Intermediate: Labour cost accounting and recording of journal entries

(a) Identify the costs to a business arising from labour turnover. (5 marks)

(b) A company operates a factory which employed 40 direct workers throughout the four-week period just ended. Direct employ¬ ees were paid at a basic rate of £4.00 per hour for a 38-hour week. Total hours of the direct workers in the four-week period were 6528. Overtime, which is paid at a premium of 35%, is worked in order to meet general production requirements. Employee deductions total 30% of gross wages. 188 hours of direct workers’ time were registered as idle.

Required:

Prepare journal entries to account for the labour costs of direct workers for the period.