1.

RCW operates a bonus scheme based on time saved against a predetermined time
allowance for actual output. In week 6, an operative produced 750 units of ‘R’ in 32
hours. The standard allowance is 20 units of ‘R’ per hour. The time saved by this
employee in Week 6 on ’R’ production was;
a) 6.50
b) 4.75
c) 5.50
d) 5.90

2. Gross wages incurred in a cost center for the month of January showed;
$
Ordinary time Direct employees 27,500
Indirect employees 6,500
Overtime Direct employees
Basic 4,500
Premium 2,250
Special conditions Direct employs 1,300
allowance
Indirect employees 450
Shift allowance Direct employees 2,000
Sick pay Direct employees 750
The direct wages for January would be;
a) $27,500
b) $28,800
c) $32,000
d) $34,250

3. H&H operates an incentive scheme based on differential piecework. Employees are paid
on the following basis;
Weekly output up to 600 units - $0.40 per unit
601–650units - $0.50 per unit
650 units + - $0.75 per unit
With only the additional units qualifying for the higher rates. This is paid only upon
production meeting quality standards. In Week 17, an employee produced 660 goods
units. The gross pay for the week would be:
a) 260.40
b) 272.50
c) 325.75
d) 488.25

4. H&H employed on average 55 employees during the year. There had been 8 leavers all
of whom were replaced. The company’s labor turnover ratio was;
a) 7.30%
b) 8.50%
c) 14.55%
d) 17.00%

5. Which of the following method of remuneration is not an incentive-based scheme?

a) Straight piece work
b) High day rate
c) Group bonus
d) Differential piece work
6. Which of the following relates to the cost of replacing labor due to high employee
turnover?
a) Improving working conditions
b) Suffering the learning curve effect
c) Provision of a pension
d) Provision of welfare services

7. The following information relates to small production unit during a period;

Budgeted hours 9,500 Hours
Actual hours worked 9,200 Hours
Standard hours of work produced 9,300 Hours
What is the efficiency ratio for the period to the nearest 1%?
a) 97%
b) 98%
c) 99%
d) 101%

8. A job is budgeted to require 3,300 productive hours after incurring 25% idle time. If the
total labor cost budgeted for the job is $36,300, what is the labor cost per hour?
a) $8.25
b) $8.80
c) $11.00
d) $13.75

9. Which one of the following would be classified as direct labor?

a) Personnel manager in a company servicing car.
b) Bricklayer in a construction company
c) General manager in a DIY shop
d) Maintenance manager in a company producing cameras

10. Employee A is a carpenter and normally works 36 hours per week. The standard rate of
pay is $6.60 per hour. A premium of 50% of the basic hourly rate is paid for all overtime
hours worked. During the last week of October. Employee A worked for 42 hours. The
overtime hours worked were for the following reasons
Machine breakdown; 4 hours
To complete a special job at the request of the customer; 2 hours
How much of Employee A’s earnings for the last week of October would have been
treated as direct wages?
a) $237.60
b) $257.40
c) $277.20
d) $283.80

11. Which of the following statements is correct?

a) Idle time cannot be controlled because it is always due to external factors
b) Idle time is always controlled because it is due to internal factors
c) Idle time is always due to inefficient production staff
d) Idle time is not always the fault of production staff

12. A company makes a product for which the standard labor time is 2 hours per unit. The
budgeted production hours for a given week were 820. During the week production staff
were able to produce 380 units of product. Staff worked and were paid for 800 hours.
 During the week, 20 production hours were lost due to a shortage of material. The
efficiency ratio was therefore;
a) 95.00%
b) 95.12%
c) 97.44%
d) 97.50%

13. A company has calculated that its activity ratio is 103.5% and that its efficiency ratio is
90%. Therefore, its capacity ratio will be;
a) 86.96%
b) 9315%
c) 115.00%
d) 193.50%

14. A company operates a piecework scheme to pay its staff. The staff received $0.20 for
each unit produced. However, the company guarantees that every member of staff
receives at least $15 per day. Shown below is the number of units produced by Operator
A during a recent week:
Day Monday Tuesday Wednesday Thursday Friday
Units produced 90 70 75 60 90
What are Operator A’s earnings for the week?
a) $75.00
b) $77.00
c) $81.00
d) $152.00

15. A company employs 20 direct production operatives and 10 indirect staff in its
manufacturing department. The normal operating hours for all employees are 38 hours
per week and all staff are paid $5 per hour. Overtime hours are paid at the basic rate
plus 50%. During a particular week all employees worked for 44 hours. What amount
would be charged to production overhead?
a) $2,650
b) $2,350
c) $450
d) $300

16. Which of the following would be classified as an overhead?

a) Overtime premium when the overtime was worked at the costumer’s request
b) Overtime premium when the overtime worked was because of a machine breakdown
c) Payments to staff on a piecework scheme
d) The basic pay relating to overtime hours

17. A company pays direct operatives a basic wage of $8.50 per hour plus a productivity
bonus. The bonus is calculated as:
[(Time allowed – Time take) X (Basic rate per hour / 3)]
The time allowed is 2.4 minutes per unit of output. An operative produced 1,065 units in
a 37½ hour week. What were the total earnings of the operative in the week?
a) $318.75
b) $333.20
c) $340.40
d) $362.10
18. A differential piecework scheme has a basic rate of $0.50 per unit. Output in addition
to 500 units is paid at higher rates. The premiums over and above the basic rate,
which apply only to additional units over the previous threshold, are:
Output (units) Premium (per unit)
501–600 $0.05
Above 600 $0.10
What is the total amount paid if output is 620 units?
a) $317
b) $318
c) $322
d) $372

19. Labor costs may include;

1. Overtime hours of direct operative at basic rate
2. Overtime premiums of factory employees
3. Productive time of direct operatives
4. Training of direct operatives
Which of the above items will usually be treated as a direct cost?
a) 1 and 2
b) 1 and 3
c) 2 and 4
d) 1, 2 and 4

20. Which of the following labour records may be used to allocate costs to the various
cost units in a factory?
1. Employee record card
2. Attendance record card
3. Time sheet
4. Job card
a) 1 and 2
b) 2, 3 and 4
c) 2 and 3
d) 3 and 4

21. How is the activity (production volume) ratio calculated?

a) Actual hours / budgeted hours
b) Budgeted hours / actual hours
c) Standard hours for actual output / actual hours
d) Standard hours for actual output / budgeted hours

22. Which of the following may be used to support claims for overtime payments for
salaries staff?
a) Employees record cards
b) Job cards
c) Pay slips
d) Timesheets

23. The gross wages of the direct operatives in a production cost centre for a period are
analyzed as follows;
 Direct operatives ($)
Productive hours at basic rate 37,640
Overtime premium 2,440
Idle time 590
Group bonuses 3,130
How much of the gross wages would normally be accounted for as direct labour?
a) $37,640
b) $40,080
c) $40,670
d) $43,210

24. An incentive scheme is in operation for each direct worker in a factory. The basic rate
of pay is $8 per hour for an 8-hour day with a bonus if hours worked are less than the
standard hours for the output achieved. The bonus is 50% of the time saved against
standard, paid at the basic rate. A single product is manufactured and the standard
time is 10 minutes per unit. What is the bonus for a worker who manufacturer 60
units in an 8-hours day?
a) $0
b) $4
c) $8
d) $16

25. The following data relates to production activity in a cost centre for a period:
Budget Actual
Output (units) 9,600 9,4 00
Labor (hours) 2,400 2,320
What was the efficiency ratio in the period (to one decimal place)?
a) $96.7%
b) $97.9%
c) $98.7%
d) $101.3%

26. Which of the following are aspects of payroll systems?

1. Attendance records
2. Calculation of bonuses
3. Employee tax codes
4. Apportionment of wages to cost centers
a) 1, 2 and 3 only
b) 2, 3 and 4 only
c) 1, 2 and 4 only
d) All four items

27. The direct labor capacity ratio for a period was 104%. What could have caused this?
a) Actual hours worked being greater than budgeted hours
b) Actual hours worked being less than budgeted hours
c) Standard time for actual output being greater than budgeted hours
d) Standard time for actual output being less than budgeted hours