Labour accounting

Given: units produced = 300; standard time per unit = 5 hours; wage rate = Rs 60 per hour.

Standard time for the output = 300 × 5 = 1,500 hours

$\text{Wages (on standard time)} = 1{,}500 \times 60 = \text{Rs } 90{,}000$

The question does not give the actual time taken or a bonus plan (Halsey, Rowan etc.), so the wages are taken as standard hours at the hourly rate: Rs 90,000.

Given:

• Time allowed for 80 units = 2 hours
• Output produced = 400 units
• Wage rate per hour = Rs. 800

Time allowed for 400 units: $\text{Time allowed} = \frac{2}{80} \times 400 = 10 \text{ hours}$

Wages: $\text{Wages} = 10 \times 800 = \text{Rs. 8,000}$

Therefore, wages of the worker = Rs. 8,000.

A time card is a record maintained for each worker showing the time of arrival and departure from the factory or workplace, used to compute the total hours worked and wages due.

Given: output = 400 units a week; normal output = 10 units per hour; wage rate = Rs 50 per hour.

Time needed at normal rate:

$\text{Time} = \frac{400}{10} = 40 \text{ hours}$

$\text{Earning} = 40 \times \text{Rs } 50 = \text{Rs } 2{,}000$

The worker's earning for the week is Rs 2,000.

A job card is a document used in cost accounting to record the time spent by a worker on a particular job or production order. It shows details such as the worker’s name, job number, date, time spent, and wage rate, and is used to compute and allocate direct labour cost to that job.

Given: standard time per unit = 4 hours; wage rate = Rs 400 per unit; hours worked = 200.

Units produced = 200 ÷ 4 = 50 units

$\text{Total wages} = 50 \times 400 = \text{Rs } 20{,}000$

Total wages of the worker = Rs 20,000.

Two advantages of the time rate system of wage payment:

1. Guaranteed income — a worker is assured of a fixed wage for the time spent at work, regardless of output, which gives a sense of security.
2. Simple and economical — wages are easy to compute (hours worked × rate per hour) and need little clerical work and record-keeping.

Given:

• Hourly production (standard) = 4 units
• Hourly wage rate = Rs. 200
• Total production = 800 units

Working: $\text{Time taken} = \frac{\text{Total production}}{\text{Hourly production}} = \frac{800}{4} = 200 \text{ hours}$

Total wages payable: $\text{Total wages} = \text{Time taken} \times \text{Wage rate} = 200 \times 200 = \text{Rs. } 40,000$

Total wages payable = Rs. 40,000

A system of wage payment in which a worker is paid a fixed rate for each unit of output produced, irrespective of the time taken.

Under the piece rate system, wages are calculated as:

$\text{Wages} = \text{Rate per unit} \times \text{Units produced}$

For example, if the rate is Rs 5 per unit and a worker produces 200 units, the wages will be Rs 5 × 200 = Rs 1,000.

Given: 30 units take 3 hours; output = 500 units; wage rate = Rs 600 per hour.

Time allowed for 500 units:

$\frac{3}{30} \times 500 = 50 \text{ hours}$

$\text{Monthly wages} = 50 \times 600 = \text{Rs } 30{,}000$

Monthly wages of the worker = Rs 30,000.

Labour cost is the amount paid by an organisation to its workers or employees in the form of wages, salaries, bonuses, and other benefits in return for the work they perform. It is a major element of cost and is classified as direct labour cost (traceable to a specific product) and indirect labour cost (not traceable to a specific product).

1. There is no reward for efficient workers, because pay is the same for fast and slow workers, so the workers have little incentive to raise output.
2. Close supervision is needed to prevent idle time, and the labour cost per unit is hard to fix because it changes with output.

Total standard hours = $200 \text{ units} \times 4 \text{ hours} = 800$ hours.

$\text{Total wages} = 800 \times \text{Rs } 80 = \text{Rs } 64{,}000$

The worker is paid for the standard time allowed for the output, at Rs 80 per hour.

Two advantages of the time wage system:

1. Assured regular income — workers are paid for the time they work, so earnings are stable and they are not forced to rush, which helps quality.
2. Simple and economical — calculation is easy (hours worked × rate per hour) and little record-keeping is needed.