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Accounting For Labor Problems

The document contains 4 problems related to accounting for labor costs. Problem 1 describes two methods for recording overtime premium costs and computes job costs under each method. Problem 2 involves payroll calculations including journal entries. Problem 3 requires calculating employee pay and overhead allocation based on an incentive pay plan. Problem 4 asks how many additional bridges must be built to reduce the average construction time below one year using an 80% learning curve.

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Ryan Maliwat
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2K views2 pages

Accounting For Labor Problems

The document contains 4 problems related to accounting for labor costs. Problem 1 describes two methods for recording overtime premium costs and computes job costs under each method. Problem 2 involves payroll calculations including journal entries. Problem 3 requires calculating employee pay and overhead allocation based on an incentive pay plan. Problem 4 asks how many additional bridges must be built to reduce the average construction time below one year using an 80% learning curve.

Uploaded by

Ryan Maliwat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Accounting for Labor

Problem 1

The Evergreen Company produces tools on a job order basis. During May, two jobs were completed, and
the following costs were incurred:
Job 401 Job 402
Direct Materials P28,000 P37,000
Direct Labor – Regular 18,000 23,000
Overtime premium 6,000

Other factory costs for the month totaled P16,800. Factory overhead costs are allocated one-third to Job
401 and two-thirds to Job 402.

Required:

a) Describe two alternative methods of recording the overtime premium and explain how the
appropriate method affect the cost of each job.
b) Compute the cost of Job 401 and Job 402 under each of the two methods.

Problem 2

A semi-monthly payroll summary made from time tickets shows the following data:

Employee Exemption Classification Rate/Hour Number of Number of


Status Regular Hours Overtime
Hours
Austria S Direct P 36 80 6
Bautista ME Direct 36 80 8
De Santos ME – 2 Direct 45 80 8
Motus S–4 Indirect 30 80
Reyes S Indirect 30 80

Additional information:
Employee Withholding SSS Pagibig PhilHealth Total
Tax
Austria 91.23 109.00 96.12 100 396.35
Bautista 102.03 127.20 99.36 100 428.59
De Santos - 145.30 100.00 100 345.30
Motus - 90.80 72.00 100 262.80
Reyes 15.85 90.80 72.00 100 278.65
TOTAL 209.11 563.10 439.48 500 1,711.69

Overtime is payable at one and a half times the regular rate of pay for an employee.

Required:
a) Determine the net pay for each employee.
b) Prepare journal entries for:
1. Recording the payroll.
2. Payment of the payroll.
3. Distribution of the payroll.
4. The employer’s payroll taxes (assuming the employees’ contribution is equal to
employer’s contribution).

Problem 3

The Norman Company recently adopted an incentive wage plan. Factory workers are paid P7.50 per unit
with a guaranteed minimum wage of P2,000 per week. Following is a report on employees’ productivity
for the week ending May 16, 2014. All employees worked the full 40-hour week.

Weekly Summary

Employee’s Name Units Produced

R. Cruz 240
J. Briones 286
C. David 275
A. Mendoza 240
F. Rivera 225
R. Tolentino 285

Required:
1. Compute each employee’s gross pay.
2. What amount should be charged to work in process?
3. What amount should be charged to factory overhead?

Problem 4

Pinnacle Construction Company has just completed constructing a bridge. This is the first bridge the
company has built, and it required 100 weeks to complete. Having a bridge construction crew with some
experience, the company would like to continue building bridges. Because of the investment in heavy
machinery needed continuously by this crew, the company believes it would have to bring the average
construction time to less than one year (52 weeks) per bridge to earn a sufficient return on investment.
The average construction time will follow an 80% learning curve.

Required:
a) Complete the number of additional bridges the crew must build to bring the average
construction time (for all bridges constructed) below one year per bridge.

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