Labour cost accounting

(a) Describe briefly the purpose of the ‘wages control account’. (3 marks)

(b) A manufacturing company has approximately 600 weekly paid direct and indirect production workers. It incurred the following costs and deductions relating to the payroll for the week ended 2 May:

The employer’s National Insurance contribution for the week was £18770.
From the wages analysis the following information was extracted:

*Work done by building maintenance workers concreting floor area for a warehouse extension.
You are required to show journal entries to indicate clearly how each item should be posted into the accounts (i) from the payroll, and (ii) from the Wages Control Account to other accounts, based on the wages analysis.
Note: Narrations for the journal entries are not required.

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Gross wages Deductions: Employees' National Insurance Employees' pension fund contributions Income tax (PAYE) Court order retentions Trade union subscriptions Private health care contributions Total deductions Net wages paid () () 180460 14 120 7200 27 800 1840 1 200 6000 58 160 122 300