a) Controllable labour costs are costs which can be influenced by the actions of a person in whom authority for such control is vested. e.g. supervisory cost.
b) Non controllable labour costs are costs of labour which can not be influenced by actions of a person in whom authority for such control is vested.
- The following examples illustrate the degree in to which control of labour costs may be exercised.
1. Where the employee is paid on straight piece work bases. A fixed rate per product unit then the time taken per product will be influenced by a number of factors such as efficiency of the employee, degree of supervision, efficiency in the follow of materials used etc. Such factors are controllable to varying degree by different management members and functions.
2. Where the employee is paid a fixed weekly wage there is no control over the wage paid to the employee. The control will focus on ensuring the product or a service is achieved as efficiently as possible. E.g. in case of production of quality limited models, emphasis will be on quality rather the speed of output.
3. Where the employee is in a service department e.g. a fitter in the maintenance department paid at a rate per hour worked. The basic working week may be agreed as part of employer -employee negotiation e.g. through working hour per day for 5 day week. The control over the use of this time will be the responsibility of the engineer in charge of the maintenance department. He can direct the fitter to carry out maintenance work of a routine nature or in the event of a machine breakdown. In some extent however, the control of over the use of filter time will be in the hand of others. A manager in the production department may require agent repair and may necessity working extra at a premium rate of pay.
Wilfykil answered the question on August 5, 2019 at 12:47
- Differentiate between Fixed and Variable Labour Cost(Solved)
Differentiate between Fixed and Variable Labour Cost
Date posted: August 5, 2019. Answers (1)
- Explain Over time and incentive bonuses(Solved)
Explain Over time and incentive bonuses
Date posted: August 5, 2019. Answers (1)
- Discuss on classification of Labour Cost(Solved)
Discuss on classification of Labour Cost
Date posted: August 5, 2019. Answers (1)
- Below is the consumption per week of a certain item(Solved)
Below is the consumption per week of a certain item
Required: R.L; Min stock level, max stock level, average stock level.
Date posted: August 5, 2019. Answers (1)
- Elaborate on Setting Material Levels(Solved)
Elaborate on Setting Material Levels
Date posted: August 5, 2019. Answers (1)
- A company is reviewing its stock and has the following alternatives available for evaluating the optimal order size for item number 1287 (Solved)
A company is reviewing its stock and has the following alternatives available for evaluating the optimal order size for item number 1287
1. Purchase stock twice monthly, 100 units
2. Purchase monthly, 200 units
3. Purchase every three months, 600 units
4. Purchase every six months, 1,200 units
5. Purchase annually, 2,400 units
It is ascertained that the purchase price per unit is Sh.80 for deliveries up to 500 units. A 5% discount is offered by the supplier on the whole order where deliveries are 301 up to 1,000 and 10% reduction on the total order for deliveries in excess of 1,000. Each purchase order incurs administration costs of Sh.50. Storage, interest on capital and other costs are Sh.25 per unit of average stock quantity held.
Required: Advise management on the optimum order size
Date posted: August 5, 2019. Answers (1)
- Bora Supermarket carries on its operations in Kisumu town. On annual basis, it orders 480,000 pens from a Nairobi based distributor.(Solved)
Bora Supermarket carries on its operations in Kisumu town. On annual basis, it orders 480,000 pens from a Nairobi based distributor. A packet of twenty four pens delivered to Bora‟s warehouse costs Sh.480 including transport charges. The supermarket borrows money from BHK bank at an interest rate of 10% per annum to finance its inventories. The supermarket also incurs Sh.1, 500 to place an order for the pens and Sh.8 carrying cost for each pen. Required:
(i) Economic order quantity (EOQ) for the pens
(ii) Total cost at the economic order quantity
(iii) For orders of 72,000 pens and above, the distributor has offered a discount rate of 10% on delivery price.
Advise the management of the supermarket on whether to take advantage of the discount offer.
Date posted: August 5, 2019. Answers (1)
- List the four cost associated inventory(Solved)
List the four cost associated inventory
Date posted: August 5, 2019. Answers (1)
- Tido ltd buys and sells products Q3. It values stock on the basis of LIFO. As at 1st June 2001 stock in hand consisted of...(Solved)
Tido ltd buys and sells products Q3. It values stock on the basis of LIFO. As at 1st June 2001 stock in hand consisted of 4500 units which was acquired at sh 50 per unit. The operations for the month were as follows.
Date posted: August 5, 2019. Answers (1)
- Explain the Purchasing Systems(Solved)
Explain the Purchasing Systems
Date posted: August 5, 2019. Answers (1)
- Give the Steps followed in Procurement of Materials(Solved)
Give the Steps followed in Procurement of Materials
Date posted: August 5, 2019. Answers (1)
- List the Concepts of Cost accounting(Solved)
List the Concepts of Cost accounting
Date posted: August 5, 2019. Answers (1)
- What is the definition of:
1. Cost
2. Cost units(Solved)
What is the definition of:
1. Cost
2. Cost units
Date posted: August 5, 2019. Answers (1)
- Discuss the term "Management Accounting"(Solved)
Discuss the term "Management Accounting"
Date posted: August 5, 2019. Answers (1)
- What is the difference between financial accounting and cost accounting?(Solved)
What is the difference between financial accounting and cost accounting?
Date posted: August 5, 2019. Answers (1)
- What is the meaning of Financial accounting?(Solved)
What is the meaning of Financial accounting?
Date posted: August 5, 2019. Answers (1)
- Discuss Cost accounting and control(Solved)
Discuss Cost accounting and control
Date posted: August 5, 2019. Answers (1)
- Discuss the definition of and Scope of Cost Accounting(Solved)
Discuss the definition of and Scope of Cost Accounting
Date posted: August 5, 2019. Answers (1)
- Explain the Cost of Redeemable Debentures and Preference Shares(Solved)
Explain the Cost of Redeemable Debentures and Preference Shares
Date posted: August 5, 2019. Answers (1)
- Which are the Methods/models of Computing Cost of Capital?(Solved)
Which are the Methods/models of Computing Cost of Capital?
Date posted: August 5, 2019. Answers (1)