1) An employee is paid on a piecework basis as follows.

Up to 100 units per week $2.40 per unit

101 to 120 units per week $2.70 per unit
121 units or more per week $3.00 per unit
Only the additional units qualify for the higher rate and rejected units do not qualify for payment. In a
week when the employee produced 133 units of which 11 were rejected what would be the
employee’s pay for the week?
a) $297
b) $300
c) $333
d) $366

2) A standard hour is:

a) A normal working hour
b) A normal clock hour
c) The amount of work expected to be completed in an hour
d) The portion of time in a given hour that is productive and not lost through idle time

3) Information on standard rates of pay would be provided by.

a) A trade union
b) A production manager
c) A personnel manager
d) A work study manager

4) Which of the following BEST defines idle time?

a) Hours unpaid to workers without any production taking place
b) Time during which workers are on strike
c) Hours paid to workers without any production taking place
d) Meal breaks for which workers are paid

5) A machine operator in a production cost centre works a basic week of 37.5 hours at a
basic rate of $9 per hour. Overtime, paid at 130% of the basic rate, is worked to meet the
general needs of the business. The machine operator worked a total of 45 hours in Week
9. How much of the operator's gross wages in Week 9 would have been treated as a
DIRECT labour cost?
a) $337.50
b) $405.00
c) $492.75
d) $425.25

6) Sara is a clothing machinist. She is paid a flat rate of $4/hour for a 37-hour week, with
any overtime paid at time and a half. In addition, a piecework rate of $6 is paid for each
customer contract finished in the week. Last week Sara worked 42 hours and completed four
customers’ contracts. How much is Sara's gross pay for the week?
a) $202
b) $178
c) $172
d) $276
7) A manufacturing organization has 24 employees who are paid a basic hourly rate of
$6.00 for a standard 38-hour week with any overtime hours being paid at a rate of time
and a half. In a typical week the employees all work 4 hours of overtime and produce
2,500 units of the organization’s product. What is the total unit labour cost for the
product?
a) $2.19
b) $2.30
c) $2.42
d) $2.53

8) A manufacturing organization employs 100 factory workers who are all paid at an hourly
rate of $7.00 for a 38-hour week. Any overtime hours are paid at time and a half. On
average each unit of the product the factory makes takes 4 hours and in an average week
each employee works 4 hours of overtime.
The management has recently installed new machinery which it is estimated should reduce the time
taken to produce one unit of the product to 3.5 hours. The employees will continue to work the same
amount of overtime.
What will be the increase in the number of units made each week now the machinery has
been installed?
a) 35 units
b) 135 units
c) 150 units
d) 250 units

9) A job requires 2,400 actual labour hours for completion and it is anticipated that there
will be 20% idle time. If the wage rate is $10 per hour, what is the budgeted labour cost
for the job?
a) $19,200
b) $24,000
c) $28,800
d) $30,000

10) Overtime premium pay may be correctly defined as:

a) The bonus paid to skilled workers
b) The increased payment during overtime hours because of increased rate of pay
c) The payment for all hours in excess of the basic working week
d) A premium paid to the workers to compensate the fatigue

11) The following data relates to work at the factory of Hitchin All over Ltd
Normal working day 8 hours
Basic rate of pay per hour $6
Standard time allowed to produce 1 unit 2 minutes
Premium bonus 75% of time saved at
basic rate
The direct labour cost for production in a day when 340 units are made will be:
a) $48
b) $51
c) $63
d) $68
12) Which of the following statements is / are true about group bonus schemes?
(i) Group bonus schemes are appropriate when increased output depends on a number of people
all making extra effort.
(ii) With a group bonus scheme, it is easier to award each individual’s performance.
(iii) Non-production employees can be rewarded as part of a group incentive scheme.
a) (i) only
b) (i) and (ii) only
c) (i) and (iii) only
d) all of them

13) Jane works as a member of a three-person team in the assembly department of a factory.
The team is rewarded by a group bonus scheme whereby the team leader receives 40 per
cent of any bonus earned by the team and the remaining bonus is shared evenly between
Jane and the other team member. Details of output for one day are given below:
Hours worked by team 8 hours
Team production achieved 80 units
Standard time allowed to produce one unit 9 minutes
Group bonus payable at $6 per hour 70% of time saved
The bonus element of Jane’s pay for this particular day will be:
a) $5.04
b) $7.20
c) $10.08
d) $16.80

14) Given below is a graph of a labour cost:

Activity height
What type of labour cost is this?
a) A straight piece rate system with a minimum guaranteed wage.
b) A straight time rate system.
c) A differential piece rate system.

15) Which of the following would NOT be an aspect of the production employee’s payroll
system?
a) Calculation of labour costs charged to products
b) Calculation of bonus payments
c) Calculation of basic pay
d) Record of attendance time

16) Jim Hill is a machine operative in a production cost centre and works a basic week of 35
hours. The basic rate of pay is $10.00 per hour. A premium of 25% of the basic hourly
rate is paid for all overtime hours worked. During the first week of March. Jim worked
for 44 hours. The overtime hours worked was for the following reasons:
 Late delivery of materials required in the manufacturing process 2 hours
Machine breakdown 3 hours
To complete the manufacture of items required to meet a delivery date 4 hours
brought forward by the customer
How much of Jim's earnings for the first week of March would have been treated as
direct wages?
a) $450.00
b) $400.00
c) $390.00
d) $462.50

17) A company operates a pay scheme which includes a basic wage plus a bonus which is
based upon the following formula:
Bonus = (time allowed - time taken) / 2] x basic rate per hour
During Week 12, an operative produced 205 units in the normal working week of 40
hours. The time allowed is 15 minutes per unit and the basic hourly rate is $12. What was
the total bonus paid to the operative in Week 12? ________

18) The direct labour efficiency ratio for a period was 98%. What could have caused this?
a) Actual hours worked exceeded the standard time for actual output
b) Budgeted hours exceeded the standard time for actual output
c) Standard time for actual output exceeded the actual hours worked
d) Actual hours worked exceeded the budgeted hours

19) A company pays a bonus to staff when the efficiency ratio is greater than 100%. 40% of
the time saved is then paid as a bonus at the basic hourly rate of $18. 10,400 hours were
worked in a period during which the standard time for actual production was 10,900.
What was the bonus for the period? _________

20) Labour efficiency ratio is calculated to be 110% and production volume ratio as 98%.
What is capacity ratio?
a) 100%
b) 112.2%
c) 208%
d) 89%

21) The following statements relate to labour costs. There would be an increase in the total
cost for labour as a result of:
(i) additional labour being employed on a temporary basis
(ii) a department with spare capacity being made to work more hours
(iii) A department which is at full capacity switching from the production of one product to another.
Which of the above is/are correct?
a) (i) only
b) (ii) only
c) (iii) only
d) (i) and (iii) only
22) KL currently pays its direct production workers on a time basis at a rate of $6.50 per
hour. In an effort to improve productivity, the company is introducing a bonus based on
(time taken/time allowed) x time saved x rate per hour. The standard time allowed for a
worker in the Assembly Department to perform this particular operation once has been
agreed at 37.5 minutes.
In the first week of the scheme's operation, one employee worked for a total of 44 hours and performed
94 operations. The gross wages for this employee based on a time rate of $6.50 per hour plus the
productivity bonus based on (time taken/time allowed) x time saved x rate per hour, to 2 decimal places,
is:
a) $214.20
b) $357.80
c) $381.88
d) $977.60

23) The following statements refer to situations occurring in Process Q of an organisation

which operates a series of consecutive processes:
(i) Direct labour is working at below the agreed productivity level.
(ii) A machine breakdown has occurred.
(iii) Direct labour is waiting for work to be completed in a previous process.
Which of these situations could give rise to idle time?
a) (i) and (ii) only
b) (i) and (iii) only
c) (ii) and (iii) only
d) (i), (ii) and (iii)

24) A company had 30 direct production employees at the beginning of last year and 20
direct production employees at the end of the year. During the year, a total of 15 direct
production employees had left the company to work for a local competitor. The labour
turnover rate for last year was:
a) 16.7%
b) 20.0%
c) 25.0%
d) 60.0%

The following data are to be used for questions 25 & 26 (next two questions)
Budgeted and actual production data for the year that has just ended are as follows;
Actual
Product
production
Units Standard machine hours Units
W 15,000 3,000 12,000
X 20,000 8,000 25,000
Y 14,000 7,000 16,000
Z 6,000 9,000 5,000
Total machine hours worked in the period amounted to 29,000 hours.

25) What was the capacity ratio in the year, as a percentage to one decimal place?
a) 93.1%
b) 103.3%
c) 105.5%
 d) 107.4%

26) What was the efficiency ratio in the year, as a percentage to one decimal place?
a) 96.2%
b) 103.3%
c) 103.9%
d) 107.4%

27) X Co. has recorded the following wages costs for direct production workers for
November.
$
Basic pay 70,800
Overtime premium 2,000
Holiday pay 500
Gross wages incurred 73,300
The overtime was not worked for any specific job. The accounting entries for these wages cost
would be;
Debit Credit
$ $
a) Work in progress account 72,800
Overhead control account 500
Wages control account 73,300
b) Work in progress account 70,800
Overhead control account 2,500
Wages control account 73,300
c) Wages control account 73,300
Work in progress account 70,800
Overhead control account 2,500
d) Wages control account 73,300
Work in progress account 72,800
Overhead control account 500

The following data are to be used for questions 28 & 29 (next two questions)
Normal working week 36 Hours
Basic rate per pay (direct) $6.20 Per hour
Overtime pay $7.50 Per hour
Last week, the total hours worked by all these workers were 936. The overtime hours worked was 108. All
employees worked at least their basic 36 hours.

28) The number of workers who worked last week;

a) Was 23
b) Was 26
c) Was 29
d) Cannot be determined from the above data

29) The total direct labor charge for the above was;
a) $810.00
b) $5,133.60
c) $5,803.20
 d) $6,210.00

30) JoJo is an assembly worker earning $12 per hour for a basic 35-hour week. Any overtime
is paid at a premium of 50%.
In the last four-week period, JoJo was paid for 150 hours. During this time 15 hours were classed as
idle due to a machine break down. Also included in the number of hours are four hours’ overtime spent
working for an urgent job at the request of the customer. How much should be charged to the
production overhead account for the four-week period?
a) $216
b) $240
c) $288
d) $360