A company plans to produce 400 units next month. Each unit needs 2.5 labour hours. Labour is paid $25 per hour. 20% of the total labour hours will be idle time.

What is the estimated total labour cost for the month?

Sana is contracted to work 38 hours per week at a rate of $28 per hour. Last week, she worked 42 hours. The extra 4 hours were worked specifically at the request of a client. Overtime is paid at 1.5 times the regular rate.

What amount of Sana’s wages should be classified as a direct labour cost?

A business uses a piecework wage system. Workers are paid $6.00 per unit for the first 10 units produced in a week, and $9.00 per unit for any additional units. There are 60 workers, and each is expected to produce 15 units weekly.

What is the average labour cost per unit?

A production company employs 80 factory workers, each working a standard 40-hour week at a rate of $8.00 per hour. Each employee also works an average of 5 overtime hours per week, paid at 1.5 times the normal rate.

Previously, it took 4.5 hours to produce one unit of the product. After new equipment was introduced, the production time per unit is expected to drop to 4 hours. The total working hours (including overtime) will remain unchanged.

By how many units is weekly production expected to increase due to the new equipment?

TechFab Ltd produces precision-engineered panels. The business currently employs 8 workers, each working 37 regular hours per week at a rate of $7.50 per hour, along with an additional 3 hours of overtime paid at $11.25 per hour. Over the course of a week, the team produces 400 units.

Management is considering switching to a piecework system, where each worker would be paid $4.20 per unit for the first 40 units, and $5.10 per unit for any units above 40. It is expected that each worker will produce 45 units per week under the new pay structure.

If TechFab Ltd moves to the proposed piecework system, what would be the change in unit labour cost compared to the current system

(to 2 d.p)?

At LumaTech Electronics, factory workers are paid a basic hourly wage of $6.20 for a standard 38-hour workweek. Overtime is compensated at a rate of $8.70 per hour. Currently, it takes 2.4 hours to produce one unit of the company's signature device. On average, employees work 6 hours of overtime each week to meet demand.

Management is evaluating an investment in new automation technology. If implemented, the time required to produce each unit would be reduced by 0.4 hours, and no overtime would be necessary going forward.

What would be the impact on labour cost per unit if the automation is introduced?

Which of the following scenarios would cause an overtime premium to be classified as a direct cost?

At GlowPrint Packaging, employees are paid based on the number of cartons they assemble each week using the following piecework rates:

• Up to 90 cartons: $3.00 per carton

• 91 to 110 cartons: $3.40 per carton

• 111 cartons and above: $3.80 per carton

Only the additional cartons qualify for the higher rates, and any rejected cartons do not qualify for pay.

One week, a worker assembled 125 cartons, of which 10 were rejected after quality inspection.

What is the employee’s gross pay for the week?

Which labour-related entry correctly reflects the allocation of direct labour cost to production?

At MetroLite Manufacturing, workers are part of a bonus scheme where they receive a bonus based on the time they save compared to the standard time allowed. The standard output rate is 22 units of product X per hour. In Week 12, one employee produced 770 units in 30 hours. The employee’s normal hourly wage is $10.00. Under the scheme, the bonus is calculated as 80% of the hourly rate for each hour of time saved.

What is the bonus earned by the employee for time saved during Week 12?

At Vertex Construction Ltd, a large custom-built equipment project is budgeted to require 2,400 productive labour hours. However, the budgeting team expects that 20% of total labour hours will be lost to unavoidable idle time due to setup and delays. The total labour cost budgeted for the project is $28,800.

What is the labour cost per hour (including both productive and idle time)?

Employee B is a technician who works on the factory floor assembling and configuring production equipment for custom manufacturing jobs. They typically work 38 hours per week at a standard pay rate of $4.20 per hour. The company pays a 60% overtime premium for hours worked beyond the normal week.

During the second week of November, Employee B worked 44 hours in total. The 6 overtime hours were spent as follows:

• 3 hours repairing a broken conveyor belt that halted production

• 3 hours performing an urgent machine setup for a client-specific order

How much of Employee B’s wages for that week would be treated as direct wages?

A garment factory pays its workers based on a piecework system. Each worker is paid $0.30 for every item stitched. However, the factory ensures a minimum daily wage of $15 for each worker.

Below is the number of items stitched by Worker B during a recent week:

Monday: 50 items , Tuesday: 55 items , Wednesday: 60 items , Thursday: 40 items , Friday: 80 items

What are Worker B’s total earnings for the week?

The HR department at NovaTech Ltd. has compiled the following payroll details for Department A for the month:

Department A:

• Payments made to employees: $8,200

• Income tax deducted: $2,800

• Employees’ state benefit contributions (NI in the UK): $1,500

• Employer’s state benefit contributions (NI in the UK): $2,300

• What is the gross wages amount for Department A for the month?

Employee A normally earns $12 per hour for a 40-hour work week. Last week, the employee worked 48 hours and is entitled to time-and-a-half for overtime. The overtime was due to machine breakdown.
What is the overtime premium, and how should it be recorded in the accounts?