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Management accounting techniques > Labour costs > Flashcards

Labour costs Flashcards

1
Q

What are labour costs ? P83

A

Wages and salaries - all employees

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2
Q

What are the factors affecting labour costs ? P83

A

CHUNNI O
C - Business Confidence - interest charges
H - Housing and transport
U - High Unemployment - wage rates
N-** N** ational average wage rates comparison
N - National and living wages set by government
I - -Incentives from government - additional employees

O - Other local businesses

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3
Q

Who are direct labour costs paid to ? P83

A
  • Production lien
  • involved in assembly
  • involved in an output of a service business
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4
Q

What are the three main methods of direct labour ? P84

A
  • Time rate
  • piecework rate
  • bonus system
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5
Q

What is time rate ? P84

A

Time spent at work
overtime - beyond standard number of hours / days not in working week

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6
Q

What is piecework rate ? P84

A
  • Agreed sum - each task / unit of output completed
  • unit of outputs BASED ON agreed output per hour = standard hour produced
  • Guaranteed minimum wage
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7
Q

What is the bonus system ? P84

A

Time rate + bonus
Output better than expected
compared - time allowed with time taken
calcualtion = agreed percentage of time saved * time rate

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8
Q

What is needed to calculate gross pay and how is this recorded ? P85

A
  • Hours worked and/or work done
  • time sheets
  • clock cards
  • piecework tickets
  • job cards
  • route card
  • computer cards
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9
Q

When would a proportion of the labour cots ffor production line employees be classsed as indirect costs ? P89

A
  • Wages - direct workers - not linked to specific work
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10
Q

When are the three times where the wages of production workeers woiuld be classec as indirect? P90

A
  • Overtime payments and premiums
  • Idle time
  • equivalen units
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11
Q

How is overtime discerned in two ways ? P89

A
  • Overtime payment - time rate + premium ( time and a half)
  • overtime premium - the half bit
  • accounting purposes - time rate is direct
  • accounting purposes - OT premium indirect
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12
Q

When would overtime be classed as direct labour ? P89

A

Cost to customer

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13
Q

How would other additional pay be treated, such as bonus, be treated ? P89

A

Indirect labour

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14
Q

What is idle time and when does this happen? P90 and P31 mini booklet ?

A

Not egngaged- production work
no fault - machine breakdown , shortage of materials

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15
Q

How are employeees under a piecework and bonus system paid in idle tim ? P90

A

Time rate

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16
Q

What type of labour is idle time classed as? P90

A

Indirect labour

17
Q

When would a calculation equivalent units be needed ? P90

A
  • Production employees paid - output basis
  • Part of production = work in progress ( end of accounting period)
  • labour content
18
Q

How do you calculate total equivalent units? P90

A

Units completed + (units work in progress * percentage completed) = equivalent units

19
Q

What are the costs bookkeeping entries for labour costs concerned with ? P92

A
  • Transfer of labour costs
  • to production
  • to overheads
20
Q

What account is used to charge labour costs ? P92

A
  • Wages control account
  • linked - payroll accounting system
21
Q

What responsibility centre does the wage control account charge labour costs to ? P92

A
  • Costs
  • profit
  • investment centres
22
Q

In what way is labour charged to various centres of a business ? P92

A
  • Direct labour - production
  • Indirect labour - production overheads
  • Administration labour - non production overheads
23
Q

What are production overheads also referred to as ? P93

A
  • Operating overheadds
24
Q

What are non production overheads also referred to as ? P93

A

Non- operating overheads

25
Q

What is the double entry for transferring direct labour to production ? P93

A

Debit production
credit wages control

26
Q

What is the general ledger entry for transferring indirect labour costs to production overheads ? P93

A
  • Debit production overheads
  • credit wages control account
27
Q

What is the general ledger entry for transferring administration labour costs to non-production overheads ? P93

A
  • Debit - non production overheads
  • credit - wages control account
28
Q

How do you account for labour costs relating to capital expenditure ? P93

A
  • E.g. own workforce building extension to premise
  • debit - premise account ( relevant capital expenditure)
  • credit - wage control account
29
Q
A

Management accounting techniques (9 decks)

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