CosAcc - Accounting for Labor

Sample Problems Discussion

Problem 1
Among Us Corporation provided the following data:
No. of employees at the beginning of the month, 600
No. of employees at the end of the year, 640
No. of employees resigned, 40
No. of employees discharged, 10
No. of employees replaced, 20

Required: Calculate the labor turnover by applying three methods:

a. Separation method = # separations/Ave. # employees 8.06%
b. Replacement method = # replaced/Ave. # employees 3.23%
c. Flux method = labor turnover(separation + replacement) 11.29%

Problem 2

Crewmates Company determined P284,200 payroll for the week consisting of P240,000 earned by
80 direct laborers and P44,200 earned by 20 indirect laborers. The total factory bonuses to be paid
at year-end is estimated at P980,000. All factory workers receive a 3-week vacation and 10 paid
holidays.

Required:
Prepare journal entries to (a) distribute the weekly payroll and to (b) accrue the bonus, vacation
and holiday pay.

Problem 3
Impostor Company's payroll register shows the following information for December:
Salary paid to marketing department, P40,000 (10 employees)
Wages paid to direct labor, P100,000
Insurance is fully paid by company, P10,000 per month

Impostor Company has a policy to award a fully paid one week vacation to best employee of the
year from marketing department with a bonus of P1,500

Required:
Assuming that current period has completed, prepare all necessary journal entries to record the
payroll on December 31st.

Problem 4:
Skeld Company has only 5 employees currently paid at a rate of P125/hour and a minimum
guaranteed salary of P1,000/day. The following today's production report is as follows:

Employee name (# hours worked)

Alpha (8.2)
Beta (8.6)
Gamma (7)
Rho (6)
Kappa (10)

Required: Calculate the direct labor and factory overhead.

Problem 5
Polus Restaurant Supply operates in two shifts, paying a late shift premium of 10 percent and an
overtime premium of 75 percent. The May 2013 payroll follows:
Total wages for 6,000 hours (including overtime and shift premiums) P540,000
Normal hourly employee wage P90
Total regular hours worked, split evenly between the shifts 5000
All overtime was worked by the early shift during May. Shift and overtime premiums are considered
part of overhead rather than direct labor.

Required:
·         How many overtime hours were worked in May?
·         How much of the total labor cost should be charged to direct labor? To overhead?
·         What amount of overhead was for second-shift premiums? For overtime premiums?
Journal entries: Bonus Pay

Total # weeks /year

WIP 240000 Less: Vacation weeks
Factory overhead 44200 # working weeks
Wages payable/Cash 284200
Total bonus
Factory overhead 49000 divide: # working weeks
Accrued liabilities/accrued expenses 49000 weekly bonus pay

Marketing salaries 40000 Bonus

Cash 40000 Vacation
Total marketing salaries/month
WIP 100000 Divide: # employees
Cash 100000 Marketing salaries/month/emplo

Divide: # weeks in a month

Insurance expense 10000 Vacation pay to be awarded
Cash 10000

Vacation pay - marketing 1000

Bonus pay - marketing 1500
Cash 2500

Employees # hours workedDirect laboMinimum Amount paid WIP

Alpha 8.2 1025 1000 1025 Factory overhead
Beta 8.6 1075 1000 1075 Cash
Gamma 7 875 1000 1000
Rho 6 750 1000 1000
Kappa 10 1250 1000 1250
Total 4975 5350
DL 4975
Oh 375

Idle time, shift, overtime

Normal - production (common) OH
Normal - production (specific to job) WIP or part to the job specified
Abnormal Period cost
 1 Overtime hours 1000
2 Direct labor 450000
OH 90000
3 Shift premium (10%) Overtime premium (75%)
# hours in late shift 2500 # overtime hrs
x premium 9 x premium
Shift premium 22500 Overtime premium
Overtime premium 67500

WIP 450000
Factory overhead 90000
Cash 540000
 Vacation pay

52 Weekly payroll 284200

3 Multiply: # vacation weeks 3
49 Total vacation pay 852600
divide: # working weeks 49
980000 Weekly vacation pay 17400
working weeks 49
20000

1500

Total marketing salaries/month 40000

Divide: # employees 10
Marketing salaries/month/employee 4000

Divide: # weeks in a month 4

Vacation pay to be awarded 1000

4975
Factory overhead 375
5350

WIP or part to the job specified

Period cost
 1000
67.5
67500
Holiday pay

Weekly payroll 284200

Multiply: # holidays (in weeks) 2
total holiday pay 568400
Divide: # working weeks 49
Weekly holiday pay 11600