Employee Cost

1. The following information is available about a work process:

2. Calculate the labour hour rate for a worker ‘X’ from the following data:
Basic Pay Rs. 200 p.m.
D.A. Rs. 150 p.m.
Fringe Benefits Rs. 100 p.m.
Number of working days in a year are 300. 30 days full pay and 20 days half-pay
leave in a year is availed and allowed. Assume 8 hours in a day.
What would be the effect on hourly rate if only 30 days full pay leave is allowed?
(ans.2.52 and 2.5)
3. PQR Co., employs its workers for a single shift of 8 hours per day for 25 days in a
month. The company has recently fixed the standard output of 40 units per day per
worker for a mass production item and introduced an incentive scheme to boost
output. Details of wages payable to the workers are as follows:
Basic wages : Rs. 9 per unit subject to a guaranteed minimum wage of Rs.
240 per day worked.
Dearness Allowance : Rs, 120 per day worked.
Incentive Bonus
Up to 80% efficiency : nil
Efficiency above 80% : Rs. 150 for every 1% increase above 80%.
The details of performance of two workers X and Y for a particular month are as
follows:
Workers No. of days worked Output
X 25 820
Y 18 500
Calculate the total earnings of both the workers for the month.

4. The management of a company wants to formulate an incentive plan for the workers
with a view to increase productivity. The following particulars have been extracted
from the books of the company:
Piece wage rate Rs. 10
Weekly working hours 40
Hourly wage rate Rs. 40 (guaranteed)
Standard / Normal Time 15 minutes per unit
Actual output for a week:
 Worker A 176 pieces
Worker B 140 pieces
Differential piece rate: 80% of piece rate when output is below normal and 120% of
piece rate when output is above normal. Under Halsey scheme, worker gets a bonus
equal to 50% of wages of time saved. You are required to calculate”
a. Earning of workers under Halsey’s and Rowan’s Scheme.
b. Calculate the earnings of the workers under Taylor’s Differential Piece rate
system, and
c. Emerson efficiency rate.

5. You are required to calculate the normal and overtime wages payable to a workman
from the following data:
Days Hours Worked
Monday 10 hrs
Tuesday 8 hrs
Wednesday 10 hrs
Thursday 9 hrs
Friday 11 hrs
Saturday 4 hrs
Normal working hours 8 hours per day
Normal rate Rs. 1.50 per hour
Overtime rate Up to 8 hours in a day at single rate and over 9 hours a
day at double rate
Or
Up to 48 hours at single rate and over 48 hours at double
rate, whichever is more beneficial to the workman

6. Calculate the earnings of worker P & Q for a month and allocate the earnings of each
to job X, Y & Z.
P Q
Basic wages Rs. 400 Rs. 600
DA 50% 50%
PF (on basic wages) 10% 10%
ESI (on basic wages) 2% 2%
Overtime 10 hrs …
 Idle time and leave … 16 hrs
The normal working hours for the month are 200 hours. Overtime is paid at double
the normal rate of wages plus DA. Employee’s contribution to ESIC and PF are at
equal rate with an employee’s contribution. In the month there are 25 working days
and one paid leave. Two workers were employed on jobs X, Y and Z in the following
proportions:
Jobs X Y Z
Worker P 40% 30% 30%
Worker Q 50% 20% 30%
Overtime was done on Job Y.

7. The worker is paid Rs. 50 per hour and the 5 days working week contains 42 hours.
The daily allowance for approved absence from his place of work, maintenance of
machine, etc., is 12 minutes and his job cards show that his time chargeable during the
week to various cost centers is as follows:
Job No. 305 20 hrs.
Job No. 310 10 hrs.
Job No. 320 8 hrs.
The unaccounted for is caused by a power failure. Show how his wages for the week
would be dealt with in the cost accounts.
8. A company’s basic wage rate is Rs. 4 per hour and its overtime rate is Rs. 6 per hour.
During January 2023 the labour hours worked on a job were:
Normal 2,000 hrs.
Overtime 500 hrs.
You are required to calculate the labour cost chargeable to the job in each of the
following cases:
i. Where overtime is worked regularly throughout the year due to labour
shortage.
ii. Where overtime is worked irregularly to meet the production requirement.
iii. Where overtime is worked specifically at the customer’s request to expedite
delivery.
iv. Where overtime is worked because of abnormal idle time in the past.

9. Under a scheme of payment by result, a worker takes 8 hours to complete a job. The
wage is Rs. 24 per hour. Material cost of the job is Rs. 150 and overheads are
recovered at 25% of the total direct wages. Standard time allowed for the job is 12
hours. You are required to calculate the factory cost of the job under rowan system
and Halsey system incentive plan.