ACCA Applied Knowledge · Management Accounting · Accounting for material, labour and overheads
A company operates a group bonus scheme where time saved is rewarded. The standard time for a job is 50 hours and the job was completed in 40 hours. The hourly rate is $15 and the bonus is 60% of the time saved, paid at the hourly rate. What is the total labour cost of the job including bonus?
The total labour cost is $690. Basic pay for 40 hours is $600, and the bonus is 60% of the 10 hours saved at $15, which is $90. Together they come to $690.
- A$690Correct
- B$600
- C$750
- D$640
Explanation
Time saved = 50 - 40 = 10 hours. Bonus = 60% x 10 x $15 = $90. Basic pay for hours taken = 40 x $15 = $600. Total = $690. Paying 50 hours ($750) ignores that pay is for hours worked, and omitting the bonus gives $600.
Did you get it right without looking?
One question tells you little. A timed set on Accounting for material, labour and overheads shows your real accuracy, how long you take and where you lose marks.
More Accounting for material, labour and overheads questions
- A company's direct labour force of 20 workers is paid for 40 hours a week for 50 weeks a year. Each worker receives 160 hours of paid holida…
- Which of the following is the correct accounting treatment at the end of the period when production overheads have been over-absorbed?
- Dunmore Co has two service departments, Maintenance (M) and Canteen (C), and two production departments, X and Y. Overheads before service a…
- A factory worker is paid under a piece-rate system with no guaranteed minimum. The rate is $0.80 per unit. In a 40-hour week the worker prod…
- Which of the following is most likely to INCREASE the labour turnover rate in a factory?
- Which of the following would most likely cause overheads to be under-absorbed in a period?