Example of labour remuneration, Cost Accounting

Example of Labour Remuneration

Beneath a premium bonus scheme, workers obtained a guaranteed basic hourly minimum rate of pay in addition of a bonus of 50 percent of the time saved. So no payment is paid beyond the time permitted but the bonus that is paid at the basic hourly rate is appropriate to the accepted output only. Hence no penalty is imposed on refused output. The specified details are available for the month of January in 2003 year

Worker

A

B

C

Time allowed per unit (hrs)

¼

1/6

½

Units produced                       

474

684

175

Units rejected            

54

84

25

Time taken (hrs)                    

78

72

80

Basic Pay per hour (Kshs)

6

6

3

Required

From the above information estimated for all employee

a) Bonus hours and amount of bonus paid

b) Gross wages earned

c) Labour cost for each good unit sold

Solution

Worker A

Net time saved = Expected time - Time taken

                        = ¼ (474 - 54) - 78 = 1/4/ X 420 - 78 = 105 - 78 = 27 hours

So Accepted time saved = 50/100 x 27 = 13.5 hrs

Consequently bonus hours = 13.5 hours

And Bonus pay = 13.5 x 6 = Shs 81

Worker B

= 1/8 (684 - 84) = Shs 100

Time saved = 100 - 72 = 28 hours 

Bonus hours = 28/100 X 50 = 14 hours

Bonus pay = 14 x 6 = Shs 84

Worker C

= ½ (175 - 25) = 150/2 = 75 hours

Time saved = 75 - 80  = - 5 

Bonus hours = 0

Gross Wages = Regular wage by Bonus

 

A         

B

C

Time allowed per unit

¼

1/6

½

Regular pay                

Bonus   pay                                           

78 x 6

= 468

81

   549

72 x 6

= 432

84

   516

75 x 3

= 225

0

   225

Good units

 

A

B

C

 

474 - 54

684 - 84

175 - 25

Good units

= 420

= 600  

= 150

Labour cost per unit of output

549

420

516

600

225

150

 

= 1.30

=0.86

=1.5

Posted Date: 2/5/2013 6:00:56 AM | Location : United States







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