A company pays its factory workers on a time basis & is now considering the introduction of alternative methods. The following relates to two employees for one week.

Blair Brown

Hours worked 44 40

Rate of pay per hour 3.50 4.50

Units of output 480 390

Standard time allowed for each unit of output is 7 minutes. For the purpose of piecework calculations, each standard minute is valued at 0.05. Required: Calculate the gross pay of each employee where earnings are based on: (i) piecework rates with earnings guaranteed at 80% of pay calculated on an hourly basis; (ii) a premium bonus scheme with the bonus based on 75% of time saved.

Exercise 3

Clement Motor Accessories Ltd has received an order for 100 units of a specialist component. The following resources have been booked out to the job:

Direct materials:

Material J 21.4 kg

Material Q 3.7 kg @ 2.75 per kg

Unskilled labour 16 hours @ 4.78 per hour

Skilled labour 8 hours @ 8.21 per hour

Material J was booked out of stores on 21 September. The stores ledger entries prior to that date are as follows:

Kg.

1 September Balance brought forward @ 14.30 per kg 28.7

8 September Purchases @ 14.20 per kg 30.0

18 September Issues to production (20.6)

Clement Ltd prices stock issues using FIFO. Calculate (i) total prime (direct) cost; (ii) prime cost per component.

Exercise 4

1. The following information relates to the wages paid to workers for a four week period in a factory department (Department A) where two products (Product M and N) are manufactured.
2. All workers are paid at hourly rates. Basic rates (gross) are $8.00 per hour for direct workers and $6.00 per hour for indirect workers for a 40 hour week.
   1. Calculate the gross wages, for the four week period in department A, for both direct workers and indirect workers.

The department employs 24 direct workers and 9 indirect workers. Overtime is regularly worked to meet general production requirements and is paid at a premium of 25% over basic rate for all workers. Overtime hours in the four week period were 256 and 84 for direct and indirect workers respectively.

Production of the two products during the four week period was:

Product M 9,640 units in 1,620 hours of direct workers time.

Product N 22,800 units in 2,270 hours of direct workers time.

The balance of the direct workers time in the period was non-productive time.

Required:

1. Calculate the gross wages, for the four week period in department A, for both direct workers and indirect workers.
2. Calculate direct labour costs.