wage rate per hour 1 15 minutes A Re minutes B Re minutes C Re minutes D Re minutes E Re The factory works 40 hours a week and the production target is 600 dozen per week. Prepare a statement showing for each operation and in total the number of operators required, the labour cost per dozen and the total labour cost per week to produce the total targeted output. Question : 3 (May, 2001) From the following information, calculate labour turnover rate and labour flux rate: No. of workers as on = 7,600; No. of workers as on = 8,400 During the year, 80 workers left while 320 workers were discharged. 1,500 workers and the rest were recruited in accordance with expansion plans. Question : 4 (Nov, 2008) The following information is collected from the personnel department of ST limited for the year ending 31 st March, 2008: Number of workers at the beginningg of the year 8,000 Number of workers as the end of the year 9,600 Number of workers left the company during the year 500 Number of workers discharged during the year 100 Number of workers replaced due to leaving and discharges 700 Number of workers employed for expansion during the year 1,500 You are required to calculate labour turnover rate by using separation method, replacement method and flux method. Page No. 1

2 Question : 5 (Dec, 2000,2005) (CS Inter) The cost accountant of Adarsh limited, has computed labour turnover rates for the quarter ended 31 st March, 2000 as 20%, 10% and 6% respectively under Flux method, replacement method and separation method. If the number of workers replaced during that quarter is 80, find out the number of (i) workers left and discharged; and (ii) workers recruited and joined including replacements Question : 6 (Dec, 2006) (CS Inter) The labour turnover rates of a manufacturing organization for the quarter ended 31 st March, 2006 are 10%, 5% and 3% under Flux method, replacement method and separation method respectively. The number of workers replaced during the quarter is 120. Work out the number of workers (i) left and discharged; and (ii) recruited and joined including replacements. Question : 7 (Nov, 2003) The management of a company are worried about their increasing labour turnover in the factory and before analyzing the cause 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 ` 83,03,300 and the profit-volume ratio was 20 per cent. 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 costs incurred consequent on labour turnover revealed on analysis the following: ` Settlement costs due to leaving 43,820 Recruitment costs 26,740 Selection cost 12,750 Training costs 30,490 Assuming that the potential production lost as a consequence of labour turnover could have been sold at prevailing price. Find the profit foregone last year on account of labour turnover. Question : 8 (June, 2009) (ICMA) The standard hours for job X is 100 hours. The job has been completed by Amar in 60 hours, Akbar in 70 hours and Anthony in 95 hours. The bonus system applicable to the job is as follows: Percentage of time saved to time allowed Bonus Saving upto 10% 10% of time saved From 11% to 20% 15% of time saved From 21% to 40% 20% of time saved From 41% to 100% 25% of time saved The rate of pay is ` 10 per hour. Calculate the total earnings of each worker and also the rate of earnings per hour. Question : 9 (May, 2007) Using Taylor s differential piece rate system, find the earning of A from the following particulars: Standard time per piece 12 minutes Normal rate per hour (in a 8 hours day) ` 20 A produced 37 units Question : 10 (May, 2008) Standard output in 10 hours is 240 units; actual output in 10 hours is 264 units. Wages rate is ` 10 per hour. Calculate the amount of bonus and total wages under Emerson plan. Page No. 2

3 Question : 11 (Dec, 2003) (ICMA) The standard time required per unit of a product is 20 minutes. If in a day of 8 working hours, a worker gives an output of 30 units, calculate his earnings under Halsey Bonus Scheme and Rowan Bonus Scheme. He gets a time rate of ` 20 per hour. Question : 12 (Dec, 2005) (ICMA) A worker is allowed 60 hours to compete a job on a guaranteed wage of ` 10 per hour. He completes the job in 48 hours. For the same saving in time, how much will he get under Halsey Premium Plan (@ 50% Bonus)? Question : 13 (Nov, 2005) The existing incentive system of Alpha Limited is as under: Normal working week 5 days of 8 hours each plus 3 late shits of 3 hours each Rate of payment Day work: ` 160 per hour Late shift: ` 225 per hour Average output per operator for 49-hours week i.e. including 3 late shifts. 120 articles In order to increase output and eliminate overtime, it was decided to switch on to a system of payment by results. The following information is obtained: Time-rate (as usual) : ` 160 per hour Basic time allowed for 15 articles : 5 hours Piece-work rate : Add 20% to basic piece-rate Premium bonus : Add 50% to time. Required: (i) Prepare a statement showing hours worked, weekly earnings, number of articles produced and labour cost per article for one operator under the following systems: a) Existing time-rate b) Straight piece-work c) Rowan system d) Halsey premium system. Assume that 135 articles are produced in a 40-hour week under straight piece work, rowan premium system, and Halsey premium system above and worker earns half the time saved under Halsey premium system. Question : 14 (Nov, 2009) 2 hours allowed to a worker to produce 5 units and wages has been ` 25 per hour. In a 48 hours week the worker produced 170 units. You are required to calculate the total earnings the worker under the following incentive wage systems: (i) Halsey 50 per cent system (ii) Rowan system (iii) Emerson s efficiency system (iv) Barth system. Question : 15 (May, 2008) Calculate the total wages earned by a workman for a working day of 8 hours under Halsey and Rowan Plans. Standard production per hour 20 units Actual production of the day 200 units Wage rate per hour ` 30 Page No. 3

4 Question : 16 (Nov, 2002) A company is undecided as to what kind of wage scheme should be introduced. The following particulars have been compiled in respect of three system, which are consideration of the management: Workers Actual hours worked in a week A B C Hourly rate of wages Production in units: ` 6 ` 5 ` 7.20 Production in units: Product P Product Q Product R Standard time allowed per unit of each product is: P Q R Minutes For the purpose of piece rate, each minute is valued at ` You are required to calculate the wages of each worker under: Guaranteed hourly rates basis Piece work earnings basis, but guaranteed at 75% of basic pay (guaranteed hourly rate) if his earnings are less 50% of basic pay. Premium bonus where the worker receive bonus based on Rowan scheme Question : 17 ( June, 2003) (CS Inter) In an engineering concern, the employees are paid incentive bonus in addition to their normal wages at hourly rates. Incentive bonus is calculated in proportion of time taken to time allowed of the time saved. The following details are made available in respect of employees A, B and C for the first week of December, 2002 : Employee A B C Wage rate per hour (`) Unit produced 6,000 3,000 4,800 Time allowed for every 100 units (hours) Actual time taken (hours) You are required to work out for each employee : (i) The amount of bonus earned; and (ii) The amount of wages received. Question : 18 (May, 2009) Two workmen, A and B, produce the same product using the same material. A is paid bonus according to Halsey plan, while B is paid bonus according to Rowan plan. The time allowed to manufacture the product is 100 hours. A has taken 60 hours and B has taken 80 hours to complete the product. The normal hourly rate of wages of workmen A is ` 24 hour. The total earnings of both the workers are same. Calculate normal hourly rate of wages of workman B. Question : 19 (June, 2009) The standard time for a job is 50 hours. The hourly rate of guaranteed wages is ` 9. Because of saving in time, a worker X gets an hourly wage of ` under Rowan premium bonus system. For the same saving in the, calculate the hourly rate of wages a worker Y will get under Halsey premium bonus system, assuming 50% bonus to worker. Page No. 4

5 Question : 20 (Nov, 2009) Standard time for a job is 90 hours. The hourly rate of guaranteed wages is ` 50. Because of the saving in time a worker A gets an effective hourly rate of wages of ` 60 under Rowan premium bonus system. For the same saving in time, calculate the hourly rate of wages a worker B will get under Halsey premium bonus system assuring 40% to worker. Question : 21 (May, 2002) The finishing shop of a company employs 60 direct workers. Each worker is paid ` 400 as wages per week of 40 hours. When necessary, overtime is worked upto 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 upto 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 ` 11 per unit and the direct material costs is ` 8 per unit. The variable overheads amount to ` 0.50 per direct labour hour and the fixed overhead is ` 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 : 22 (Dec, 2004) (ICMA) The budgeted annual production of a company is 1,20,000 units. Each unit requiring 2 ½ hours at an hourly wage rate of ` 15. Currently, the average efficiency of the production workers is only 60%. The management has a scheme to raise this to 75%. The scheme involves re-aligning the machinery and intensive training of the production workers, at a onetime cost of ` 10 lakhs. The scheme also proposes to raise the wage rate to ` 16 to enlist the full co-operation of the works. Examine the scheme and state whether it can be accepted. Question : 23 (Nov, 2007) Two works A and B produce the same product using the same material. Their normal wage rate is also the same. A is paid bonus according to Rowan scheme while B is paid bonus according to Halsey scheme. The time allowed to make the product is 50 hours. A takes 30 hours while B takes 40 hours to complete the product. The factory overhead rate is ` 5 per person-hour actually worked. The factory cost of product manufactured by A is ` 3,490 and for product manufactured by B is ` 3,600. Required: (i) Compute the normal rate of wages. Question : 24 (Dec, 2008) ICMA) Apex limited has its factories at two locations. Rowan Plan is in use at Location A and Halsey Plan at location B. standard time and basic rate and basic wages are same for a job which is similar and is carried out on similar machinery. Time allowed is 60 hours. Job at location A is completed in 36 hours, while at B, it has taken 48 hours. Conversion cost at respective places are ` and ` 3,000. Overheads account for ` 40 per hours. Requirements: (i) Find out the normal wage rate, and (ii) Prepare the comparative conversion cost in detail. Question : 25 (Dec, 2009) (CS Inter) A worker under the Halsey Plan of remuneration has a day rate of ` 1,200 per week of 48 hours, plus a cost of living bonus of ` 10 per hour worked. He is given an 8-hour task to perform, which he accomplishes in 6 hours. He is allowed 30% of the time saved as premium bonus. What would be his total hourly rate of earnings, and what difference would it make if he were paid under the Rowan Plan? Page No. 5

6 Question : 26 (Dec, 2009) (CS Inter) A workman executed a piece of work in 120 hours as against 150 hours allowed to him hi. His hourly rate is ` 25 and he gets a dearness allowance of ` 100 per day of 8 hours work in addition to his wages. What earning will a workman receive under the following incentive schemes (i) Halsey premium plan, 50% bonus to worker, (ii) Rowan Plan, (iii) Emerson s Efficiency plan. Question : 27 (Nov, 2001) Calculate the earnings of a worker under (i) Halsey plan and (ii) Rowan plan from the following particulars (i) Hourly rate of wages guaranteed 0.50 paisa per hour. (ii) Standard time for producing one dozen articles 3 hours. (iii) Actual time taken by the worker to produce 20 dozen articles 48 hours. Question : 28 (May, 1999 During audit of accounts of G Company, your assistant found errors in the calculation of the wages of factory workers and he wants you to verify his work. He has extracted the following information: (i) The contract provides that the minimum wage for a worker is his base rate. It is also paid for downtime i.e. the machine is under repair of the worker is without work. The standard work week is 40 hours. For overtime production, workers are paid 150 percent of base rates. (ii) Straight piece work The work is paid at the rate of 20 paise per piece. (iii) Percentage bonus plan Standard quantities of production per hour are established by the engineering department. The workers average hourly by the standard quantity of production to determine his efficiency ratio. The efficiency ratio is then applied to his base rate to determine his hourly earnings for the period. (iv) Emerson efficiency plan A minimum wages is paid production upto 66⅔% of standard output or efficiency. When the workers production exceeds 66⅔% of the standard output, he is paid bonus as per the following table: Efficiency level Upto 66 ⅔ % Above 66 ⅔ % to 79% 80% - 99% 100% - 125% Bonus Nil 10% 20% 45% Your assistant has produced the following schedule pertaining to certain workers of a weekly pay roll: Workers Wage incentive plan I Total hours Down time hours Unit produced Standard units Base rate Gross wages as per book ` ` Rajesh Straight piece work Mohan Straight piece work John Straight piece work Harish Percentage bonus plan Mahesh Emerson Anil Emerson (40 hour s production) Total hours of Mohan include 6 overtime hours. Total hours of John include 4 hours overtime. Prepare a schedule showing whether the above computation of workers wages are correct or not. Give details. Question : 29 (Nov, 1999) A skilled worker in XYZ Ltd. Is paid a guaranteed wage rate of ` 30 per hour. The standard time per unit for a particular product is 4 hours. P, a machine man, has been paid wages under the rowan incentive plan and he had earned an effective hourly rate of ` on the manufacture of that particular product. What could have been his total earnings and effective hourly rate, had he been put on Halsey Page No. 6

7 Question : 30 (Nov, 2000) The present output details of a manufacturing department are as follows: Average output per week 48,000 units from 160 employees Saleable value of output ` 6,00,000 Contribution made by output towards Fixed expenses and profit ` 2,40,000 The board of directors plans to introduce more mechanization into the department at a capital cost of ` 1,60,000. The effect of his will be to reduce the number of employees to 120, and increasing the output per individual employee by 60%. To provide the necessary incentive to achieve the increased output, the board intends to offer a 1% increase on the piece work rate of ` 1 per unit for every 2% increase in average individual output achieved. To sell the increased output, it will by necessary to decrease the selling price by 4%. Calculate the extra weekly contribution resulting from the proposed change and evaluate for the board s information, the desirability of introducing the change. Question : 31 (May, 2004) ZED Limited is working by employing 50 skilled workers. It is considered the introduction of incentive scheme either Halsey scheme (with 50% bonus) or Rowan scheme of wage payment for increasing the labour productivity to cope up the increasing demand for the product by 40%. It is believed that proposed incentive scheme; if could bring about an average 20% increase over the present earnings of the workers; if could act as sufficient incentive for them to produce more. Because of assurance, the increase in productivity has been observed as revealed by the figures for the month of April, Hourly rate of wages (guaranteed) ` 30 Average time for producing one unit by one worker at the previous performance hours (This may be taken as time allowed) Number of working days in the month 24 Number of working hours per day of each worker 8 Actual production during the month 6,120 units Required: a) Calculate the effective rate of earnings under the Halsey scheme and Rowan scheme. b) Calculate the savings to the ZED Limited in terms of direct labour cost per piece. c) Advise ZED Limited about the scheme to fulfill his assurance. Question : 32 (May, 2011) You are given the following information of a worker: (i) Name of worker : X (ii) Ticket No. : 002 (iii) Work started : at 8 a.m. (iv) Work finished : at 12 noon (v) Work allotted : Production of 2,160 units (vi) Work done and approved : 2,000 units (vii) Time and units allowed : 40 units per hour (viii) Wage rate : ` 25 per hour (ix) Bonus : 40% of time saved (x) Worker X worked 9 hours a day. You are required to calculate the remuneration of the worker on the following basis: (i) Halsey plan and (ii) Rowan plan Question : 33 (Nov, 2011) X executes a piece of work in 120 hours as against 150 hours allowed to him. His hourly rate is ` 10 and he gets a dearness ` 30 per day of 8 hours worked in addition to his wages. You are required calculate total wages received by X under the following incentive scheme: (i) Rowan premium plan, and (ii) Emerson s efficiency plan Page No. 7

8 Question : 34 (May, 2012) The management of a company wants to formulate an incentive plan for the workers with a view to increase productivity. The following particulars have been extracted from the books of company. Piece wage rate ` 10 Hourly wages rate ` 40 (guaranteed) Weekly working hours 40 Standard/normal time taken per unit 15 minutes. Actual output for a week: Worker A pieces and Worker B pieces. Differential piece rate: 80% of piece rate even output below normal and 120% of piece rate when output above normal. Under Halsey scheme, worker gets a bonus equal to 50% of wages of time saved. Calculate: (i) Earning of workers under Halsey s and Rowan s premium scheme. (ii) Earning of workers under Taylor s differential piece rate system and Emerson s efficiency plan. Question: 35 (Nov, 2012) Accountant of your company had computed labour turnover rates for the quarter ended 30 th Sept., 2012 as 14%, 8% & 6% under Flux method, Replacement method & separation method respectively. If the number of workers replaced during 2 nd quarter of the financial year is 36, find the following: The number of workers recruited and joined & the number of workers left and discharged. Question: 36 (May, 2013) A skilled worker is paid a guaranteed wage rate of ` 120 per hour. The standard time allowed for a job is 6 hours. He took 5 hours to complete the job. He is paid wages under Rowan incentive plan. Calculate his effective hourly rate of earnings under Rowan incentive plan. If the worker is placed under Halsey incentive scheme (50%) and he wants to maintain the same effective hourly rate of earnings, calculate the time in which he should complete the job. Question : 37 (Nov, 2013) The rate of change of labour force in a company during the year ending 31 st March, 2013 was calculated as 13%, 8% and 5% respectively under Flux Method, Replacement method and Separation method. The number of workers separated during the year is 40. You are required to calculate: (i) Average number of workers on roll (ii) No. of workers replaced during the year (iii) Number of new accessions i.e. new recruitment. (iv) No. of workers at the beginning of the year. Question : 38 (Nov, 2015) Human resources department of A Limited computed labour turnover by replacement method at 3%for the quarter ended June During the quarter, fresh recruitment of 40 workers was made. The number of workers at the beginning and end of the quarter was 990 and 1010 respectively. You are required to calculate the labour turnover rate by Separation method and Flux method. Question : 39 (May, 1998 ) The management of Sunshine Ltd. wants to have an idea of the profit lost/forgone as a result of labour turnover last year. Last year sales accounted to ` 66,00,000 and the P/V Ratio was 20%. The total number of actual hours worked by the direct labour force was 3.45 lakhs as a result of the delays by the personnel department in filling vacancies due to labour turnover, 75,000 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 costs incurred consequent on labour turnover revealed on analysis the following: - ` Settlement cost due to leaving 27,420 Recruitment costs 18,725 Selection costs 12,750 Training costs 16,105 Assuming that the potential production lost due to labour turnover could have been sold at prevailing prices, ascertain the profit foregone/lost last year on account of labour turnover. Page No. 8