Chapter 3 - Labour Costs

Question 1

What are labour costs ?

Answer 1

Labour costs are one of the elements of costs that cover the costs of wages and salaries for all of their employees

Question 2

Give three factors that affect labour costs ?

( How much a business pays its employees )

Answer 2

• wage rates paid by other businesses
• comparisons with national wage rates
• national minimum living wage rates
• government incentives to take on additional employees
• local employment conditions ( AKA high or low employment in the area where the business is based )

Question 3

What type of employee would fall under direct labour costs ?

Answer 3

Employees that work on a production line or are involved in assembly of a product

Employees that are involved in the output of a service business

Question 4

What are the three main payment methods for direct labour ?

Answer 4

1) Time rate
2) piecework rate
3 ) bonus system

Question 5

payment methods for direct labour

What is the time rate payment method ?

Answer 5

This is where an employee is paid based on the time they spend at work

Question 6

payment methods for direct labour

What is the piecework rate method of payment for employees ?

Answer 6

The employee is paid an agreed sum for each task carried out or each unit of output completed

Question 7

payment methods for direct labour

What is the bonus system method of payment for employees ?

Answer 7

The employee is paid a time rate and then receives a bonus if the output of the employee is better than expected

Question 8

List three ways that work done can be recorded.

Answer 8

• time sheets
• clock cards
• piecework tickets
• job cards
• route cards
• computer cards