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Cost Accounting · Class 12 Commerce

Ch 3Labour — Class 12 Cost Accounting, concept-first.

After materials, labour is the second major element of cost in almost every manufacturing and service organisation. Labour cost is the total payment made to the human effort — physical and mental — used in converting raw materials into finished goods or in rendering a service.

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Key concepts

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Classification of Labour

Labour cost is the total payment for human effort used in production, including wages, allowances, bonus and employer's statutory contributions.

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Chapter contents

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1

Meaning, Definition and Classification of Labour

After materials, labour is the second major element of cost in almost every manufacturing and service organisation.

2

Characteristics of an Ideal Wage System

A wage system is the set of rules by which an organisation decides how much each worker is paid. Because wages affect both the cost of the product and the morale of the workforce, choosing and designi…

3

Methods of Wage Payment — Time Rate and Piece Rate

There are two basic methods of paying wages, from which all more elaborate incentive plans are built: the Time Rate System and the Piece Rate System.

4

Labour Accounting — Time Keeping and Time Booking

Before any wage can be computed or any hour of labour charged to a job, cost accounting must record how long each worker was present, and what that time was spent on.

5

Idle Time, Overtime, Casual Worker and Out Worker

Idle Time = Time Kept (Total Attendance) − Time Booked (to Productive Jobs)

6

Labour Turnover — Meaning, Causes, Effects and Remedial Measures

Meaning Labour Turnover is the rate of change in the workforce of an organisation during a period — the extent to which workers leave and are replaced.

7

Incentive Plans — Halsey Premium Plan and Halsey-Weir Plan

Incentive (premium/bonus) plans are wage schemes that combine the security of a time wage with the incentive of a piece-rate scheme. The organisation fixes a standard time (time allowed) for a job.

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Incentive Plans — Rowan Premium Plan

- Time Saved = Time Allowed − Time Taken - Basic (Time) Wages = Time Taken × Rate per Hour - Bonus = (Time Saved ÷ Time Allowed) × Time Taken × Rate per Hour - Total Earnings = (Time Taken × Rate) + […

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 67 questions67 questions
  1. Q1Correct the underlined portion of the following sentence: The difference between the time as per time card and time as per job card is calle…Preview
  2. Q2Answer in one sentence: What is a job card?Preview
  3. Q3Answer in one word/term: The rate of change in the composition of the labour force of an organization.Preview
  4. Q4The formula for calculating bonus under Rowan Plan is (a) T x R + 50% (S - T) R (b) 30% (S - T) x R (c) (S - T)/S x R (d) (S - T)/S x T x RPreview
  5. Q5One of the following which is not a monetary wage, is (a) Basic wage (b) Dearness Allowance (c) Employer's contribution to Provident Fund (d…Preview
  6. Q6The process of recording the time spent by each worker on the job is known as (a) Time study (b) Time keeping (c) Time booking (d) Motion st…Preview
  7. Q7Name two mechanical methods of time-keeping.Preview
  8. Q8If time allowed is 10 hours, time taken is 8 hours and time rate is Rs. 10 per hour, find the total earnings under Rowan plan?Preview
  9. Q9Write any two factors to be considered before introducing an incentive plan.Preview
  10. Q10Who are out workers?Preview
  11. Q11Write any two advantages of time wage system.Preview
  12. Q12Explain Halsey premium plan.Preview
  13. Q13The time for which payment is made but no output obtained, is (a) idle time (b) casual time (c) overtime (d) arrival timePreview
  14. Q14Under the piece-rate system of wage payment a worker is paid wages on the basis of (a) actual time worked (b) actual quantity produced (c) t…Preview
  15. Q15Halsey premium plan is based on (a) output (b) time (c) experience (d) both time and outputPreview
  16. Q16Correct the underlined portion of the following sentence: __Time__ card is a record for each job in respect of time spent by workers on that…Preview
  17. Q17Fill in the blank: ________ labour cost is a part of production overhead.Preview
  18. Q18Express in one word/term: The time allowed for actual production.Preview
  19. Q19What is labour turnover?Preview
  20. Q20Explain fringe benefits to workers.Preview
  21. Q21If standard time is 12 hours, actual time is 6 hours and rate per hour is Rs. 9, find out the total earnings under Halsey premium plan.Preview
  22. Q22Write any two advantages of Halsey premium plan.Preview
  23. Q23What do you mean by direct labour?Preview
  24. Q24Mention any three objectives of incentive plan.Preview
  25. Q25Calculate the labour cost per unit under (i) Halsey premium plan and (ii) Rowan plan from the following particulars: | Particulars | Amount…Preview
  26. Q26Wages of a carpenter in furniture manufacturing shop, is : (a) Direct wages (b) Direct expenses (c) Indirect wages (d) Indirect expensesPreview
  27. Q27The amount of wages a worker will get, when works 8 hours per day for a week of 5 days @ ₹ 8 per hour : (a) ₹ 64 (b) ₹ 40 (c) ₹ 320 (d) ₹ 40…Preview
  28. Q28The process of recording the arrival and departure time of each worker is known as : (a) Time booking (b) Time keeping (c) Time study (d) La…Preview
  29. Q29The extra time worked by a worker over and above the normal working hours, is known as : (a) Overtime (b) Normal idle time (c) Abnormal idle…Preview
  30. Q30The workers who are not on the payroll of the factory, but are engaged to meet the extra load in the factory, are known as : (a) Casual work…Preview
  31. Q31Halsey Premium plan is an incentive plan, based on : (a) Output (b) Time (c) Experience (d) Both time and outputPreview
  32. Q32When time saved by a worker is equal to 50% of standard time, bonus under Halsey and Rowan plans are : (a) Same (b) More in Halsey plan than…Preview
  33. Q33Total earnings of a worker under Halsey plan is equal to : (a) Nominal wages (b) Bonus under the Halsey plan (c) Normal wages plus bonus (d)…Preview
  34. Q34If a worker cannot save 50% or more than 50% of time saved, the more beneficial plan for him, is : (a) Halsey Premium plan (b) Rowan Premium…Preview
  35. Q35The standard time and actual time of a worker are 8 hours and 6 hours respectively. The hourly rate is ₹10 per hour. Then the difference of…Preview
  36. Q36Explain time booking.Preview
  37. Q37Who are outworkers ?Preview
  38. Q38State any two advantages of Rowan Plan.Preview
  39. Q39Mention any three causes of idle time.Preview
  40. Q40State any three advantages of Halsey plan.Preview
  41. Q41Mention any three features of incentive plans.Preview
  42. Q42Discuss the features of a good wage payment system.Preview
  43. Q43From the following particulars, calculate : (a) the earning and (b) bonus payable to X and Y workers under Rowan Plan. | Particulars | X | Y…Preview
  44. Q44From the following, the one which is a fringe benefit, is : (a) Dearness allowance (b) Production bonus (c) Employer's contribution to Provi…Preview
  45. Q45The time, for which the employer's pays but obtains no production, is : (a) Overtime (b) Idle time (c) Time engaged in work (d) Time absent…Preview
  46. Q46Express each of the following in one word / term : (iii) A premium plan where the bonus may vary from 33 1/3 % to 66 2/3 % of the wages of t…Preview
  47. Q47Rectify the underlined portions of the following sentences : (viii) Attendance register method is a _mechanical_ method of time-keeping. (un…Preview
  48. Q48Fill in the blanks : (xi) The workers who take materials from the factory and make finished goods at their own premises are known as ______…Preview
  49. Q49Who are casual workers?Preview
  50. Q50Explain the meaning of time rate and piece rate method of wage payment.Preview
  51. Q51Write any four causes of labour turnover.Preview
  52. Q52State any three effects of labour turnover.Preview
  53. Q53Explain Rowan premium plan of wage payment.Preview
  54. Q54From the following information, calculate the earnings of workers A and B under straight piece-rate system : Normal rate per hour : Rs.1,800…Preview
  55. Q55Write short notes on : (Any two) (a) Time booking (b) Time keeping (c) Idle time (d) OvertimePreview
  56. Q56(h) Piece rate system of wage payment is most suitable : (a) Where it is difficult to measure the quantity of work done (b) Where output of…Preview
  57. Q57(i) When time saved is less than 50% of standard time, earning per hour is higher under : (a) Halsey plan (b) Rowan plan (c) Halsey-Weir pla…Preview
  58. Q58(j) One of the following which is not cause of labour turnover is : (a) Job dissatisfaction (b) Bad working condition (c) Retirement or deat…Preview
  59. Q59Express each of the following in one word / term : (ii) The rate of charge in the composition of the labour force of an organisation.Preview
  60. Q60Answer the following questions within one sentence each : (v) What is a Job Card ?Preview
  61. Q61Rectify the underlined portions of the following sentences : (viii) Time rate system may help in lowering cost due to increased production.…Preview
  62. Q62(f) What is Indirect Labour ?Preview
  63. Q63(g) What do you mean by outworker ?Preview
  64. Q64(i) What do you mean by Labour Turnover ?Preview
  65. Q65(d) How wage is calculated under time wage system ?Preview
  66. Q66(e) What is over time ?Preview
  67. Q67From the following information given below calculate the earning of each employee under (a) Halsey premium bonus plan (b) Rowan premium bonu…Preview

More questions

+Show 14 questions14 questions
  1. Example 1What is meant by labour cost? Distinguish between Direct Labour and Indirect Labour, giving one example of each.Free
  2. Example 2State any five characteristics of an ideal wage system.Free
  3. Example 3Distinguish between the Time Rate System and the Piece Rate System of wage payment.Free
  4. Example 4A worker is employed on a Time Rate basis at ₹45 per hour and works 208 hours during a month. Compute the worker's wages for the month.Preview
  5. Example 5A worker is paid under the Piece Rate system at ₹12.50 per unit. In a day the worker produces 320 units. Compute the worker's wages for that…Preview
  6. Example 6Distinguish between Time Keeping and Time Booking, and state one method commonly used for each.Preview
  7. Example 7As per the time-keeping records, a worker was present in the factory for 48 hours during a week; the job cards show only 44 hours booked aga…Preview
  8. Example 8What is Overtime? Explain how the overtime premium is treated in cost accounts in different situations.Preview
  9. Example 9Distinguish between a Casual Worker and an Out Worker.Preview
  10. Example 10What is Labour Turnover? State its main causes and remedial measures.Preview
  11. Example 11From the following data, compute the labour turnover rate under the (a) Separation Method, (b) Replacement Method, and (c) Flux Method. Numb…Preview
  12. Example 12The standard time (time allowed) for a job is 40 hours; the worker completes it in 30 hours. The wage rate is ₹20 per hour. Compute the work…Preview
  13. Example 13For the same job — time allowed 40 hours, time taken 30 hours, wage rate ₹20 per hour — compute the worker's total earnings and the effectiv…Preview
  14. Example 14Distinguish between the Halsey Premium Plan and the Rowan Premium Plan.Preview