SOLUTIONS TO ASSIGNMENT PROBLEMS. Problem No. 1. Time taken (or) Actual time (Note) Problem No. 2

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1 Ph: /26 4. LABOUR-I SOLUTIONS TO ASSIGNMENT PROBLEMS Problem No. 1 Time taken (or) Actual time (Note) Standard out put Actual out put Rate per hour Standard time for 10 units Standard time for 0 units( Time saved (S-T) 0 units x1hour ) 10 units Earnings of worker Wage = time taken x rate per hour= Hrs x 0.5 Bonus = 40% of time saved = (10 Hrs x 40%) x 0.5 Hrs 638 units 0 units Rs Hour hours = - = 10 Hours = Rs.25 = Rs.2 Rs.27 Effective rate of earnings =( Earnings 27 = ) Time taken = Rs.0.54 Note: Time taken: Monday Tuesday Wednesday Thursday Saturday 9 Hrs 9 Hrs 9 Hrs 9 Hrs 5 Hrs Hrs Problem No. 2 Statement showing computation of effective hourly cost of employee X (i) Earning of Employee X : Per month Per annum Basic pay 1,000 12,000 Dearness Allowance 200 2,400 Bonus 240 2,880 Employer s contribution to provident fund (similar to employee s contribution) 120 1,440 Other allowance 2 3,000 1,810 21,720 IPCC_34e_Costing_ Labour-I_Assignment Solutions 16

2 No.1 for CA/CWA & MEC/CEC MASTER MINDS (ii) Effective working hours : Particulars Amount Annual working hours 2,400 Less : Normal idle time 400 Effective working hours 2,000 Effective hourly cost of X : Rs. 21,720/2, Problem No. 3 a. Statement showing calculation of total burdento the employer and the net wages payable to the employee. Particulars Total A B C D 1. Gross wages (+) employer contribution to EPF(10% of wages) (+)employer contribution to ESI(5% of wages) Wages chargeable to job Employee contribution to PF Employee contribution to ESI Net wages payable to employee(1-2-3) b. Total amount deposited by the employer in PF = 191 Total amount deposited by the employee in PF = c. Total amount deposited by the employer in ESI = 95.5 Total amount deposited by the employee in ESI = d. Calculation of total cost of job: Direct material 00 Direct labour 21.5 Direct expenses -- Prime cost 81.5 (+)over head Total cost of job 12, Problem No. 4 Particulars Y Z a) Actual production 7 9 b) Piece work rate 1/- 1/- c) Wages 7/- 9/- d) Dearness 200/- 200/- e) % on bonus 75% 95% f) Amount on bonus - 7/- g) Total monthly remuneration (c+d+f) 9/- 1900/- IPCC_34e_Costing_ Labour-I_Assignment Solutions 17

3 Ph: /26 Problem No. 5 Given, a) AT taken = 6 hrs b) = 8 hrs c) T. S(b-a) = 2 hrs d) Rate per hour = ` 6 Copy Rights Reserved To MASTER MINDS, Guntur Calculation of total earnings: Earnings under halsey system = (T X R) + ½ (T. S X R) = 6 hrs. `6 + 1/2 (2 hrs. ` 6) = ` 36 + `6 = ` 42 T.S Earnings under rowan system = ( T XR) + (T XR) = (6 X 6) +2/8 (6 X 6) = 36+9 = 45 Problem No. 6 a) Earnings as per Rowan = Time taken x Rate / H + = 5 x x 5 x = = 700 T.Earnings Earnings per hours = = actualtime TimeSaved 700 = Rs.140/h 5 x TT x R/H T.Earnings b) Halsey Earning/ h = Actualhours T. Earnings = Earnings per hour x Actual hours T. Earnings = 140 x A.T T. Earnings = 140AT T. Earnings = AT x R/H + ½ TS (ST AT) x R/H 140 AT = AT x ½ (6 AT) x AT = 120AT + 3 AT 80AT = 3 3 AT = In order to maintain same earnings per hour as in Rowan, in Halsey Scheme, the worker should complete the job in 4.5 hours Problem No Calculation of wages undeer extra output basis: Given standard time for 80 units = 1hr No.of hrs per day = 8hrs Therefore standard production per day = 8hrs X 80units = 640units Actual production = 800 units IPCC_34e_Costing_ Labour-I_Assignment Solutions 18

4 No.1 for CA/CWA & MEC/CEC MASTER MINDS Extra output = = 1 units 100units Rs.15 Bonus = 24 1units? Wage earnings = Therefore labour cost for 100 units = X100 = Rs Calculation of wages under straight work basis: No. of hrs per day = 8hrs Wages per day = Rs. Wages per hour = = Rs.6.25 per hour Standard production for one hour = 80 units 6.25 Therefore piece rate = = Rs per unit 80units Earnings = 800 units X = Rs.62. Labour cost of 100 units = 100 units X = Rs.7.80 Copy Rights Reserved To MASTER MINDS, Guntur 3. Calculation of earnings under halsey system: a. Given actual time = 8 hours 1hour 80units b. Standard time = 10 hours? 800units c. Total time saved (b-a) = 2 hours. Earnings = (T X R)+1/2(T X R) = (8 X 6.25) + ½ (2 X 6.25) Labour cost for 100 units = X100 = Rs = Rs Calculation of earnings under rowan system: T.S Earnings = (T X R) + (T XR) =(8 X 6.25) + 2/10(8 X 6.25) = Rs. Labour cost of 100 units = /80 X 100 = Rs.7. Problem No. 8 Given Rate per hour = Rs. 0.4 per unit, Piece rate = Rs. 0.3 per unit, Standard production per hour = 2 units Time taken = 40 hours Standard production for 40 hours = 80 units (40 X 2) Actual production for 40 hours (X) = units (Y) = 80 units Particulars 1. Earnings (W.N 1) Taylor Differential Merrick Differential Piece Rate Piece Rate Gantt s Task X Y X Y X Y ( % 80) (0.3 ) ( % 80) (40 0.4) (0.3 83% ) 19.2 [16+(16 20%)] IPCC_34e_Costing_ Labour-I_Assignment Solutions 19

5 Ph: /26 2. Cost per piece ( ) ( ) ( ) ( ) 80 ( ) 80 ( ) 80 W.N - 1: Efficiency = Actual production Standard production 80 ; X = = 62.5%; Y = = 100% Given that, Time taken (T) = 8 hours Standard output per hour = 5 units Standard output for 8 hours = 40 units Rate per hour = Rs Actual output (X) = 25 units Actual output (Y) = 40 units Problem No. 9 Copy Rights Reserved To MASTER MINDS, Guntur Efficiency = Earnings Calculation of earnings and bonus under Emersion s system of plan Particulars Worker A Worker B Actual Production % % 100 Standard Production (8 X 6.25) + ( x 20%) Note- 1: Worker A has < 66.67% efficiency, therefore he get only time rate wages. Note- 2: Worker B has 100% efficiency, therefore he get 120% of time rate wages. Problem No. 10 (i) Rowan Premium Plan: Rowan Premium Plan ` Normal wages (10 x 120) 1,200 D.A. for 15 days (30 x 15 ) 4 Bonus : T.S Hours Bonus hours XT 1 Bonus (24 x 10) 240 Total Wages 1890 (ii) Emersion`s Efficiency Plan Normal Wages: Normal wages 1200 D.A. (15 x 30) 4 1 Efficiency %= x100 = 125% 120 Rate of Bonus up to 100% 20% From 101% to 125% 25% 45% IPCC_34e_Costing_ Labour-I_Assignment Solutions 20

6 No.1 for CA/CWA & MEC/CEC MASTER MINDS Bonus being 45% normal wages( x1200 ) 100 Total Wages 2190 Daily wages Incentive system Problem No. 11 Statement showing earning of workers A, B & C Workers A B C Standard output units (8h x 2units x 6days) units (8h x 2units x 6days) units Actual output 132 units 108 units units Efficiency (%) x100 x100 x100 = 137. = 112. = 100 Rs.3 Emerson s efficiency system Rs.3 Merrick Differential price rate system Rs.3 Taylor s differential piece work system Rate of Bonus 57.5% of time rate (20% to 37.5%) 20% of ordinary price rate 25% of ordinary price rate Effective wage rate Total weekly earnings per hour 3 x157.5% 8 Rs.3402 (8 h x 6 days x ) 27 per piece 3 x120% 16 Rs.2916 (108 units x 27) per piece 3 x125% 16 Rs.2700 ( units x ) Problem No. 12 Given Information Vishnu (Rowan) Shiva (Halses a) 100h 100h b) A.T h 80h c) T.S (a b) 40h 20h d) 10/hr Rs.0 Rs.800 (b x 10) e) W.C / F.O Rs.7,280 Rs.7,0 Let R be Rate/ hr & M be DM cost Given Vishnu is being paid under Rowan system T.S Earnings = (T x R) + (TxR) 40 = ( x R) + (xr) 100 = 84 R & shiva is being paid under Halsey system Earnings = (T x R) + ½(T.S x R) = (80 x R) + ½ (20 x R) = 90R Given, Factory cost of Vishnu polt = 7,280 IPCC_34e_Costing_ Labour-I_Assignment Solutions 21

7 Ph: /26 DM + DL + FOH = 7,280 M + 84R + 0 = 7,280 M + 84R = 6, & Factory cost of shiva s polt = 7,0 M + 90R = 7,0 M + 90R = 6, By solving eq. 1 & 2 M + 84R = 6,680 M + 90R = 6,800 (-) (-) (-) - 6R = R = 6 R = 20 By substituting R in eq. 1 M + 84 (20) = 6,680 = M + 1,680 = 6,680 = M = 00 Problem No. 13 Given Standard time (S) = 90 hours. Rate per hour (R) = Given effective rate of earnings = Earnings(E) = Time taken(t) Earnings = T We know that T.S Earnings = ( T XR) + (T XR) T = T () + ( 90 T ) T 90 T T 90 T = T 90 = 18 = 90 T T = =72 10T 90 T = T 90 Copy Rights Reserved To MASTER MINDS, Guntur Halsay system: E = TR + 40% (TS)R = 72 X + 40% (18) = = 39 IPCC_34e_Costing_ Labour-I_Assignment Solutions 22

8 No.1 for CA/CWA & MEC/CEC MASTER MINDS ERE= 39/72 = 55. No of units produced Standard time/ Pu S.H for A.P Actual time Time saved (ST AT) Problem No. 14 Particulars Margaret Jennifer 30 2 (30 x 2) a) Calculation of loss incurred due to incorrect rate selection: (42 x 2) Particulars Margaret Jennifer Basic wages Bonus (as per halsey) 140 (28 x 5) 80 (32 x % 5) (44 x % x 5) Excess wages paid = 530 ( ) b) Amount of loss if rowan scheme of bonus payment: Particulars Margaret Jennifer Basic wages Bonus 140 (28h x 5) (40 x 5) x32x5 x44x5 84 Excess wage paid = c) Calculation of amount that could have been saved if Rowan scheme were followed: Particulars Margaret Jennifer Wages as per Halsey Wages as per Rowan Difference(savings) d) Rowan scheme of incentive payment has the following benefits, which is suitable with the nature of business in which Jigyasa Boutique LLP operates: Under Rowan scheme of bonus payment, workers can t increase their earnings (or) bonus by merely increasing its work speed. Bonus under Rowan scheme is maximum when the time taken by a worker in a job is half of the time allowed. As this fact is known to the workers, therefore they work at such a speed which helps them to maintain the quality of output too. If the rate setting department commits any mistake in setting standards for time to be taken to complete the works, the loss incurred will be relatively low. Problem No. 15 Statement showing calculation of good unit, bonus and earnings IPCC_34e_Costing_ Labour-I_Assignment Solutions 23

9 Ph: /26 Particulars X Y 1. Production 2. Standard Time per unit 189 units 20 Min (1)x(2) 63 hrs 3. Standard Time 45 hrs 4. Actual Time 18 hrs 5. Time saved (3)-(4) 2 6. Rate per hour 7. Wages (Normal) 84 (42 2) 12 (3 4) 8. Wages (Over Time) Bonus (Over Time) [(5) X (6)] X % Earnings ( ) Rejections 12. Good units (1) - (11) Wage cost per good unit units 15 Min 51 hrs 39 hrs 12 hrs 2 84 ( x2) ( ) 200 In case of Y, wage cost per good units is calculated only for this job only i.e. only Rs. 90 are taken as his earnings. Problem No. 16 a) Computation of wages of each worker (guarantee wages) Worker Actual hours worked (A) R/H (B) Wages C = A x B I II III b) Computation of wages of each worker under price work earning basis Product A B C Rate / P.U 15(15/1) 20 (20/1) 30 (30/1) Worker I Worker II Worker III Unit Wages Unit Wages Unit Wages c) Statement showing T. Earnings [Rowan scheme] Worker Time Allowed Time Taken Time Saved I x x x R/H 40 Earning (a) TT ST Bonus (b) 8 xttxc / H T. Earnings c = a +b 1 II III THE END IPCC_34e_Costing_ Labour-I_Assignment Solutions 24

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