Page 74 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 4: Costing and Control of Labour

6. Critically evaluate the rate system and bonus system of wages payment. Notes

7. Under Time Rate method payment is made at a rate on attendance by hour, day, week or

a month regardless of output. What are the key significance and drawbacks of time rate
method?
8. Do you think idle time can be reduced by implementing some effective strategies?
Discuss.
9. What factors would you take into consideration in introducing an incentive scheme?
10. Discuss the advantages and disadvantages of the piece rate method of payment of wages.
Do you consider that workers remunerated by reference to this method should be required
to maintain time records?

11. Standard time is 24 hours. The hourly rate of guaranteed wage is ` 3. Because of time saved,
a worker Mr. Rajesh gets an effective hourly wage rate of ` 3.75 under Rowan Premium
Plan. For the same saving in time, calculate the effective hourly rate of wages for a worker
Mr. Rajesh under Halsey System.
12. Two workers A and B were given an identical job. The labour cost was estimated at ` 15 per
hour for 32 hours. Overhead are recovered at ` 45 per labour-hour. Material used by both
the workers is valued at ` 1,200 each.
The works cost of production came to ` 2,700 and ` 2,910 respectively for two jobs with
Halsey Plan (50%). Find the time taken by A and B.

Answers: Self Assessment

1. Labour turnover 2. overhead expense
3. Idle time 4. Normal idle time
5. Abnormal idle time 6. Profit & Loss Account

7. separation method 8. False
9. True 10. True
11. True 12. False
13. Rowan Plan 14. Normal wages
15. Bonus

4.7 Further Readings

Books Arora M. N., Cost and Management Accounting, Himalaya Publishing House, 2010
Pandey, IM, Management Accounting, Excel Book, New Delhi, 2007
Richard G. Schroeder, Myrtle W. Clark, Myrtle W. Clark, Jack M. Cathey, Financial
Accounting Theory and Analysis: Text Readings and Cases, John Wiley & Sons Inc.
Shah Paresh, Management Accounting, Oxford University Press, New Delhi, 2009

Online links www.futureaccountant.com
www.managementstudyguide.com

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