chapter 7 accounting for labour

8/12/2019 Chapter 7 Accounting for Labour

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Chapter 7: Accounting for Labour 2014

1 Ibrahim Sameer ACCA (FMA Villa College)

F2 - Management Accounting

ACCA Tutorial Questions

Chapter 7 Accounting for Labour


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Question 1

Rush & Fluster Co budgets to make 25,000 standard units of output (in four hours each) during a

budget period of 100,000 hours.

Actual output during the period was 27,000 units which took 120,000 hours to make.

Required

Calculate the efficiency, capacity and production volume ratios.

Question 2

Penny Pincher is paid 50c for each towel she weaves, but she is guaranteed a minimum wage of

$60 for a 40 hour week. In a series of four weeks, she makes 100, 120, 140 and 160 towels.

Required

Calculate her pay each week, and the conversion cost per towel if production OH is added at the

rate of $2.50 per direct labour hour.

Question 3

The following data relate to work at a certain factory.

Normal working day 8 hours

Basic rate of pay per hour $6

Standard time allowed to produce 1 unit 2 minutes

Premium bonus 75% of time saved at basic rate

What will be the labour cost in a day when 340 units are made?

Question 4

Jaffa Co employs two types of labour: skilled workers, considered to be direct workers, and

semi-skilled workers considered to be indirect workers. Skilled workers are paid $10 per hour

and semi-skilled $5 per hour.


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The skilled workers have worked 20 hours overtime this week, 12 hours on specific orders and 8

hours on general overtime. Overtime is paid at a rate of time and a quarter.

The semi-skilled workers have worked 30 hours overtime, 20 hours for a specific order at a

customers request and the rest for general purposes. Overtime again is paid at time and a

quarter.

What would be the total overtime pay considered to be a direct cost for this week?

Question 5

The following data relate to work in the finishing department of certain factory.

Normal working day 8 hoursBasic rate of pay per hour $6

Standard time allowed to produce 1 unit 5 minutes

Premium bonus payable at the basic rate 60% of time saved

On a particular day one employee finishes 190 units. Calculate his gross pay for the day.

Question 6

Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is$3.70 per hour. A premium of 50% of basic hourly rate is paid for all overtime hours worked.

During the last week of October, Employee A worked 42 hours. The overtime hours worked

were for the following reasons:

Machine breakdown 4 hours

To complete a special job at the request of a customer 2 hours

How much of Employee As earning for the last week of October would have been treated as

direct wages?


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Question 7

A company has 35 direct production employees at the beginning of last year and 25 direct

production employees at the end of the year. During the year, a total of 15 direct production

employees had left the company to work for local competitors.

Calculate the labour turnover rate for the last year.

chapter 7 accounting for labour

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