Labour Costing: Time Keeping, Time Booking, Wage Systems and Labour Turnover Questions

Question 1

Distinguish between time keeping and time booking (any three points).

Accepted Answer

Time keeping and time booking differ as follows:

| Basis | Time keeping | Time booking |
|---|---|---|
| Meaning | records attendance/total time | records job/process-wise time |
| Use | wage calculation, overtime | job costing, efficiency analysis |
| Output | total time | time per job/operation |

Question 2

Define time keeping.

Accepted Answer

Time keeping is the process of recording the attendance and total time spent by workers in the factory/premises.

Question 3

Define time booking.

Accepted Answer

Time booking is the process of recording the time spent by a worker on each job, operation or process.

Question 4

What is idle time?

Accepted Answer

Idle time is the time paid for but not worked, i.e., the difference between attendance time and productive working time.

Question 5

What is overtime premium?

Accepted Answer

Overtime premium is the extra amount paid over normal wages for hours worked beyond normal working hours.

Question 6

State one advantage of piece rate system.

Accepted Answer

Piece rate system encourages higher output because wages increase with the number of units produced.

Question 7

What is labour turnover?

Accepted Answer

Labour turnover is the rate of change in the labour force due to employees leaving (separations) and being replaced.

Question 8

State the causes of idle time and its basic treatment in cost accounts.

Accepted Answer

Causes of idle time include machine breakdown, power failure, waiting for materials/tools, lack of instructions, and poor planning/supervision.

Treatment: normal idle time is treated as factory overhead (or included in labour rate). Abnormal idle time is charged separately to Costing Profit & Loss account.

Question 9

Explain time rate and piece rate wage systems with one merit and one demerit each.

Accepted Answer

Time rate: wages = time worked × rate. Merit: stable income and simple. Demerit: weak incentive to increase output.

Piece rate: wages = units produced × rate per unit. Merit: encourages output. Demerit: may affect quality unless inspection/control is strong.

Question 10

Explain overtime and its treatment when overtime is due to (i) general workload and (ii) a specific urgent job.

Accepted Answer

Overtime is work beyond normal hours. The overtime premium (extra over normal wages) is treated as:
(i) General workload: charged to factory overhead and spread over production.
(ii) Specific urgent job: charged directly to that job because it was incurred to complete that job.

Question 11

Write short notes on labour turnover: any three causes and any two remedies.

Accepted Answer

Causes: low wages/benefits, poor working conditions, bad supervision/conflict, lack of training/growth, personal reasons.

Remedies: fair wage and incentive policy, better working conditions and welfare, training and career development, improved supervision and communication.

Question 12

Differentiate between separation, replacement and flux methods of labour turnover.

Accepted Answer

All methods use average number of employees (Avg) as base.

- Separation method: (Separations / Avg) × 100
- Replacement method: (Replacements / Avg) × 100
- Flux method: ((Separations + Replacements) / Avg) × 100

Flux method captures overall movement in workforce.

Question 13

Explain Halsey and Rowan incentive plans with formulas and compute earnings for: Standard time 10 hrs, time taken 8 hrs, rate ₹50/hr.

Accepted Answer

Let S = standard time, T = time taken, R = hourly rate.

Halsey (50% sharing):
- Bonus = 0.5(S − T)R
- Earnings = TR + 0.5(S − T)R

Rowan:
- Bonus = ((S − T)/S) × T × R
- Earnings = TR + Bonus

Given: S=10, T=8, R=₹50
Time wages = 8×50 = ₹400

Halsey bonus = 0.5×(2)×50 = ₹50 → Earnings = 400 + 50 = **₹450**
Rowan bonus = (2/10)×8×50 = ₹80 → Earnings = 400 + 80 = **₹480**

Thus, Rowan gives higher earnings in this case.

Question 14

Compute labour turnover percentage using all three methods for the month: Employees at start 900, at end 1,000; separations 50; replacements 40.

Accepted Answer

Average employees (Avg) = (900 + 1,000)/2 = 950

Separation method = (50/950)×100 = 5.26% (approx.)
Replacement method = (40/950)×100 = 4.21% (approx.)
Flux method = ((50 + 40)/950)×100 = (90/950)×100 = 9.47% (approx.)

A summary table:

| Method | Formula | % |
|---|---|---:|
| Separation | 50/950×100 | 5.26 |
| Replacement | 40/950×100 | 4.21 |
| Flux | 90/950×100 | 9.47 |

Question 15

Describe a labour cost control system and explain how time keeping/time booking help in control of idle time and overtime (include a flow).

Accepted Answer

A labour cost control system ensures correct wage payment, proper allocation of labour cost, and reduction of losses from idle time/overtime through systematic recording, analysis and corrective actions.

Role of time keeping and time booking:
- Time keeping records attendance and total hours, enabling correct overtime calculation.
- Time booking records job-wise time, enabling allocation of direct labour to jobs and identification of idle time (unproductive time).

Idle time and overtime control: analyse causes (breakdowns, waiting, rush orders), classify normal vs abnormal, and charge costs appropriately (job/overhead/Costing P&L).

Flow (simplified):

```mermaid
flowchart TD
  A[Time keeping
Attendance] --> B[Time booking
Job-wise time]
  B --> C[Wage computation
Time/Piece + incentives]
  C --> D[Idle time analysis
Normal vs abnormal]
  D --> E[Overtime analysis
Job vs overhead]
  E --> F[Efficiency reports
& corrective actions]
```

A good system reduces payroll errors, improves productivity, and supports responsibility and cost control.

Basis	Time keeping	Time booking
Meaning	records attendance/total time	records job/process-wise time
Use	wage calculation, overtime	job costing, efficiency analysis
Output	total time	time per job/operation

Labour Costing: Time Keeping, Time Booking, Wage Systems and Labour Turnover

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