Unit - 4 Labour accounting - Meaning, Methods of Remuneration, Incentive Plans, Non-monetary incentives Control systems and procedures- Treatment of Idle time, Leave with pay, Holiday with pay, Profit sharing Bonus Labour Turnover: (1). Separation Method = Workers left + Discharged / Average No. x 100 (2). Replacement Method = Workers replaced / Average No. x 100 (3). Flux Rate = Separations + Accessions / Average No. x 100 -------------------------------------------------------------------------------------------------------------------------------1. From the following data given by the personnel department, calculate the Labour Turnover rate by applying: (a). Separation Method; (b). Replacement Method and (c). Flux Method No. of Workers on the payroll: At the beginning of the Year – 900; At the end of the year – 1100 During the month, 10 workers left, 40 persons were discharged and 150 workers were recruited. Of these, 25 workers are recruited in the several of those leaving, while the rest were engaged for an expansion scheme. 2. X Ltd provides the following information: No. of employees on 1.1.2011 No. of employees on 31.12.2011 No. of employees resigned No. of employees discharged No. of employees replaced Calculate Labour Turnover rate. - 5,000 - 6,000 - 500 - 130 - 450 3. From the following information, calculate labour turnover rate: No. of Workers as on 01.01.2000 = 7,600 DIRECT Direct expenses, Pricing of AND Over INDIRECT heads indirect - Allocation, EXPENSES expenses Apportionment, - Material cost, Absorption Labour Cost (T1: and 9.37 Overheads to 9.50) (T2: 1.23 to 1.26) 80 workers left while 320 workers were discharged. Time Rate – Rs. Standard Time (or Allowed Time) = 50 hours Wage rate per hour = Rs.400 During the year. of Workers as on 31. From the following.4. 3 per unit. Calculate the earnings of a worker under (i) Halsey Plan and (ii) Rowan Plan from the following particulars . 1500 workers were recruited during the year of which 300 workers were recruited because of exits and the rest were recruited in accordance with expansion plans. Worker A has produced 500 units in 40 hours and Worker B has produced 450 units 42 hours. Calculate their Time Rate Wages and Piece Rate Wages. Halsey and Rowan Bonus Plan 1.20 per hour and Piece Rate – Rs. Time rate per hour is Rs. Calculate the total earnings per hour worked under (i) Halsey Plan and (ii) Rowan Plan. 4.2 Time Taken = 6 hours 3. Methods of Remuneration Time and Piece Rate 1.5 and Piece rate per unit is Re.3 Actual time taken = 42 hours Calculate Earnings under Halsey and Rowan Plan 2. The standard time allowed for a job is 50 hours.0. Calculate Time Rate and Piece Rate Earnings of Worker A and Worker B. In a manufacturing organization worker X and worker Y produced 80 units and 92 units respectively within the 8 hours and 9 hours in a day. calculate earnings of the worker under: (i) Halsey Plan and (ii) Rowan Plan Standard Time = 10 hours Hourly rate = Rs.25 per hour worked.50.2000 = 8.12.No. 2. The actual time taken by the worker is 40 hours. The hourly rate of wages is Rs. 400 = Rs.200 = 650. Halsey Plan.10 per hour plus a dearness allowance of Rs. Hourly rate of wages guaranteed Re. (b).15 per hour = Rs.17 per hour Halsey Plan Basic. Earnings per hour= 650/40 = Rs. (b).25 per hour = Rs. 200 = Rs. Halsey Plan and (d). Rowan Plan. Actual time taken by the worker to produce 20 dozen articles – 48 hours 5. 50 = Rs.0.200 = Rs. Earnings per hour = 600/40 = Rs. Piece Rate Method. The actual time taken by the worker was 40 hours.Rs.400 = Rs.700. Standard time for producing one dozen articles – 3 hours (c).400 = Rs.5 per hour Dearness Allowance Re. Time Basis.50 per hour = Rs.1 per hour Standard hours – 80 hours Actual Hours – 50 hours 6. 80 = Rs. (c). The hourly rate of wage is Rs. (d). Compute the earnings of a worker under the: (a). 600.50 paise per hour (b).10) DA Total Earnings .16.40 x 10 Bonus (50 % of 10 hours x Rs. Standard time allowed for a job is 50 hours. Calculate total wages on: (a).200 = Rs.5 per hour worked. (c). Rowan Plan Information given: Wage rate . Piece Basis. Earnings per hour = 680/40 = Rs.10) DA Total Earnings Rowan Plan Basic Bonus(10/50 x 40 hrs x Rs. Time Basis: Basic – 40 x 10 DA – 40 x 5 Total Earnings Piece Basis: Basic – 50 x 10 DA – 40 x 5 Total Earnings = Rs.17.500 = Rs.(a). Earnings per hour = 700/40 = Rs. Time Rate Method.680. Actual Performance: X produced 80 units in a day of 10 hours Y produced 110 units in a day of 10 hours.50 Low piece rate = 0.000 units per day. 5 per unit Higher rate = Rs. On the basis of the following information.50 x 1. calculate the earnings of X and Y under the Straight Piece Rate System and Taylor’s Differential Piece Rate System: Standard Production = 10 units per hour Normal time rate = Rs.40 High piece rate = 0. Calculate Earnings of Worker X and Worker Y with the help of Taylor’ piece rate system. .5 / 10 units = 0.5 per hour Differential Piece rate to be applied: 80 % of piece rate for below standard performance 120 % of piece rate for performance at or above the standard. Ans: 1 unit = Rs.2.8.75 per unit Worker X Produces = 7 units per hour Worker Y Produces = 9 units per hour 2. 4. Taylor’s Differential Piece Rate System: 1.20 = 0.80 = 0.60 3.Differential Piece Rate System: (a).40 = 30 seconds Differential Piece rate to be applied: 80 % of piece rate for below standard performance 120 % of piece rate for above standard performance Worker A produces 800 units per day and B produces 1. On the basis of the following information calculate the earnings of A and B on the Straight price rate basis and Taylor’s differential piece rate system. Calculate the earnings of workers A & B under (a) Straight piece rate system and (b) Taylor’s differential piece rate system from the following particulars: Normal rate per hour Standard Time per unit = Rs.50 x 0. Standard Production = 8 units per hours Working hours per day = 8 hours Lower rate = Rs. Re.2 120% 0.44 D 12 Units 96 units 100 100/96 = 104.20 per unit Output of A – 100 units.66 96 x 0. Standard output .36 C 12 Units 96 units 84 84/96 = 87.0.40 per hour Differential to be applied:80% of piece rate below standard 120% of piece rate at or above standard.100 units 2. A produces 54 units and B products 75 units. 3.96 units . In a 9 hour day.4 B 12 Units 96 units 96 96/96 = 100% 110% 0.66 84 x 0.Rs.66 55.60 . B – 135 units and C-180 units Calculate the earnings of A.B and C under Straight Piece rate system and Merrick’s differential piece rate system from the following particulars: .72 72.00 .60 38.150 units per day of 8 hours Piece rate . On the basis of the following information calculate the earnings of A.0.66 63. Merrick Differential Piece Rate System: 1.B.Standard Production Normal time rate .5% 110 % 0.C and D under Merrick Differential Piece Rate System: Standard Production per hour Normal rate per unit In an 8 hour day: A produced B produced C produced D produced Ans: Standard Production per hour Standard production per day of 8 hours ( 8 hours x 12 units) Actual Efficiency Piece Rate Applicable Total Earnings A 12 Units 96 units 64 64/96 = 66. 0.64 units . Calculate the earnings of workers A.Re.60 64 x 0.7% Normal 0.B and C workers under Merrick’s differential piece rate system.12 units .8 units per hour .72 100 x 0.84 units . 40/60 units = 0.Rs. and C.Normal rate per hour .e.5.09 Standard output per day of 8 hours = 60 units x 8 hours = 480 units . 60 units per hour) Working hours per day .5.600 units Hint: Wage rate per unit = Rs.. B – 450 units.8 hours Output per day is as follows: A – 390 units.40 Standard time per unit .1 minute (i. . profit bonus. Methods of labour remuneration Time rate system Under this system. E. Its cost cannot easily be allocated or identified. watchmen etc.g. daily. medical facilities. weekly or monthly. a) Monetary benefits : It includes basic wages dearness allowance. storekeeper. pension. Indirect Labour : It is the labour which indirectly helps the direct labour engaged in production.Labour Cost It includes the following items of expenditure incurred on workers by the employer. retirement gratuity. Scheme.. . subsidized education to their children. production bonus. The cost of this labour will be included in the overhead. b) Fringe benefits : It includes subsidized food and housing to the workers.I. product or process. 2) Time rate at high levels : under this system. holidays. wages are paid at a rate on the basis of time irrespective of the work done by the worker.S. It can be easily allocated to a particular job. a time rate which is higher than the rate prevailing in that area or industry is adopted to provide an incentive to the workers. wages are fixed and paid to the workers on the basis of time which may be hourly. pay and recreational facilities. This may be applied under the following methods : 1) Time rates at ordinary levels : Under this system. employer’s contribution to provident fund and E. Types of labour Direct labour : It is the labour directly engaged in the production of goods. The cost of this labour forms part of prime cost. (Wages = Time Taken x Time rate). supervisors. 3) Graduated time rate : Under this method the wages rate may vary according to the changes in the cost of living index. .