0% found this document useful (0 votes)
442 views4 pages

Labor (Solman)

1. The estimated total labor hours required to produce 25,000 units is 125,000 hours. This would require 782 workers working 160 hours each in June. 2. The budgeted labor cost for June production is estimated to be P3,750,000. 3. The total charge to direct labor for the week of August 12-18, 2014 is P6,112.50. This includes overtime premiums for work on job 23.

Uploaded by

Ellie Roxas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
442 views4 pages

Labor (Solman)

1. The estimated total labor hours required to produce 25,000 units is 125,000 hours. This would require 782 workers working 160 hours each in June. 2. The budgeted labor cost for June production is estimated to be P3,750,000. 3. The total charge to direct labor for the week of August 12-18, 2014 is P6,112.50. This includes overtime premiums for work on job 23.

Uploaded by

Ellie Roxas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Exercises:

Exercise 1: Theory

Match the following terms with the phrases given below:

Time and motion study


Financial accounting phase in labor cost control
Timekeeping
Cost accounting phase in labor cost control
Clock card
Time ticket
Daily time report
Payroll sheet
Earnings record
Payroll check
Incentive system

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

Exercise 2: Estimated Labor Hours and Required No. of Workers


Five hours of labor are allowed per unit of a product at the rate of P 30 per hour. Budgeted
production volume for June is 25,000 units. Total regular working hours for June is 160 per worker.

a. What is the estimated number of labor hours required to produce 25,000 units?

Budgeted labor hours = 25,000 units x 5 hours = 125,000 hours

b. How many workers must be made available for the production in June?

Required no of workers = 125,000 hours


160 hours/worker
= 782 workers
c. How much must be the budgeted labor cost for June?
Budgeted labor cost = 125,000 x P 30 = P 3,750,000

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.

Exercise 4. Gross Pay with Overtime Premium and Payroll Charges


The following information is given based on the contents of clock cards and time tickets for a
week.
Rate
Hours Timed In Jobs Worked On Others
per Hr.
Regular Overtime 25 26 27 28 Nature Hrs.
L P 30 48
M 20 40 3 16 12 10 Shipping 4
O 25 50 25 16 7
P 20 45 15 12 11 Repairs 4
Q 28 48 5 10 20 20
R 20 46 21 8 15

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.

Exercise 6. Payroll Preparation and Charges


You are required to prepare the payroll and the corresponding entries based on the following information:
Check No. Hourly Hours Timed in Monthly W/H
June 7-13 Earnings Taxes
Regular Overtime
Lucero, Magno 55 Foreman P 50 48 P 10,000 P 300
Abe, Mario 22 Worker 30 48 5 7,000 250
Boni, Carlos 23 Worker 30 46 3 6,500 300
Pantig, Jose 29 Worker 30 48 6 7,200 320
Tonio, Ben 32 Worker 28 45 2 6,800 300
Yasay, Dante 39 Worker 25 48 5 6,000 250
Overtime premium is 30%. Jose Pantig worked for four hours on a holiday because of the rush nature of
job no. 45. Other overtime work is due to the greater volume of work for the month. Payroll deductions
include union dues of P 50 from each worker aside from income taxes withheld and the contributions for
SSS, Medicare and Pag ibig.

Time tickets for the week show the following:

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.

Supply the answer.


The following data are given for 2014
Budgeted production volume 70,000 units
Allowed number of hours per unit 1/5 hr.
Labor rate per hour P 25
No. of regular hours in August per worker 192 hours
1. How many workers are required for the August production? 73 workers

Solution: budgeted labor hours = 70,000 * 1/5


= 14,000
Required no. of workers = 14,000/192 hours
= 73 workers

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

Jose Carlos 300.00 500.00 225.00 1,025.00 18.75


Mario Farela 375.00 625.00 225.00 1,225.00 12.50
Ben Gomez 400.00 750.00 125.00 1,275.00 43.75
Lucio Lim 425.00 375.00 500.00 1,300.00 50.00
Gem Tinio 250.00 450.00 425.00 1,125.00 37.50
TOTAL 1,750.00 2,700.00 1,500.00 5,950.00 162.50

Total direct labor cost 6,112.50

4. How much must be the total payroll for the week? P 7,927.50

Hourly Regular Overtime


Regular rate Pay Pay Gross Pay
Pete Tuazon 48 30.00 1,440.00 1,440.00
Jose Carlos 43 25.00 1,075.00 3 93.75 1,168.75
Mario Farela 48 25.00 1,200.00 2 62.50 1,262.50
Ben Gomez 46 25.00 1,150.00 7 218.75 1,368.75
Lucio Lim 45 25.00 1,125.00 8 250.00 1,375.00
Gem Tinio 45 25.00 1,125.00 6 187.50 1,312.50
TOTAL 275 155.00 7115.00 26 812.5 7927.5
5. Lucena Manufacturing Co. charges factory overhead toproduction at 80% of direct labor cost.
Jobs 842 and 843 were completed and sold in July, 2014. Total direct materials cost and prime
cost for Job 842 were P 9,000 and P 14,000, respectively. Production cost of Job 843 amounted to
P 31,200 with factory overhead equal to 48% of direct materials cost. How much were the direct
labor costs of Jobs 842 and 843? P 5,000 and P 9,000 respectively\
Job 842
Materials = P 9,000
Prime cost = 14,000
Prime cost = direct materials + direct labor
14,000 = 9,000 + direct labor
Direct labor = 5,000
Job 843
Let x - DM
Labor cost
Production cost = DM + DL + FOH
Production cost = x + 0.60x + .48 x
31,200 = 2.08 x
x = 15,000
direct labor = .60*15,000
direct labor = 9,000
Items 6 and 7
Each of the five (5) workers in a factory is being paid P 250 per day. For every unit produced in
excess of 25 units in one day, a worker is paid P 12. Fixed factory overhead per annum is P 198,000
and there are approximately 330 working days in one year.
Production data for January 6 and 7, 2014 shows the following number of units produced by each
worker:
January 6 January 7
Abdon 25 26
Belleza 27 26
Cortes 24 28
Drillon 24 27
Emilio 28 26
6. What is the average direct labor cost per unit for the two day period? P 10.18
Abdon 250 262
Belleza 274 262
Cortes 250 286
Drillon 250 274
Emilio 286 262
1310 1346 2656
Average for 2 day 10.17625

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

Without incentive = 1,200 (261-13)


= 4.83871
With incentive = 1200/ 261 = 4.59771
Savings = .24

You might also like