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Jane works as a member of three person team in the assembly department of a factory. The team rewarded by the group bonus where the team leader receives 40% of any bonus earned by the team and the remaining bonus is shared evenly between Jane and the other team member.
Hour 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 saved timeWhat is the bonus element of Jane’s pay?
The answer is $5.04. How to reach this answer?
In the BPP book the workings are a bit complicated.The standard time for 80 units is 80 x 9/60 = 12 hours.
The actually time was 8 hours, so they save 4 hours, so the total bonus is 70% x 4 x $6 = $16.80.
The leader of the time gets 40%, so Jane gets half of the remaining 60%.1/2 x 60% x $16.80 = $5.04
1.”70% of the saved time”. What does this mean?
2. what is the accounting entries for wages costs?
1. The save time is the difference between the actual time and the standard time.
2. The accounting entries are not relevant for Paper F2.
1. Basic pay is $70,800
Overtime premium is $2,000
Holiday pay $500
Gross wages incurred $73,300-What is the accounting entries for these wages costs?
DR WIP $70,800
DR overhead control $2,500
CR wages control account $73,3002. In a typical cost ledger, what is the double entry for indirect labour cost incurred?
DR overhead control
CR Wages control-For these two exercises, could you explain briefly what does the double entry mean?
1. The basic pay is a direct cost of production, so debit the WIP account.
The overtime premium and the holiday pay are indirect costs, and so debit overheads.2 The same as in (1) because they are indirect costs
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