Page 72 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING
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Unit 4: Costing and Control of Labour




          Self Assessment                                                                       Notes

          State whether the following statements are true or false:


          8.   Guaranteed Time Rates is a payment of a fixed sum per fixed unit produced without regard

               to time taken.
          9.   Time saved is the difference between Time Allowed (Standard Time) and Time Taken.
          10.   Normal wages may be ascertained and bonus may be added to arrive at total earnings.
          11.   The difference between Halsey plan and Rowan plan is only in the calculation of the
               bonus.

          12.   Straight Piece Rates takes the form of wage rate which varies with changes in the local cost
               of living index.
          Fill in the blanks:

          13.   Bonus under ........................ will be calculated as: TS/TA × Time Taken × Hourly Rate
          14.   Total earnings = ........................ + Bonus
          15.   ........................ = (Time Saved/Time allowed) × Normal Wages

          4.4 Summary



               Labour may be classified as direct when (a) there is a direct relationship of the labour to
               a particular production unit or process (b) the labour cost is measurable in terms of such
               production unit or process and (c) the labour cost is suffi ciently significant in amount and


               easily identifiable with particular production unit or process.
               Indirect labour costs are those costs which are necessary for production purposes but are

               not identifiable with a particular production unit.
               Indirect labour costs consist of (a) labour costs in service departments, such as, purchasing,
               engineering, time-keeping, etc. (b) labour cost of certain works of production departments,
               viz, salaries of foremen, helpers, clerical assistants, and (c) labour costs connected with general

               factory services, viz, salaries of works manager, chief inspector, factory office staff, etc.
               Labour turnover denotes the percentage change in the labour force of an organisation. It is
               a common occurrence that the workers do change their jobs.

               Idle time is that time for which the employer pays, but from which he obtains no production.
               Idle time is of two types:
                    Normal idle time, and

                    Abnormal idle time
               Remuneration and incentive systems, according to their characteristics, fall under the
               following broad categories:

                    Time rates
                    Piece rates
                    Bonus system

                    Indirect monetary incentives and
                    Non-monetary incentives




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