Solved Examples: Labour Turnover | Cost Accounting - B Com PDF Download

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Problem No 1 . : 
R Limited operates in one of its departments a group incentive scheme. A minimum hourly rate 
is guaranteed to each of the six employees in the group if actual output for the week is less than 
the standard output. If actual output 0.50 greater than the standard output, the hourly rate of each 
employee is increased by 4% for each additional 600 units of output produced. 
The standard output for the group is 12,000 units for a 40 hour week. 
During the week ended December 31, 2019 each employee in the group worked 40 hours ; actual 
output and minimum hourly rates were as follows : 
 
 
You are required to: 
(i) Calculate the earnings of each employee. 
(ii) Appraise the effectiveness to the company of this group incentive scheme. 
Solution: 
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Problem No 1 . : 
R Limited operates in one of its departments a group incentive scheme. A minimum hourly rate 
is guaranteed to each of the six employees in the group if actual output for the week is less than 
the standard output. If actual output 0.50 greater than the standard output, the hourly rate of each 
employee is increased by 4% for each additional 600 units of output produced. 
The standard output for the group is 12,000 units for a 40 hour week. 
During the week ended December 31, 2019 each employee in the group worked 40 hours ; actual 
output and minimum hourly rates were as follows : 
 
 
You are required to: 
(i) Calculate the earnings of each employee. 
(ii) Appraise the effectiveness to the company of this group incentive scheme. 
Solution: 
Statement showing the earning of each employee in the group during the week ending 31st 
December, 2019: 
 
 
 
 
 
Problem No 2 .  
Calculate total monthly remuneration of workers A, B, C and D on the basis of the 
following information for the month of January 2007: 
(i) Standard Production for each worker = 1,000 units 
(ii) Rate of wages = 10 paise per unit 
(iii) Bonus = Rs. 5 for each 1% increase over 90% of the standard. 
(iv) Dearness Allowance per month = 100% of piece wage. 
The units completed by the four workers were as under: 
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Problem No 1 . : 
R Limited operates in one of its departments a group incentive scheme. A minimum hourly rate 
is guaranteed to each of the six employees in the group if actual output for the week is less than 
the standard output. If actual output 0.50 greater than the standard output, the hourly rate of each 
employee is increased by 4% for each additional 600 units of output produced. 
The standard output for the group is 12,000 units for a 40 hour week. 
During the week ended December 31, 2019 each employee in the group worked 40 hours ; actual 
output and minimum hourly rates were as follows : 
 
 
You are required to: 
(i) Calculate the earnings of each employee. 
(ii) Appraise the effectiveness to the company of this group incentive scheme. 
Solution: 
Statement showing the earning of each employee in the group during the week ending 31st 
December, 2019: 
 
 
 
 
 
Problem No 2 .  
Calculate total monthly remuneration of workers A, B, C and D on the basis of the 
following information for the month of January 2007: 
(i) Standard Production for each worker = 1,000 units 
(ii) Rate of wages = 10 paise per unit 
(iii) Bonus = Rs. 5 for each 1% increase over 90% of the standard. 
(iv) Dearness Allowance per month = 100% of piece wage. 
The units completed by the four workers were as under: 
A = 950 units, B = 900 units, C = 960 units, D = 850 units. 
Solution: 
% of work done by the workers: 
A = 950/1,000 × 100 = 95% 
B = 900/1,000 × 100 = 90% 
C = 960/1,000 × 100 = 96% 
D = 850/1,000 × 100 = 85% 
 
 
 
 
Problem No 3 . 
In a factory bonus system, bonus hours are credited to the employee in the production of time 
taken which time saved bears to time allowed. Jobs 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, you are required to calculate for each employee: 
(a) The bonus hours and amount of bonus earned; 
(b) Total wage cost; 
(c) The wage cost of each good unit produced. 
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Problem No 1 . : 
R Limited operates in one of its departments a group incentive scheme. A minimum hourly rate 
is guaranteed to each of the six employees in the group if actual output for the week is less than 
the standard output. If actual output 0.50 greater than the standard output, the hourly rate of each 
employee is increased by 4% for each additional 600 units of output produced. 
The standard output for the group is 12,000 units for a 40 hour week. 
During the week ended December 31, 2019 each employee in the group worked 40 hours ; actual 
output and minimum hourly rates were as follows : 
 
 
You are required to: 
(i) Calculate the earnings of each employee. 
(ii) Appraise the effectiveness to the company of this group incentive scheme. 
Solution: 
Statement showing the earning of each employee in the group during the week ending 31st 
December, 2019: 
 
 
 
 
 
Problem No 2 .  
Calculate total monthly remuneration of workers A, B, C and D on the basis of the 
following information for the month of January 2007: 
(i) Standard Production for each worker = 1,000 units 
(ii) Rate of wages = 10 paise per unit 
(iii) Bonus = Rs. 5 for each 1% increase over 90% of the standard. 
(iv) Dearness Allowance per month = 100% of piece wage. 
The units completed by the four workers were as under: 
A = 950 units, B = 900 units, C = 960 units, D = 850 units. 
Solution: 
% of work done by the workers: 
A = 950/1,000 × 100 = 95% 
B = 900/1,000 × 100 = 90% 
C = 960/1,000 × 100 = 96% 
D = 850/1,000 × 100 = 85% 
 
 
 
 
Problem No 3 . 
In a factory bonus system, bonus hours are credited to the employee in the production of time 
taken which time saved bears to time allowed. Jobs 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, you are required to calculate for each employee: 
(a) The bonus hours and amount of bonus earned; 
(b) Total wage cost; 
(c) The wage cost of each good unit produced. 
 
 
Solution: 
 
 
 
Problems no. 4  
 
ABC Ltd. is having 400 workers at the beginning of the year and 500 workers at the end of the 
year. During the year 20 workers were discharged and 15 workers left the organization. During 
the year the company has recruited 65 workers. Of these, 18 workers were recruited in the 
vacancies of those leaving, while the rest were engaged for an expansion scheme. What is the 
labour turnover rate under separation method ?  
 
Solution: 
 
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Problem No 1 . : 
R Limited operates in one of its departments a group incentive scheme. A minimum hourly rate 
is guaranteed to each of the six employees in the group if actual output for the week is less than 
the standard output. If actual output 0.50 greater than the standard output, the hourly rate of each 
employee is increased by 4% for each additional 600 units of output produced. 
The standard output for the group is 12,000 units for a 40 hour week. 
During the week ended December 31, 2019 each employee in the group worked 40 hours ; actual 
output and minimum hourly rates were as follows : 
 
 
You are required to: 
(i) Calculate the earnings of each employee. 
(ii) Appraise the effectiveness to the company of this group incentive scheme. 
Solution: 
Statement showing the earning of each employee in the group during the week ending 31st 
December, 2019: 
 
 
 
 
 
Problem No 2 .  
Calculate total monthly remuneration of workers A, B, C and D on the basis of the 
following information for the month of January 2007: 
(i) Standard Production for each worker = 1,000 units 
(ii) Rate of wages = 10 paise per unit 
(iii) Bonus = Rs. 5 for each 1% increase over 90% of the standard. 
(iv) Dearness Allowance per month = 100% of piece wage. 
The units completed by the four workers were as under: 
A = 950 units, B = 900 units, C = 960 units, D = 850 units. 
Solution: 
% of work done by the workers: 
A = 950/1,000 × 100 = 95% 
B = 900/1,000 × 100 = 90% 
C = 960/1,000 × 100 = 96% 
D = 850/1,000 × 100 = 85% 
 
 
 
 
Problem No 3 . 
In a factory bonus system, bonus hours are credited to the employee in the production of time 
taken which time saved bears to time allowed. Jobs 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, you are required to calculate for each employee: 
(a) The bonus hours and amount of bonus earned; 
(b) Total wage cost; 
(c) The wage cost of each good unit produced. 
 
 
Solution: 
 
 
 
Problems no. 4  
 
ABC Ltd. is having 400 workers at the beginning of the year and 500 workers at the end of the 
year. During the year 20 workers were discharged and 15 workers left the organization. During 
the year the company has recruited 65 workers. Of these, 18 workers were recruited in the 
vacancies of those leaving, while the rest were engaged for an expansion scheme. What is the 
labour turnover rate under separation method ?  
 
Solution: 
 
Average number of workers = (400 + 500)/2 = 450 Separation method = No. of separations 
during the period x 100 Average number of workers during the period = 20 + 15 x 100 450 = 
7.78% 
 
Problem No 5 . 
 
‘Under the Rowan Premium Bonus system, a less efficient worker can obtain same bonus as a 
highly efficient worker.’ Discuss with suitable examples.  
 
Solution 
Bonus under Rowan system = (Timeallowed/Timetaken)x time saved xrate per hour  
For example let time allowed for a job = 4 hours and Labour rate = Rs. 5 per hour.  
 
Case I : Less efficient worker 
If time taken = 3 hours  
Then time saved = 4 – 3 = 1 hour  
Bonus = (3 hours/ 4 hours)x 1hourx Rs.5=  Rs.3.75  
 
Case II : Highly efficient worker  
If time taken = 1 hour  
Then time saved = 4 – 1 = 3 hours  
Bonus = (1hour/ 4 hours )x 3 hours x Rs.5=  Rs.3.75  
So, it can be concluded that under Rowan System, the less efficient worker and highly efficient 
worker can get the same bonus. 
 
Problem No 6 . 
 Discuss the treatment of overtime premium in cost accounts. 
 
Solution  
Overtime premium is a part of total wages of overtime period. In cost accounting the treatment 
of overtime premium will be as follows:  
(i) If the overtime is resorted to at the desire of the customer, then the entire amount of overtime 
including overtime premium should be charged to the job directly.  
(ii) If it is due to a general pressure of work to increase the output, the premium as well as 
overtime wages may be charged to general overheads.  
(iii) If it is due to the negligence or delay of workers of a particular department, it may be 
charged to the concerned department.  
(iv) If it is due to circumstances beyond control, it may be charged to Costing Profit & Loss 
Account. 
 
 
Problem No 7 . 
 
In a unit, 10 men work as a group. When the production for the group exceeds the standard 
output of 200 pieces per hour, each man is paid an incentive for the excess production in addition 
to his wages at hourly rates. The incentive is at half the percentage, the excess production over