Cost Accounting Unit-3 Element of Cost : Labour Important Question Answer [ Gauhati University Bcom 4th Sem]

 

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Unit - 3

ELEMENTS OF COST : LABOUR

SHORT ANSWER TYPE QUESTIONS

Q2. What is direct labour?

Ans: Direct labour is that labour which is directly engaged in the production of goods or services and which can be conveniently allocated to goods, products or services unit. In simple words, it is that labour which can be conveniently identified or attributed wholly to a particular job, product or process or expended in converting raw materials into finished goods, Wages of such labour are known as direct wages and it is second most important elements of prime cost.

Q3. What is indirect labour ?

Ans: Indirect labour is that labour which is not directly engaged in the production of goods or services but which indirectly helps labours engaged in production. Wages of such labour are known as indirect wages. Examples of such labour are: Supervisors, maintenance workers, men employed in service departments, material handling and internal transport, trainees and instructors, clerical staff and labour employeed in time office and security office.

Q4. What are the methods of time keeping? 

Ans: The methods of time keeping are:

(i) Time recording clocks or clock cards

(ii) Disc method

(iii) Attendance record

Q5. What is job card?

Ans: This card is a combine record which shows both the time taken for completion of job as well as the attendance time. Therefore there is no need to keep separate record of both time taken and attendance time.

Q6. What is idle time?

Ans: Idle time is defined as the difference between the time for which workers are paid and the time they actually spend on production. It is the time for which payment is made but no production is obtained. Idle time arises only when the wages are paid on time basis. It does not arise when the wages are paid on piece rate basis. Idle time has been classified as:

(i) Normal idle time

(ii) Abnormal idle time

Q7. What is overtime?

Ans: Overtime is time worked beyond normal working hours. A workers who works more than 9 hours on any day or 48 hours in a week, is entitled to overtime payment. According to the factories Act 1978, the amount for overtime is double the normal rate of wages. If the factories act does not apply, establishment act will apply, according to this act overtime has to be paid at times of the normal rate of wages. The excess paid over usual normal rate is called overtime premium.

Q8. What is labour turnover?

Ans: Workers may come and go. This is a normal feature in every Business organisation. The movement of shifting into and out of the Organisation by the employees is known as labour turnover. Labour urnover is usually expressed as a rate or percentage in order to facilitate comparison between two periods and between two undertakings. Higher the percentage of labour turnover, higher is the instability in the labour force and will results in low productivity and increased cost of production.

Q9. What are the methods of measurement of labour turnover?

Ans: The various methods of measurement of labour turnover are:

(i) Separation method

(ii) Replacement method

(iii) Flux method

Q10. What is job evaluation ?

Ans: A job evaluation is a systematic way of determining the value of worth of a job in relation to other jobs in an organization. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure.

Q11. What is job analysis?

Ans: Job analysis or work analysis is a family procedures to identify the content of a job in terms of the activities. It involves in addition to the attributes or requirements necessary to perform those activities. Job analysis provides information to organisations that helps them to determine which employees are best fit for specific jobs.

Q12. What is merit rating?

Ans: Merit rating is the systematic method of determining the relative worth of the workers or employees. It is the qualitative and quantitative assessment of the workers relating to their performance in his job. The primary objective of merit rating is to reward an employee on the basis of his merit. Merit rating supports a system of incentive ignoring the detailed procedureof work study.

Q13. What is motion study?

Ans: The propounder of this concept was Frank B. Gilbesth. He defined motion study as the "science of elimination of wastefulness resulting from ill-directed and inefficient motions." The important objectives of motion study are: 

(i) To improve the process of doing work

(ii) To improve the design of work place layout

(iii) To find the best way of doing a job

(iv) To minimise the unnecessary human movements.

(v) To have more effective 

utilisation of material, machines 

and workers. 

Q14. What is time study?

Ans: Time study may be defined as "the art of observing and recording the time required to do each detailed element of an industrial activity or operation." The important objectives of times study are:

(i) Determining the standard time required to perform a job

(ii) Setting up the standard target for workers.

(iii) Determining the number of workers required to perform a job.

(iv) Categorising the workers into efficient and inefficient categories. 

Q15. What is time rate system?

Ans: Under this system, the workers are paid on time basis i.e., hour, day, week or month. The amount of wages due to a worker are arrived at by multiplying the time worked (including normal idle period) by rate for the time. Time rate system is suitable for the employees, (i) whose services can not be directly or tangibly measured, (ii) engaged in highly skilled jobs. Under this system wages paid to a worker is calculated as:

Wages = Time taken x Time rate

Q16. What is piece rate system?

Ans: Under this system, each job, operation or unit of production is termed a piece. A rate of payment, known as the piece rate or piece work rate is fixed for each piece. The wages of the worker depond upon his output and rate of each unit of output; it is in fact independent of the time taken by him. The wages paid to a worker is calculated as: Wages = Number of units produced x piece rate per unit 

Q17. What is Halsey Premium System?

Ans: This Plan was introduced by F.A. Halsey, an American engineer. In this plan, bonus is paid on the basis of time saved. Standard time is fixed for a job and if the actual time taken is less than the standard time, the worker become eligible for bonus. However, bonus is paid equal to wages of 50% of the time saved. The formula for computing the total wages is as follows:

Wages = (Time taken x Time rate) + (50% of time saved x Time rate).

Q18. What is Rowan Premium System?

Ans: DOWNLOAD EBOOK

LONG ANSWER TYPE QUESTIONS

Q20. What is normal idle time? What are the causes of normal idle time?

Ans: Normal idle time refers to the idle time which occurs normally or regularly. It is the time which can not be avoided or reduced in the normal course of business. Following are the causes of normal idle time:

(i) The time lost between factory gate and the place of work.

(ii) The interval between one job and another

(iii) The setting up time for the machine

(iv) Normal rest time, break for lunch etc.

(v) Time lost due to waiting for jobs, instructions etc.

Q21. What is abnormal idle time? What are the causes of abnormal idle time?

Ans: Abnormal idle time refers to the idle time which arises unusually or abnormally. It may due to avoidable and unavoidable causes. Following are the causes of abnormal idle time.

Avoidable causes :

(i) Time wasted due to breakdown of machinery 

(ii) Time wasted due to failure of power supply 

(iii) Time wasted due to shortage of materials

(iv) Time wasted due to unnecessary waiting for tools instructions etc.

Unavoidable causes :

(i) Time wasted due to natural calamities like, flood, fire etc.

(ii) Time wasted due to strike and lock outs, due to labour disputes and political reasons.

(iii) Time wasted due to major accident, political issues etc.

Q22. What are the various advantages and disadvantages of Halsey premium plan system?

Ans: Advantages of Halsey Premium Plan System:

(i) Time rate is guaranteed while there is opportunity for increasing earnings by increasing production.

(ii) The system is equitable in as much as the employer gets a direct return for his efforts in improving production methods and providing better equipment.

Disadvantages of Halsey Premium Plan System :

(i) Incentive is not so strong as with piece rate system. In fact, the harder the worker works, the lesser he gets per piece.

(ii) The sharing principle may not be liked by employees.

Q23. What are the various advantages and disadvantages of Rowan Premium Plan System ?

Ans : Advantages of Rowan Premium Plan System :

(i) It is claimed to be a full proof system in as much as a worker can never double his earning even if there is bad rate setting.

(ii) It is admirably suitable for encouraging moderately efficient workers as it provides a better return for moderate efficiency than under the Halsey Plan.

(iii) The sharing principle appeals to the employer as being equitable.

Disadvantages of Rowan Premium Plan System :

(i) The system is a bit complicated

(ii) The incentive is weak at a high production level where the time saved is more than 50% of the time allowed.

(iii) The sharing principle is not generally welcomed by employees.

Q24. Distinguish between Time Rate System and Piece Rate System.

Ans: DOWNLOAD EBOOK

Q25. Distinguish between Halsey Plan and Rowan Plan.

Ansv DOWNLOAD EBOOK

Q26. What do you mean by labour turnover? Explain the various methods of measurement of labour turnover.

Ans: DOWNLOAD EBOOK

Q27. What are the various causes of Employees (Labour) Turnover?

Ans: DOWNLOAD EBOOK

PRACTICAL PROBLEMS

Q1. The extracts from the payroll of M/S Maheswari Bros. is as

follows:

Number of employees at the beginning of 2020: 150

Number of employees at the end of 2020: 200

Number of employees resigned : 20

Number of employees discharged: 5

Number of replaced due to resignation and discharges : 20

Calculate the labour turnover rate for the factory by different methods.

Solution: DOWNLOAD EBOOK

Q2. The accountant of Y Ltd. has computed employee turnover rates for the quarter ended 31st March, 2021 as 10%, 5%, and 3% respectively under 'Flux method', 'Replacement method' and 'Separation method' repectively. If the number of workers replaced during the quarter is 30. Find out the number of workers for the quarter :

(a) Recurited and joined

(b) Left and discharged and;

(c) Equivalent 'employee turnover rates for the year.

Solution:DOWNLOAD EBOOK

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• GU Cost Accounting Chapter wise Important Question Answer and Solved Papers

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