.

03. Labour Cost

Tntroduction

cost consistS oF abor

The n phase o pr oduction
Labor coSt Can be devided into 0 Par t ,
cOSt.

O Direct cost
Direct wages are those paid to

emploqees directly concern ed coith

Labor ma ou facturing the product

CoSt
E aSsem blers Sp r a e rs,

02. n direct CO t

The wages pcid ho u p port and

orga2ed production. These Cre

classfied aS r o d u c ti 0n OVer he qds,

SRcuri Eq of Gicer Salary

Bok keepers

Labour Time Record

Method

OIAtendance time | gate records

The emp loyeeS sings a a t t e n de nce reg iSter

bim sel u nder the supervi Sor Or O+her

by
responsi ble persop.

A+tendance recordd

Punch card

Token meth Od.

innn
 2. Actiuity time record

bow emploqee en9 age n _th octivi ty

activi.

ime sheet
o b ticket.

Meth ods of Remunera tion

O. Time Bas e
System

Accos ding9 to this metho d workers pay is not

related
to output. wor kers p ccidFOr actually 0oreing nd e
merel atteo di ng . t Can

Besed on Hours
Dumbe of bours xBaslc ra+e per hour
Based on days
Mumber of dayS * B así c
Ya te per day
Based on weelks
Namber of wee kS x B as C ra te
per week
High day rate Sy3tem

4 igb day rat Sustem 1s des

igned to provicde a
i ncentive by strong
paying rates Cell above normal
ote S neichange 0r ba Síc
abo ve ave rag e
.Until produc ti0 output & pesFormM
targe t
Flat rate system
Above target
Htgh dau ra te
sy stem. *

this ne\ps to
Siop inefficiepcy 4 en Cou rage the
to get better output, empo

innet
 92 Output base syStem

o Straig plece Sgs-tem

ageS Num ber units
8asIC rate per unit.

Eample ol
Piece a te PS
DPer plece
Number oF Pieceg rodUCe - So u i t s
Calcu la t e t e e a r i ngs in cupees.

wage S
Num ber of uni tS X B asic rate p er unit.
10

p s Soolz

eam ple o,
Pay Tatè per uoit
22
The employees ABC res pective ly produce 100,So S

unis per week. Calcula te t 0La earninq o above 3

emplbyees weekK.

2
SOX2 - 300
3 S
C
Total earni ng Ps 8solL

of XBasic rate Per

Wages Num ber
units unit
 DiEferent pi ece rate Sy Sttm
otoduCe variou
The mana9emed t tate
is.
Por variou5 output eve
NAAem

6mple
20 per uít
ay a e up to So uni tS
S per unr

30 per i .

l e a te ab outr C o t or s units

s 30)
(SuADo) (sox 3J)
x
LabaN OSt
+ So

Ps 2 7so/:

Labour Tuvnover

This s usuall epreCeed as a ra tio.

he hig h labour LUn oVor ra tes badly af fect to the
Organiationa| cativities
dosou mora e

Teduce produc tivity

ReasoOS For Labour Turnove

o dicatifaclon

03. a o Vomi
eIcOne arn eo men
 O a bOur urnover
Calca la + ion

L a b ouY tarnover Neo emploqee+le avers

Aerage number oF emplo yeos.

eavers
LabouT turnover 2 NoOF
To tal number of am ployees

Bonus Schemes

Saved time
TIme allowed Time La leen

+The determined *The time that Time Tme

SPet trul For aLllowed +d ken
time For certain|
certan actiVi t
actiui ty or
Or product
Produc4

O1. Halsey Bonus System CH8S

Personal Bonus 02. Hqlsey weiir bonus System CH wB

Sche mes
o3.ROwan Bonus System CReS)

inno
 Dale:../.

HB BS Saved time x 50 . ) x Rate per bour

H WBS (Saved timex 30y.) X Rate per hour

RBS Saved time k time ta ken x rate per hour

cllowed ime

Eaample
Rate per hour Ps 10
Tme taken 40 hrs Saved +ime 60-400
Tme allowed 60 hrS. 2
20

Calcula te bc Sic ear ning.

HBS (Saved me x Soy) x Rate per hrs

z C20x 5 o.) x
s 100/1

Basic Salarg

Basie Sa larg me talken x Rate per hour

40 X 10
Ps 400

ino
 a l ay Bonu e m

HBS (2oxso7.) xio

C SS Sa \ a r u slc Salary H&

4 O0 +100
RS S o l

ross salara 4lsey Qir bonus S s t e m

HW Bs o x 30y.) x 10

CroSs salary Basic salary H RS

400 + So

s 460

bon us SySte m
ROan
Gross salary

40x 10
2 0x

133.3

4 00 + 133.3
Gross Salary
es S333/

irunce
 Year I Semester 1
(2018/2019)
Marketing Management/ Eco Business Management
Faculty of Management Studies
Sabaragamuwa Unlversity of Sri Lanka
Lecturer: LD Kalyanl
MM/EBM 2153 Management Accountancy
Tutorial 02

Ruwan works in a factory where the following particulars apply:

Normal rate per hour Rs. 1.5

Normal piece rate 20% more of time ratee

Expected output 20 units per hour. Ruwan produces 157 units in a8 hours day. Calculate his wages for
the day on (i) Time basis and (i) Piece Basis

Time pase

Wag es Time Ch r rate Per nr

8 hrs IS
S 12/

Piece BaSe

S 1 /,
Piece rat e

hr - 20 uniie.

0 uniS 8

S IS 4 unts
X IS P 4.32

Uno
 Date ...../.../..nssno**

2 . The following data relate to A,B and C working in the factory ofSohan Singh:

Normal rate per

hours(0.80)
Hours worked by the workers
A 40 hrs
B 38hrs
C 45 hrs
The merit rating analysis shows the following efficiencies of the workers:
A 80%
B 110%
75%

In addition to the wages paid at the

adjusted normal rate (according to the efficiency rate of the
workers). A worker is entitled to dearnessallowance, as a percentage of his wages at the adjusted
based on cost of index
number. every For
increase of 3 points in index number (above 100
rate
dearness allowance is to be allowed. Cost of index number at points) 19%
present js 124 points.
Calculate the total wages of the workers
individually.

A
Normal Pate

Adlucted Ta te
O-64

NOrma wages O64 4-0 hrs

pS S

Dl alloance
24
raFe 3

/ allowange 2
2S.X97.
2.
.

Totel wages 5 6 + oS
es 2 b s /

ine
Adus ted Tate O.8 1O7. 2
UU
Norma wages . 88 X 38 hrs
S
33 4 4-

DaIl0wqnce 33 4 4 x)
RS 68

33 44 t 2.6
otal wage s
PS 36 2

Adus-ed rate o.8x7S/. 6

O. 6 x 4Shrs
Noma wageS

( 24/3 x
7)
Dlolloc ance
Ps 2.6/

2.16
21 t
1o4a wagec
RS 16/2

MATE
 Dalc

5. A worker is paid by different piece work. The scheme is as follows

Up to 50 units per day 50 cents per unit

51-70 units per day 60 cents per unit

71-80 units per day 65 cents per unit

81-100 units per day 70 cents per unit

uie daily output for a five day week were 58 units ,83 units 59
units 94 units & 47 units.
gross pay for the week. what will be his

tnitS Clcala tion

68 Csox o.So) +G8 xo:6)

3S.8

S3 (so xo S)+ Cao xot)+ Cio xo 6S)+ (3xa 45 6

2 6 S + 2.

soxO-S) o t ) 304
S S A

soxo-s)+Cooxo.t)+(9 xo.6s)+ C40-7) S33

S 6 S
t

4 4 oS) 23.5

Sal wages

SchoolMATE
 NO.
Date:

6. The following information is available

Normal working day 8 hours

Guaranted rule of pay (on time basis) Rs. 5.5 per hour
Standard time allowed to produced 1 unit minutes
Piecework price Rs. 0.1 per standard minute

Bonus -75% of time saved in addition to

hourly payY

Required for the following levels of output produced in one day

80 units, 120 units and 210 units

Calculate earning based on

i. Piecework where earnings are guaranteed at 80% of time based pay

i. Premium bonus system

mots
nitS Time ta ko Time aljoced | Saved
BonuS Wages
Sxbo 48o|(go x3) 40
9xS.s)
44
20
480 ox3) 360
(85 s)
Ox3)e 630 5 o31 .ss)
44

BonuS earni
ng 2
C1solb0)xSsx S7.
0 31

Guarqnted wage s. 2
8 XS S) Xx 8o).
3S.2 -less han gaar

wage

farnt ngs
Cuerqn ted wagLS
80 So X 3 X O 34 |So we netd to pay 3:22
20 120 X3 X 0.J
36
310 210 X3 X O- 63

SchoolMATE
 Date: LI

workers engaged in the

7. Three

process of Nila Co.Ltd

production
week is 40 hours
Normal working
at basic time rate plus one and half
Overtime is paid

calculated for 50% of time saved in at the rate of hourly pay

Ronus is

levels of output produces in one week

Following are the
Nimal Sunil Rangith
300 400 360
Output(units) T
Standard time allowed

to produce one unit

minutes 15 300 bo 10x yoo o Dozen for one hour

60 hours 50 2/3 hours 45 hours

Time taken

Basichourly rate of pay Rs.1hours and overtime payments,

Required calculate; 1. Bonus Earnings 2. Total overtime hours and

4. Basic salary 5. Gross Salary

3. Total overtime Earnings

Nimal Suoil Rangith

7Shrs o x400) 66+hre360 z30 hrs
ime allowed (1SS Y300) 2
b0
0

S o 2/2 hrs 4S hrss

|me takon 60 hrs

L6 hrs
OBonus hrs S hrs

15So.) x (16 X50y YI)

a
Bonus
earoiogS

40 hrs
4 0 hrs
Nor mal time |
49 hrs
66 hrs
So 2/3 hrs
Tme + aFen

OT 20
SchoolvATE
 Date
NO.

Over time 30 XI. s 30 1o /3 YS - 16|SX

hrs

0T Earnng 30 yI (30

40 XI z 40 4 0 XIz 40 40 X 40
Basic
Salary
+0T 30

Bonus 7S
64
Total wages 47.5

SchociMATE
Outpu
t Base System

wages Nuber of X Basic rote

uDits
per upit

ime Base System

Wages Number oF
Basic rate per
hrs days |weeks hr day Iweek

Labour urn over

Labour Turoover Neu eoployee+ eavers

Average number of emp lo yee

Bonus

ime 5o'l )X rate per hour

HBS (Saved x

rate hour
HWBS Saved timex 30) x per

R6S Saved Aime x ime taken x Rate per houv

alowed time