TY BCom KSD’s Model College Asst. Prof.

Nikhil Nair
Costing I (Autonomous) M.com, LL.B, NET, SET, CS Exe

LABOUR COSTING

LABOUR TURNOVER:
➢ Replacement method =
Number of employees replaced x 100 / Avg. number of employees on roll

➢ Separation method =
(No. of empl. left + No. of empl. discharged) x 100 / Avg. number of employees on roll

➢ Flux method =
(No. of empl. separated + No. of empl. added) x 100 / Avg. number of employees on roll

1) From the following information, calculate labour turnover rate and labour flux rate:
No. of workers as on 01.01.2013 = 7,600
No. of workers as on 31.12.2013 = 8,400
During the year,80 workers left while 320 workers were discharged 1,500 workers were recruited
during the year of these,300 workers were recruited because of exits and rest were recruited in
accordance with expansion plans.

2) From the following information, calculate labour turnover rate and labour flux rate:
No. of workers as on 01.01.2017 = 1,520
No. of workers as on 31.12.2017 = 1,680
During the year, 16 workers left while 64 workers were discharged 300 workers were recruited
during the year of these, 60 workers were recruited because of exits and rest were recruited in
accordance with expansion plans.

PROBLEMS ON INCENTIVE PLANS:

3) Standard production @ 20 units per hour, general wage rate Rs 240 per hour, wage rate if work
executed below standard: 80% of general rate, wage rate on execution of work equal to
standards 120% of general rate; production in 8 hrs. of one day by Mr. Simon: 150 units and by
Ms. Simran: 200 units. Compute total remuneration payable to Mr. Simon and Ms. Simran
under:
(a) Straight Piece rate plan
(b) Taylor plan.

4) Calculate the earnings of workers Amir and Babloo under Straight Piece Rate system and
Taylor’s Differential Piece Rate System from the following particulars:
Normal rate per hour - Rs 180
Standards time per unit - 20 seconds
Differentials to be applied are:
80% of the piece rate below the standard & 120% of the piece rate above standard.
Amir produced 1,300 units per day of 8 hours and Babloo 1,500 units per day of 8 hours.

5) The following particulars apply to a particular job:

Standard production per hour – 10 units
Standard working hours - 8
Normal rate per hour - Rs 150
Shahrukh produced 60 units; Salman produces 76 units; Saif produces 90 units
Calculate the wages of these workers under Merrick Differential Piece Rate System.

Page 1 of 5
 TY BCom KSD’s Model College Asst. Prof. Nikhil Nair
Costing I (Autonomous) M.com, LL.B, NET, SET, CS Exe

6) In a working day of 8 hours, a worker can produce 120 units under standard conditions. The
standard time rate was Rs. 240 per hour. Mr. A made 96 units, Mr. B made 116 units and Mr. C
made 130 units. Calculate the wages for workers under (a) Straight Time rate (b) Straight Piece
rate (c) Taylor Plan and (d) Merrick Plan

7) In a working day of 8 hours, a worker can produce 96 units under standard conditions. The
standard time rate was Rs. 300 per hour. Mr. A made 78 units, Mr. B made 94 units and Mr. C
made 100 units. Calculate the wages for workers under (a) Straight Time rate (b) Straight Piece
rate (c) Taylor Plan and (d) Merrick Plan

8) XYZ Ltd. employs its workers for a single shift of 8 hours for 25 days in a month. The company
has recently fixed the standard output for a mass production item and introduced as incentive
scheme to boost output. Details of wages payable to the workers are as follows:
(a) Basic wages: piece work wages @ Rs. 2 per unit subject to a guaranteed minimum wage of
Rs. 60 per day.
(b) Incentive bonus: Standard output per day per worker: 40 units
Incentive bonus up to 80% efficiency: NIL
Incentive bonus for efficiency above 80%: Rs. 50 for every 1% increase above 80%.
The details of performance of four workers for the month of April 2021 are as follows:
Worker No. of days worked Output (units)
A 25 820
B 18 500
C 25 910
D 24 780
Calculate the total earnings of each of the workers.

BONUS PLANs

9) Rate per hour = Rs. 50; Standard units produced in one hour is 20. Calculate total wages of
following workers under Halsey Plan and Rowan Plan: Mr. Virat made 200 units in 9 hours and
Mr. Mahi made 200 units in 8 hours.

10) Rate per hour = Rs. 50; Standard time taken to make one unit is 10 minutes. Calculate total
wages of following workers under Halsey Plan and Rowan Plan: Mr. Ranvir made 90 units in 13
hours and Mr. Ranbir made them in 12 hours.

11) Calculate the total earnings and effective rate of earnings per hour of three operates under
Rowan system and Halsey system from the following particulars.
The standard time fixed for producing 1 dozen articles is 50 hours. The rate of wages is Rs. 100
per hour.
The actual time taken by three is as follows:
Mr. Ahmed – 45 hours Mr. George – 40 hours Mr. Yadav – 30 hours

12) A Worker produced 200 units in a week’s time the guaranteed weekly wage payment for 45
hours is Rs 81. The expected time to produce one unit is 15 minutes which is raised further by
20% under the incentive scheme. What will be the earnings per hour of that worker under
Halsey (50% sharing) and Rowan bonus schemes?

13) Calculate the earnings of a worker under (i) Halsey plan and (ii) Rowan plan from the following
particulars:
1. Hourly rate of wages guaranteed Rs. 60 per hour.
2. Standard time for producing one dozen articles - 3 hours.

Page 2 of 5
 TY BCom KSD’s Model College Asst. Prof. Nikhil Nair
Costing I (Autonomous) M.com, LL.B, NET, SET, CS Exe

3. Actual time taken by the worker to produce 20 dozen articles - 48 hours.

14) A worker takes 6 hours to complete a job under a scheme of payment by results. The standard
time allowed for the job is 9 hours. His wage is Rs 1.50 per hour. Material cost of the job is Rs.
16 and the overheads are recovered at 150% of the total direct wages. Calculate the factory cost
of job under:
(a) Rowan and (b) Halsey systems of incentive.

LABOUR COST STATEMENT:

15) Basic pay Rs. 7,00,000; lease rent paid for accommodation provided to an employee Rs
2,00,000, amount recovered from employee Rs. 40,000, Employer’s Contribution to P.F. Rs.
75,000, Employee’s contribution P.F.Rs. 75,000; Reimbursement of medical expenses Rs.
67,000, Hospitalization expenses of
employee’s family member borne by the employer Rs. 19,000, Festivals Bonus Rs. 20,000,
Festival Advance Rs. 30,000. Compute the Employee cost.

16) From the following details below, compute the employee cost:
Particulars Rs.
Materials consumed 25,00,000
Salaries 18,00,000
Employee Training costs 2,00,000
Perquisites to Employees 4,50,000
Contribution to Gratuity Fund 4,00,000
Lease Rent for accommodation provided to employees 3,00,000
Festival Bonus 50,000
Unamortized amount of Employees cost related to a discontinued 90,000
operation
Special subsidy received from government towards Employee salary 2,75,000
Recoverable amount from Employee out of perquisites extended 35,000

17) Gross pay Rs. 12,00,000 (including cost of idle time hours paid to employee Rs. 25,000);
Accommodation provided to employee free of cost [this accommodation is owned by employer,
depreciation of accommodation Rs. 1,00,000, maintenance charges of the accommodation Rs.
90,000, municipal tax paid for this accommodation Rs. 3,000], Employer’s contribution to P.F.
Rs. 1,00,000 (including a penalty of Rs. 2,000 for violation of PF rules), Employees contribution
to P.F. Rs. 75,000. Compute the Employee cost.

18) From the following particulars given below, prepare the labour cost sheet per man-day of 8
hours:
(a) Basic Salary Rs. 20 per day
(b) Dearness Allowance Rs. 2.50 for every point over 100, Cost of
living index for working class – Current cost
of living index 700 points
(c) Leave Salary 10% of (a) & (b)
(d) Employer’s contribution to PF 8% of (a), (b) & (c)
(e) Employer’s contribution to State 2.5% of (a), (b) & (c)
Insurance
(f) Expenditure on amenities to labour Rs. 200 per head per month
(g) Number of working days in a month 25 days of 8 hours each

Page 3 of 5
 TY BCom KSD’s Model College Asst. Prof. Nikhil Nair
Costing I (Autonomous) M.com, LL.B, NET, SET, CS Exe

19) Calculate normal overtime and total wages payable to a worker from the particulars given below:
Days Hours Worked Days Hours Worked
Monday 10 Thursday 12
Tuesday 09 Friday 09
Wednesday 08 Saturday 04

Normal working hours = 8 per day

Normal rate = Rs 50 per hour
Overtime rate = Up to 9 hours per day – single rate; beyond 9 hours a day-double rate.

20) From the following information available you are required to calculate the Net Wage Bill as well
as Total Wages Cost:
i) A per the time cards the gross earnings of the workmen is Rs 3,00,000.
ii) The various deductions from the gross earnings are as under:
Rs. Rs.
Employees’ contribution to 25,000 Co-operative dues 6,000
provident fund
ESI- Employees’ contribution 4,000 Canteen charges 1,000
Advances against wages 8,000 Income Tax 5,000
iii) Company’s contribution to provident Fund and ESI are Rs 25,000 and Rs 8,000 respectively.

21) ‘A’ an employee of XYZ Co. gets the following emoluments and benefits:
Salary Rs 2,500 per month
D.A. Rs 5,250 per month
Employers’ contribution to Provident Fund 8% OF Salary and D.A.
E.S.I. 4 % of salary and D.A.
Bonus 20% OF salary and D.A.
Other Allowances Rs 27,250 per annum
A works for 2,400 hours per annum, out of which 400 hours are non – productive but treated as
normal idle time. You are requested to find out the effective hourly cost of ‘A’.

22) Calculate the earnings of Ashok and Bhanudas from the following particulars for a month and
allocate the labour cost to each Job No. 1, No. 2 & No. 3
Ashok Bhanudas
Basic Wages Rs. 10,000 Rs. 16,000
Dearness Allowances 50% 50%
Contribution to Provident Fund (on basic wages) 8% 8%
Contribution to Employees’ State Insurance (on 2% 2%
basic wages)
Overtime 10 hours 5 hours
Expenditure on Amenities (per month) Rs. 250 Rs. 350
The normal working hours for the month are 200. Overtime is paid at double the total of
normal wages and DA. Employer’s contribution to SIPF are at equal rates and employee’s
contribution. Two workers were employed on Job No. 1, No. 2 & No. 3 in the following
proportions:
Jobs
Job No. 1 Job No. 2 Job No. 3
Workers A 40% 30% 30%
Workers B 50% 20% 30%
Overtime was done on Job No. 2.

Page 4 of 5
TY BCom KSD’s Model College Asst. Prof. Nikhil Nair
Costing I (Autonomous) M.com, LL.B, NET, SET, CS Exe

Page 5 of 5