Labor (Solman)
Labor (Solman)
Exercise 1: Theory
a It is concerned with the total number of hours worked by each employee and what a worker does
each hour he is being paid. timekeeping
b It provides for additional financial compensation to workers and at the same time reduces the
fixed overhead cost per unit. Incentive system
c It shows how each employee’s net pay is arrived at by providing columns for gross pay and
deductions aside from net pay . payroll sheet
d It shows the number of hours a worker has devoted to a job during a day. Time ticket
e It is concerned with the determination of the breakdown of the payroll and the making of labor
cost entries on cost sheet s or production reports.. cost accounting phase in labor cost control
f It is concerned with the determination of how much to pay each employee and the keeping of the
earnings records.. financial accounting phase in labor cost control
g Different tasks are observed and analyzed to eliminate unnecessary motions and set the standard
time for the performance of each task. Time and motion study
h It shows when the worker reports for work and when he goes out and is used as basis in the
computation of his gross pay. time card
i It is used by a worker in accounting for the total number of hours timed in for a day. Daily time
report
j It shows the different amounts earned by an employee for a period and the deductions made
therefrom. Earnings record
a. What is the estimated number of labor hours required to produce 25,000 units?
b. How many workers must be made available for the production in June?
Exercise 3: Effect of Wage Incentive System on Fixed Factory Overhead per Unit
ABC Corp. pays its workers at the rate of P 200 per day plus P 21 for every unit produced in
excess of 10 units during each working day. The production report for two days show:
Worker No. of Units Completed
Monday Tuesday
A 8 Units 9 units
B 10 12
C 10 15
D 10 10
E 10 11
An analysis of overhead shows that fixed overhead per day is more or less P800.
Required:
a. The amount to be paid to each worker and the average labor cost per unit for each day.
b. Fixed overhead per unit for each day.
L is the foreman with the others as his workers. Overtime premium is 25%.
The time tickets show that overtime work was done on job no. 25 and the corresponding hours are
included already in the tabulation given above.
How much must be the gross pay of each worker?
Determine what accounts are to be debited for the payroll under each of the following assumptions:
a. Overtime work is due to the seasonal changes in the demand for the product.
b. Overtime work is due to the rush nature of the job.
Jobs Worked On
39 42 45 46 Others Hrs.
Abe, Mario 15 19 7 10
Boni, Carlos 12 17 10 3 Oiling 5
Pantig, Jose 13 20 20
Tonio, Ben 9 10 25
Yasay, Dante 19 12 16 Inspection 4
Required:
a. Computation for gross pay.
b. Weekly job time recapitulation.
c. Payroll.
d. Journal entries.
2. How much must be the budgeted labor cost for August? P 350,000
Solution:
Budgeted labor cost = 14,000 * 25
=350,000
Items 3 and 4:
The following data are given for the period August 12 to 18, 2014:
Total
Jobs Worked On Others
Hours
Regular Overtime 21 22 23 Nature Hrs.
Pete Tuazon 48 48
Jose Carlos 46 43 3 12 20 9 Delivery 4
Mario Farela 50 48 2 15 25 9
Ben Gomez 53 46 7 16 30 5
Lucio Lim 53 45 8 17 15 20
Gem Tinio 51 45 6 10 18 17 Repairs 5
Pete Tuazon is the foreman with hourly rate of P 30. All the workers under him receive P 25 per hour.
Overtime work was rendered on working days on job 23, based on a rush order. Accordingly, overtime
premium is 25%.
3. How much must the total charge to direct labor for the week? P 6, 112.50
Jobs Worked On
23 direct labor overtime
21 22 cost premium
4. How much must be the total payroll for the week? P 7,927.50
7. How much savings in fixed factory overhead per unit was affected assuming that additional
output is due to the incentive given? P .24
Fixed factory overhead = 198,000 / 330
= 600*2
= 1,200