CHAPTER 2- LABOUR

Q.No 1 Calculate the labour hour rate of worker X from the following data :
Basic pay Rs. 1,000 p.m.
D.A Rs. 300 p.m
Fringe benefits Rs. 100 p.m.
Number of working days in a year 300. 20 days are availed off as holidays on full pay in a
year. Assume a day of 8 hours.

Q .No 2 From the following particulars, calculate the labor cost per man day of 8 hours:
(1) Basic salary ` 2 per day
(2) Dearness allowance 25 paisa for every point over 100 cost of
living index for working class – current
cost of living index is 700 points.
(3) Leave salary 10% of (1) & (2)
(4) Employer’s contribution to P.F. 8% of (1), (2) & (3)
(5) Employer’s contribution to E.S.I 2.5% of (1), (2) & (3)
(6) Expenditure on amenities to labor Rs. 20 per head per month
(7) Number of working days in a month 25 days of 8 hours each.

Q.No 3 Calculate the earning of A and B from the following particulars for a month and
allocate the labour cost to each job X, Y and Z :
A B
I Basic wages Rs. 100 Rs. 100
II Dearness Allowance 50 % 55%
III Contribution to PF (on basic wages) 8% 8%
IV Contribution to ESI ( ,, ,, ,, ) 2%
2%
V Overtime Hours 10 -
VI Idle Time and Leave – 16 hours
The normal working hrs. for the month are 200. Overtime is paid at double the total
of normal wages and dearness allowance. Employers contribution to state insurance and
provident fund are at equal rates with employees contribution. The two workers were
employed on jobs X, Y and Z in the following proportions:

Jobs X Y Z
Workers A 40% 30% 30%
Workers B 50% 20% 30%
Overtime was done on job Y

Q.No 4 From the following particulars, find out the amount required for payment of wages
in a factory for a particular month:
Rs.
(a) Wages for normal hours worked 30,500
(b) Wages for overtime 2,200
(c) Leave wages 1,700
(d) Deduction of employees’ contribution to state insurance 500
(e) Employees contribution to provident fund 1,600
(f) House rent is to be recovered from 30 employees at the rate of Rs. 10 per month.

Q.No 5 Calculate the normal and overtime wages payable to a workman from the following
data:
Days Hours worked
Monday 8
Tuesday 10
Wednesday 9
Thursday 11
Friday 9
Saturday 4

Normal working hours: - 8 hours per day.

Normal rate: - Rs.0.50 per hour.

Overtime rate: Upto 9 hours in a day at single rate and over 9 hours in a day at
double rate or upto 48 hours in a week at single rate and over
48 hours at double rate, whichever is more beneficial to the
workman.
Q.No 6 calculate the total wages earned by a workman for a working day of 8 hours under
Halsey and Rowan plans .
Standard production per hour 20 units
Actual production of the day 200 units
Wages rate per hour Rs. 30
(CA-PE-II May 2008)

Q.No 7 Calculate the earnings of a worker under:

(i) Halsey Plan and (ii) Rowan Plan from the following particulars:
(1) Hourly rate of wages guaranteed 0.50 paise per hour.
(2) Standard time for producing one dozen articles – 3 hours.
(3) Actual time taken by the worker to produce 20 dozen articles–48 hours.

Q.No 8 . From the following data, tabulate the total earnings per hour of each worker
separately under:
(1) Halsey and
(2) Rowan scheme of incentive payment:
Worker A B C D E F
Time allowed (hours) 3 4 5 6 7 8
Actual time (hours) 5 3 4 5 3 3
Basic wages per hour (Rs.) 2 2 2 2 2 2
Q.No 9 An operator is engaged in machining certain components receives an ordinary
day rate of Rs. 1.60 per day of 8 hours. The standard output for machining the
components has been fixed at 80 pieces per hour (time as fixed for premium bonus). On
a certain day, the output of the worker on this machine is 800 pieces. Find the labour cost
per 100 pieces and the wages that would have been actually earned by the workmen
under the following:
(1) If a bonus of Rs. 0.23 is paid per 100 pieces of the extra output.
(2) If paid for on straight piece work basis at the standard rate.
(3) If Halsey plan is adopted.

Q.No 10 Two workers, A and B, produce the same product using the same material. The
normal wage is also same .’A’ is paid bonus according to Rowan scheme while B is paid
bonus according to Halsey scheme . The time allowed to make product is 50 hours .’A’
takes 30 hours while ‘B’ takes 40 hours to complete the product. The factory overhead
rate is Rs. 5 per person-hour actually worked .The factory cost of product manufactured
by ‘A’ is Rs. 3,490 and for product manufactured by ‘B’ is Rs. 3,600 .

Required :
(i) Compute the normal rate of wages
(ii) Compute the material cost
(iii) Prepare a statement comparing the factory cost of the product as made by two
workers ,
(CA PE-II Nov. 2007 )

Q.No 11 A skilled worker in XYZ Ltd. is paid a guaranteed wage rate of Rs.30 per hour.
The standard time per unit for a particular product is 4 hours. Mr. P has been paid wages
under the Rowan Plan and he had earned an effective hourly rate of Rs.37.50.
What could have been his total earnings and effective hourly rate, had he been put on
Halsey Incentive Scheme.

[CA (Inter) Nov., 1999 (5 marks)]

QNo 12 Standard time for a job is 90 hours .The hourly rate of guaranteed wages a is
Rs.50. Because of the saving in time a worker a gets an effective hourly rate of wages
of Rs.60 under Rowan Premium bonus system . for the same saving in time , calculate
the hourly rate of wages a worker B will get under Halsey premium bonus system
assuring 40 % to worker .

Q.No 13 The Standard time for a job is 50 hours .The hourly rate of guaranteed wages
is Rs.9. Because of the saving in time a worker X gets an effective hourly wages of
Rs.10.80 under Rowan Premium bonus system . for the same saving in time , calculate
the hourly rate of wages a worker Y will get under Halsey premium bonus system
assuring 50 percent bonus to worker .

Q.No 14 Two workmen, A and B, produce the same product using the same material. A
is paid bonus according to Halsey plan, while B is paid bonus according to Rowan plan.
The time allowed to manufacture the product is 100 hours. A has taken 60 hours and B
has taken 80 hours to complete the product. The normal hourly rate of wages of workman
A is Rs. 24 per hour. The total earnings of both the workers are same. Calculate normal
hourly rate of wages of workman B.

(PCC JUNE 2009)

Q.No 16 Bonus paid under the Halsey plan with bonus at 50% for the time saved equals
the bonus paid under the Rowan system .when will this statement hold good? (your
answer should contain the proof )

Q.No 17 which is better plan out of Halsey 50 %bonus scheme and Rowan bonus
scheme for an efficient worker ? In which situation the worker get same bonus in both
schemes ?
(CA IPCC May 2010)
Q.No 18 A worker produced 200 units in a week's time. The guaranteed weekly
wage payment for 45 hours is Rs.81. The expected time to produce one unit is 15
minutes which is raised further by 20% under the incentive scheme. What will be
the earnings per hour of that worker under Halsey (50% sharing) and Rowan bonus
scheme ?

[CA (Inter) May 1995 (6 marks)]

Q.No 19 The finishing shop of a company employs 60 direct workers. Each worker is
paid Rs.400 as wages per week of 40 hours. When necessary, overtime is worked up to
a maximum of 15 hours per week per worker at time rate plus one-half as premium. The
current output on an average is 6 units per man hour which may be regarded as standard
output. If bonus scheme is introduced, it is expected that the output will increase to 8
units per man hour and there is no overtime payment.
The company is considering introduction of either Helsey Scheme or Rowan Scheme of
Wage Incentive System. The budgeted weekly output is 19,200 units. The selling price is
Rs.11 per unit and the Direct Material Cost is Rs.8 per unit. The variable overheads
amount to Re.0.50 per direct labour hour and the fixed overhead is Rs.9,000 per week.
Prepare a Statement to show the effect on the company’s weekly profit of the proposal to
introduce (a) Time Rate Wage, (b) Halsey Scheme, and (c) Rowan Scheme.
[C.A. (Inter) May, 2002]

Q.No 20 A Company is undecided as to what kind of wage scheme should be introduced.

The following particulars have been compiled in respect of three systems, which are
under consideration of the management:

Workers
A B C
Actual hours worked in a week 38 40 34
Hourly rate of wages 6 5 7.2
Production in units:
Product P 21 - 60
Product Q 36 - 135
Product R 46 25 -
Standard time allowed per unit of each product is:
P Q R
Minutes 12 18 30
For the purpose of piece rate, each minute is valued @ 0.10. You are required to
calculate the wages of each worker under:
(1) Guaranteed hourly rate basis
(2) Piece work earning basis, but guaranteed at 75% of basic pay (guaranteed hourly
rate) if his earnings are less than 50% of basic pay.
Premium bonus basis where the worker receives bonus based on Rowan scheme.
(CA-PE-II Nov.2012)

Q.No 21 Mr. A is working by employing 10 skilled workers. He is considering the

introduction of some incentive scheme - either Halsey Scheme (with 50% bonus) or
Rowan Scheme - of wage payment for increasing the labour productivity to cope with the
increased demand for the product by 25%. He feels that if the proposed incentive
scheme could bring about an average 20% increase over the present earnings of the
workers, it could act as sufficient incentive for them to produce more and he has
accordingly given this assurance to the workers.
As a result of the assurance, the increase in productivity has been observed as
revealed by the following figures for the current month:
Hourly rate of wages (guaranteed) Rs. 2.00
Average time for producing 1 piece
by one worker at the previous performance 2 hours
(This may be taken as time allowed)
No. of working days in the month 25
No. of working hours per day for each worker 8
Actual production during the month 1,250 units.
Required :
1. Calculate effective rate of earnings per hour under Halsey Scheme and Rowan
Scheme.
2. Calculate the savings to Mr. A in terms of direct labour cost per piece under the
schemes.
3. Advise Mr. A about the selection of the scheme to fulfil his assurance.

Q.No 22 The existing incentive scheme of ISHA ltd. is as under:

Normal working week 5 days of 8 hours each plus 3 late shifts
of 3 hours each
Rate of payment day work: Rs. 160 per hour
Late shift: Rs. 225 per hour
Average output per operator for
49 hours week i.e. including 3 late shifts: 120 articles
In order to increase output and eliminate overtime, it was decided to switch on to a
system of payment by results. The following information is obtained:
Time rate (as usual) Rs. 160 per hour
Basic time allowed for 15 articles 5 hour
Piece-work rate add 20% to basic piece rate
Required: prepare a statement showing hours worked, weekly earnings, number of
articles produced and labour cost per article for one operator under the following
systems:
(1) Existing time rate
(2) Straight piece work
(3) Rowan system
(4) Halsey premium system.

Assume that 135 articles are produced in a 40 hour week under straight piece work,
rowan premium system, and Halsey premium system above and worker earns half the
time saved under Halsey premium system.

(CA-PE-II-NOVEMBER-2005)
Q.No 23 :- ZED Limited is working by employing 50 skilled workers. It is considered the
introduction or incentive scheme-either Halsey scheme (with 50% bonus) or Rowan
scheme of wage payment for increasing the labour productivity to cope up the increasing
demand for the product. It is believed that proposed incentive scheme could bring about
an average 20% increase over the present earnings of the workers; it could act as
sufficient incentive for them to produce more.
Because of assurance, the increase in productivity has been observed as revealed by the
figures for the month of April,2004.
Hourly rate of wages (guaranteed) Rs.30
Standard time to produce one unit 1.975 hours
Number of working days in the month 24
Number of working hours per day of each worker 8
Actual production during the month 6,120 units
Required :
(i) Calculate the effective rate of earnings under the Halsey scheme and the
Rowan scheme.
(ii) Calculate the savings to the ZED Limited in terms of direct labour cost per
piece as compared to straight piece rate.
(iii) Advise Zed Limited about the selection of the scheme to fulfil the assurance.

[CA(PE-II) May 2004]

Q.No 24 A job can be executed either through workman A or B. A takes 32 hours to complete
the job while B finishes it in 30 hours. The standard time to finish the job is 40 hours.
The hourly wage rate is same for both the workers. In addition workman A is entitled to
receive bonus according to Halsey plan (50% sharing) while B is paid bonus as per Rowan
plan. The works overheads are absorbed on the job at Rs.7.50 per labour hour worked. The
factory cost of the job comes to Rs.7.50 per labour hour worked. The factory cost of the job
comes to Rs.2,600 irrespective of the workman engaged.
Find out the hourly wage rate and cost of raw materials input. Also show cost against
each element of cost included in factory cost.
Q.No 25 The standard production in a company is 20 units per hour. For the first week in
April, a worker’s record was as follows:
Monday 140 units – 8 hours
Tuesday 160 units – 8 hours
Wednesday 175 units – 8 hours
Thursday 180 units – 8 hours
Friday 200 units – 8 hours
You are required to draw up to schedule showing the worker’s daily earnings, the effective
hourly rate and the labour cost per unit, if the company uses:
(a) Halsey Premium Plan with a guaranteed rate of Rs.4.50 per hour and a
premium of 60% of the time saved on production in excess of standard; or
(b) Rowan premium plan with a rate of Rs. 4.50 per hour.
(May 2017)

Q.No 26 2 hours allowed to a worker to produce 5 units and wages has been paid @ 25 per
hour .Ina 48 hours week the worker produced 170 units .
You are required to calculate the total earnings and effective hourly rate of earnings of the
worker under the following incentive wage system :
(i) Halsey 50 percent system
(ii) Rowan system (Nov. 2009)

Q.No 27 The following information is calculated from the personal department of ST Ltd.
For the year ended 31st March ,2008

Number of workers at the beginning of the year 8,000

Number of workers at the end of the year 9,600
Number of workers left the company during the year 500
Number of workers discharged during the year 100
Number of workers replaced due to left and discharges 700
Additional workers employed for expansion during the year 1,500

You are required to calculate labour turnover rate by using separation method,
replacement method and flux method.

Q.No 28. The cost accountant of Y Ltd. has computed labour turnover rates for the quarter
ended 31st March, 1997 as 10%, 5% and 3% respectively under ‘Flux Method’. ‘Replacement
method’ and ‘Separation method’.
If the number of workers replaced during that quarter is 30, find out the number of:
1. Workers recruited and joined and (2) Worker left and discharged.
(1997, 2012, 2013, 2017)

Q.No 29 :- The management of sunshine Ltd. wants to have an idea of profit lost as a
result of labour turnover last year.
Last year sales accounted to Rs. 66,00,000 and P/V ratio was 20%. The total number of
actual hours worked by the direct labour force was 3.45 lakhs. As a result of labour
turnover, total 75,000 potentially productive hours were lost. The actual direct labour
hours included 30,000 hours attributable to training new recruits, out of which half of the
hours were unproductive. The costs incurred consequent on labour turnover is
1. Settlement cost due to leaving 27,420
2. Recruitment cost 18,725
3. Selection cost 12,750
4. Training cost 16,105
Assuming that the potential production lost due to labour turnover could have been
sold at prevailing prices, ascertain the profit lost last year on account of labour
turnover.
[May 1998, 2018]

Q.No 30 Management of a manufacturing unit is considering extensive modernization of

the factory through progressive mechanization, which would result in improved
productivity and reduced strength. Through negotiations with the union, it was agreed
that for every 1% increase in productivity, workers would be paid 0.5% incentive wages. It
was also agreed that through voluntary retirement the staff strength would be reduced to
300 from the present level of 400. The following further comparative data are available
before and after the proposed mechanization.
Particulars Before After
mechanization mechanization
Number of articles produced per month 50,000 48,000
Fringe benefits 50% of wages
Wages paid per month Rs. 4,00,000
Sales value per month Rs. 24,00,000
PV ration 25%
Based on the above data, you are required to work out the annual financial implications
of the proposal.

Q.No 31 A, B, and C were engaged on a group task for which a payment of Rs. 725 was
to be made. A's time basis wages are Rs. 8 per day, B's Rs. 6 per day and C's Rs. 5 per
day. A worked for 25 days; B worked for 30 days; and C for 40 days. Distribute the
amount of Rs. 725 among the three workers.

Q.No 32 Two fitters, a labourer, and a boy undertake a job on piece rate of Rs.12,900.
The time spent by each of them is 220 ordinary working hours. The rates of pay on time-
rate basis are Re.15 per hour, for each of the two fitters Rs.10 per hour for the boy
.Calculate .
(a) The amount of the piece-work premium and the share of each worker, when the
piece work premium is divided proportionately to the wages paid
(b) The selling price of the above job on the basis of the following additional data :
(c) Cost of direct material Rs. 20,100 ;works overhead at 20% of prime cost ,selling
overhead at 10% of works cost and profit at 25% on cost of sales .
Q.No 33 The standard time of job X is 100 hours. The job has been completed by Amar
in 60 hours, Akbar in 70 hours and Anthony in 95 hours. The bonus system applicable to
the job is as follows:
Percentage of time saved to time allowed Bonus
Saving upto 10% 10% of time saved
From 11% of 20% 15% of time saved
From 21% to 40% 20% of time saved
From 41% to 100% 25% of time saved
The rate of pay is Rs.10 per hour. Calculate the total earnings of each worker and also
the rate of earnings per hour.

Q.No 34 A company uses an old method of machining a part manufactured for sale. The
estimates of operating details for the year 2005-06 are given below.
Number of parts to be manufactured and sold: 30, 000
Raw materials required per part: 10 kg @ Rs.2 per kg
Average wage rate per worker: Rs.40 per day of 8 hours
Average labor efficiency: 60%
Standard time required to manufacture one part: 2 hours
Overhead rate: Rs.10 per clock hour
Material handling expenses: 2% of the value of raw material.
The company has a suggestion box scheme and an award equivalent to three months
saving in labor cost is passed on to the employee whose suggestion is accepted. In
response to this scheme suggestion has been received from an employee to use a
special Jig in the manufacture of the aforesaid part. The cost of the Jig, which has life of
one year is Rs.30, 000 and the use of the Jig will reduce the standard time by 12
minutes.
Required:
[a] Compute the amount of award payable to the employee who has given the
suggestion.
[b] Prepare a statement showing the annual cost of production before and after the
implementation of the suggestion to use the Jig and indicate the annual saving.
[c] State the assumptions on which your calculations are based