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CMA Intermediate · Cost Accounting · Cost Book-Keeping

Gross wages of a factory for a month are ₹3,00,000. Of this, direct labour is ₹2,10,000, indirect labour ₹60,000 and the balance of ₹30,000 is idle time wages treated as abnormal. Under cost book-keeping, the Wage Control A/c will be credited when wages are allocated as follows:

Wage Control is cleared by debiting WIP ₹2,10,000 for direct labour, Factory Overhead Control ₹60,000 for indirect labour, and Costing Profit and Loss ₹30,000 for abnormal idle time. Abnormal idle time is not absorbed into product cost.

  1. AWIP ₹2,10,000; Factory Overhead ₹60,000; Costing P&L ₹30,000Correct
  2. BWIP ₹2,10,000; Factory Overhead ₹90,000; Costing P&L nil
  3. CWIP ₹3,00,000 only
  4. DWIP ₹2,70,000; Costing P&L ₹30,000

Explanation

Direct wages go to WIP (₹2,10,000), indirect wages to factory overhead control (₹60,000), and abnormal idle time is written off to Costing Profit and Loss (₹30,000). Total ₹3,00,000 reconciles. Putting abnormal idle time in overheads (option 2) would inflate product cost.

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