LABOR

[Question # 1]
Bonus paid under Hasley Plan with 50% of time saved equal bonus paid under Rowan Plan. When this
statement will hold true?

[Question # 2]
Time allowed for job is 8 hours. Hourly rate is Rs: 8/-. Show bonus earn, total earning & hourly earning
under Hasley & Rowan Plan progressively.

[Question # 3]
The management of XYZ Ltd. is worried about the increasing labor turnover in the factory and before
analyzing the causes and taking remedial steps; they want to have an idea of the profit foregone as a
result of labor turnover during the last year.
Last years sales amounted to Rs.8, 303, 300 and the profit/volume ratio was 20%. The total number of
actual hours worked by the direct labor force was 4.45 lakhs. As a result of the delays by the Personnel
department in filling vacancies due to labor turnover, 100, 000 potentially productive hours were lost.
The actual direct labor hours included 30, 000 hours attributable to training new recruits, out of which,
half of the hours were unproductive.
The cost incurred consequent on labor turnover revealed, on analysis the following.
Settlement cost due to leaving: Rs.43, 820
Recruitment costs: Rs.26, 740
Selection costs: Rs.12, 750
Training costs: Rs.30, 490
Assuming that the potential production lost as a consequence of labor turnover could have been sold at
prevailing prices, find the profit foregone last year on account of labor turnover.

[Question # 4]
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:
1. Hourly rate of wages (guaranteed) Rs. 2.00
2. Average time for producing 1 piece by one worker at the previous performance 2 hours. (This
may be taken as time allowed)
3. No. of working days in the month 25
4. No. of working hours per day for each worker 8
5. 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 fulfill his assurance.

[Question # 5]
In Amjad Manufacturing Co., the basic wage rate is Rs. 10 per hour and overtime rates are as follows:
Before and after normal working hours: 175% of basic wage rate
Sundays and holidays: 225% of basic wage rate
During the previous year, the following hours were worked:
Normal time : 1, 00,000 hours
Overtime before and after working hours : 20,000 hours
Overtime on Sundays and holidays : 5,000 hours
Total : 1, 25,000 hours
The following hours have been worked on job ‘Z’:
Normal 1000
Overtime before and after working hrs. 100
Sundays and holidays 25
Total 1125

You are required to calculate the labour cost chargeable to jobs ‘Z’ and overhead in each of the
following instances:
(a) Where overtime is worked regularly throughout the year as a policy due to the labour shortage.
(b) Where overtime is worked irregularly to meet the requirements of production.
(c) Where overtime is worked at the request of the customer to expedite the job.

[Question # 6]
During October 2007, the following information is obtained from the Personnel Department of a
manufacturing company. Labor force at the beginning of the month 1900 and at the end of the month
2100. During the month, 25 people left while 40 persons were discharged. 280 workers were engaged
out of which only 30 were appointed in the vacancy created by the number of workers separated and
the rest on account of expansion scheme. Calculate the labor turnover by different methods.

[Question # 7]
From the following particulars compute the cost of labor turnover per employee
Particulars Amount Amount
A. Preventive Cost
a) Personnel administration 10, 000
b) Medical services 6, 000
c) Welfare 30, 000
d) Pension scheme 40, 000
Total 86, 000
B. Replacement Cost
 a) Cost of selection and replacement 6, 050
b) Inefficiency of new labor - extra wages 4, 000
c) Inefficiency of new labor - overheads 2, 000
d) Training costs 3, 950
e) Loss of output 2, 500
f) Cost of scrap, tool and machine breakdown etc 15, 500
Total 34, 000
Grand total 1, 20, 000
Note: Average employees during the period 1, 000

[Question # 8]
X, Y and Z are three workers working in a manufacturing company and their output during a particular
40 hours week was 96, 111 and 126 units respectively. The guaranteed rate per hour is Rs.10 per hour,
low piece rate is Rs.4 per unit, and high piece rate is Rs.6 per unit. High task is 100 units per week.
Compute the total earnings and labor cost per unit under Taylor, Merrick and Gantt Task Bonus Plan.

[Question # 9]
Two grades of direct labour workers are employed to produce units of Product 1234. There are 40 Grade
1 employees and 20 Grade 2 employees. All employees work a basic week of 40 hours. Grade 1
employees are paid $10 per hour and Grade 2 employees are paid $15 per hour. If employees work any
overtime, they are paid at time-and-one-third (a premium of one third over the basic rate). There are
also five ‘support workers’, such as maintenance engineers, who are paid $12 per hour for a basic 40-
hour week. During Week 23, the Grade 1 employees and support workers each worked 40 hours, and
the Grade 2 employees worked 46 hours. Due to difficulties with some equipment, 250 hours of Grade 1
labour and 100 hours of Grade 2 labour were recorded as idle time in the week. During Week 23, 4,000
units of Product 1234 were manufactured.

Required
(a) Calculate the direct labour costs and the indirect labour costs in Week 23.
(b) Calculate the direct labour cost per unit of Product 1234 in Week 23.