Accounting for Labour MCQs | Labour Costing


Common methods of measuring labour activity are at Production and Productivity level. Here on we have prepared useful
Accounting for Labour MCQs | MCQs.CLUB

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Accounting for Labour MCQs

Common methods of measuring labour activity are at Production and Productivity level. Here on we have prepared useful Multiple-Choice Questions (MCQs) on Accounting for labour that covers the labour costing, factory accounting, labour cost in cost accounting. Our designed MCQs are useful for Accounting and Finance srudents and competitive exams.

  1. The personnel department will maintain a history for each employee. The record will include such details as:
    • Full name and address
    • Previous employment
    • Clock number issued
    • Date engaged
    • Department, job title and pay rate upon engagement
    • On the termination of employment, the date and reason for leaving
      1. (I) (II) only
      2. (I) (II) and (III) only
      3. All of the above
      4. None
  2. Employee time recording is required both for payment purposes and also for determining costs to be charged to specific jobs. Time recording is further classified into:
    1. Attendance records
    2. Activity time records
    3. Both A&B
    4. None
  3. A clock card is a document on which is recorded the starting and finishing time of an employee.
    1. True
    2. False
  4. The payroll preparation involves:
    1. Calculating gross wages from time and activity records
    2. Calculating net wages after tax at source and other deductions
    3. Preparing a cash analysis of total cash required for payment
    4. All of the above
  5. Common methods of measuring labour activity is/are:
    1. Production
    2. Productivity
    3. Both A&B
    4. None
  6. Production is the quantity or volume of output produced. Productivity is a measure of the efficiency with which output has been produced.
    1. The above statement is correct
    2. The above statement is incorrect
  7. An increase in production without an increase in productivity will not reduce unit costs.
    1. False
    2. True
  8. Standard hour of production is a concept used in standard costing, and means the number of units that can be produced by one worker working in the standard way at the standard rate for one hour.
    1. The above statement is correct
    2. The above statement is incorrect
  9. Production levels can be raised as:
    • Working overtime
    • Hiring extra staff
    • Subcontracting some work to an outside firm
    • Managing the workforce so as to achieve more output
      1. (I) and (II) only
      2. (III) only
      3. All of the above
      4. None
  10. Production levels can be reduced as:
    1. Cancelling overtime
    2. Laying off staff
    3. Both A&B
    4. None
  11. Measures of labour activity include the following:
    1. Production volume ratio, Activity ratio
    2. Efficiency ratio (or productivity ratio)
    3. Capacity ratio
    4. All of the above
  12. Productivity unlike is a measure of efficiency with which the units have been produced.
    1. True
    2. False
  13. The basic approaches to remuneration is/are:
    1. Time-related
    2. Output-related
    3. Both A&B
    4. None
  14. Time rates is where employees are paid a basic rate per hour, day, week or month irrespective of production achieved. Basic time rate provides no incentive to improve productivity.
    1. The above statement is Correct
    2. The above statement is Incorrect
  15. Piece-work is where a fixed amount is paid per unit of output achieved, irrespective of time spent.
    1. False
    2. True
  16. Which of the following a type of piece-work?
    1. Straight piece-work systems
    2. Differential piece rates system
    3. Both A&B
    4. None
  17. Which of the following is/are incentive scheme approaches?
    1. Premium bonus plans
    2. Measured day work
    3. Share
    4. All of the above
  18. Any incentive scheme should be:
    1. Related closely to effort
    2. Agreed by prior consultation between employer and employees
    3. Capable of being beneficial to the average worker
    4. All of the above
  19. Premium bonus plans is to pay a basic time rate, plus a portion of the time saved as compare to some agreed allowed time.
    1. True
    2. False
  20. Halsey and Rowan are examples of:
    1. Share scheme
    2. Premium bonus scheme
    3. Measured day work
    4. None
  21. Halsey (premium bonus scheme) is where employee receives ________ of the time saved.
    1. 1/3
    2. 75%
    3. 50%
    4. None
  22. Rowan (premium bonus scheme) is where the payment made to employee is based on the ratio of time taken to time allowed.
    1. Correct
    2. Incorrect
  23. Identify the basic groups of remuneration method:
    1. Time work,
    2. Piecework schemes and
    3. Bonus/incentive schemes.
    4. All of the above
  24. Labour remuneration methods have an effect on:
    1. The cost of finished products and services
    2. The morale and efficiency of employees
    3. Both A&B
    4. None
  25. Which of the following statement is correct for day-rate systems?
    1. They are easy to understand
    2. They do not lead to very complex negotiations when they are being revised
    3. They are most appropriate when the quality of output is more important than the quantity, or where there is no basis for payment by performance
    4. There is no incentive for employees who are paid on a day-rate basis to improve their performance
    5. All of the above
  26. It is normal for pieceworkers to be offered a guaranteed minimum wage, so that they do not suffer loss of earnings when production is low through no fault of their own.
    1. True
    2. False
  27. Which of the following statement is correct for piecework schemes?
    1. They enjoy fluctuating popularity
    2. They are occasionally used by employers as a means of increasing pay levels
    3. They are often seen to drive employees to work too hard to earn a satisfactory wage
    4. All of the above
  28. The characteristics of bonus/incentive schemes is/are:
    • Employees are paid more for their efficiency
    • The profits arising from productivity improvements are shared between employer and employee
    • Morale of employees is likely to improve since they are seen to receive extra reward for extra effort.
      1. All of the above
      2. Only (I)
      3. (II) and (III) only
      4. None
  29. A bonus scheme must satisfy certain conditions to operate successfully.
    1. Its objectives should be clearly stated and attainable by the employees.
    2. The rules and conditions of the scheme should be easy to understand.
    3. It must win the full acceptance of everyone concerned.
    4. It should be seen to be fair to employees and employers.
    5. The bonus should ideally be paid soon after the extra effort has been made by the employees.
    6. Allowances should be made for external factors outside the employees’ control which reduce their productivity (machine breakdowns, material shortages).
    7. Only those employees who make the extra effort should be rewarded.
    8. The scheme must be properly communicated to employees.
      1. (I) (IV) (VIII) only
      2. (III)(VI)(VIII) only
      3. (III) and (VIII) only
      4. All the above
  30. A high day-rate system is a system where employees are paid a high hourly wage rate in the expectation that they will work more efficiently than similar employees on a lower hourly rate in a different company.
    1. The above statement is correct
    2. The above statement is incorrect
  31. The advantages of a high day-rate scheme over other incentive schemes is/are:
    1. It is simple to calculate and easy to understand
    2. It guarantees the employee a consistently high wage
    3. Both A&B
    4. None
  32. The disadvantages of a high day-rate schemes is/are:
    1. Employees cannot earn more than the fixed hourly rate for their extra effort
    2. There is no guarantee that the scheme will work consistently
    3. Employees may prefer to work at a normal rate of output
    4. All of the above
  33. A group bonus scheme is an incentive plan which is related to the output performance of an entire group of workers, a department, or even the whole factory.
    1. Incorrect
    2. Correct
  34. The advantages of group bonus schemes is/are:
    1. They are easier to administer because they reduce the clerical effort required to measure output and calculate individual bonuses
    2. They increase co-operation between fellow workers
    3. They have been found to reduce accidents, spoilage, waste and absenteeism
    4. All of the above
  35. For group bonus schemes serious disadvantages would occur in the following circumstances:
    1. The employee groups demand low efficiency standards as a condition of accepting the scheme
    2. Individual employees are browbeaten by their fellow workers for working too slowly
    3. Both A&B
    4. None
  36. Identify characteristics of bonus systems.
    1. A target is set and the performance is matched against that target
    2. Employees feel trusted and motivated; the productivity increase and they are paid more for their increased efficiency
    3. Despite of the organization’s labour cost being increased in terms of bonus payments, the total unit cost of the output stands reduced and the profit per unit of sale is increased.
    4. All of the above
  37. The choice of appropriate labour payment method is very important for any organisation as it:
    1. May affect the cost of the finished products specially when it is a labour intensive organization
    2. Casts a major impact on the morale and efficiency of the employees and serious consideration should therefore be given to the possible motivational impact of the remuneration method being adopted.
    3. Both A&B
    4. None
  38. If an employee works for more hours than the basic daily requirement, then he may be entitled to an overtime payment. The overtime hours are usually paid at a premium rate such as:
    1. Time and a quarter
    2. Time and a half
    3. Double-time
    4. All of the above
  39. A profit-sharing scheme offers the employees a certain proportion of the organization’s profits. The size of this offer is related to the designation of the employee and also the length of the employment period to date.
    1. Correct
    2. Incorrect
  40. Advantages of profit-sharing scheme includes:
    1. The organization will pay only what it can afford to pay out of the actual profits earned
    2. Such schemes can be offered to indirect labour as well
    3. Both A&B
    4. None
  41. Disadvantages of profit-sharing scheme includes:
    1. Employees may be putting in best of their efforts yet the organization might still incur losses on account of issues beyond the control of the employees
    2. It is a long-term commitment that the organization is asking for.
    3. The employees have to wait for the bonus until the year ends. The reward is not an immediate one.
    4. All of the above
  42. A share incentive scheme is where the employees of the company are given an option to acquire the shares as an incentive.
    1. False
    2. True
  43. Idle time has a cost because employees will still be paid their basic wage or salary for these unproductive hours and so there should be a record of idle time.
    1. The above statement is correct
    2. The above statement is incorrect
  44. Which of the following would be a possible reason for idle time?
    1. Production disruption – due to machine breakdown, shortage of materials, inefficient scheduling etc.
    2. Policy decisions – run-down of stocks, changes in product specification, retraining schemes, seasonal factors etc.
    3. Outside influences – sudden fall in demand due to economic changes, strike affecting vital supplies etc.
    4. All of the above
  45. Labour turnover is the rate at which employees leave a company and this rate should be kept as low as possible.
    1. Correct
    2. Incorrect
  46. The cost of labour turnover can be divided into:
    1. Preventative costs
    2. Replacement costs.
    3. Both A&B
    4. None
  47. Replacement costs of labour turnover are the costs incurred as a result of hiring new employees; they include:
    • Cost of selection and placement
    • Inefficiency of new labour; productivity will be lower
    • Costs of training
    • Loss of output due to delay in new labour becoming available
    • Increased wastage and spoilage due to lack of expertise among new staff
    • The possibility of more frequent accidents at work
    • Cost of tool and machine breakages
      1. All of the above
      2. (I) and (III) only
      3. (I) (III) and (VI) only
      4. None
  48. Preventive costs of labour turn over are costs incurred in order to prevent employees leaving; they include:
    1. Cost of personnel administration incurred in maintaining good relationships
    2. Cost of medical services including check-ups, nursing staff and so on
    3. Cost of welfare services, including sports facilities and canteen meals
    4. Pension schemes providing security for employees
    5. All of the above
  49. What actions should management take in order to reduce labour turnover?
    • Paying satisfactory wages
    • Offering satisfactory hours and conditions of work
    • Creating a good informal relationship between members of the workforce
    • Offering good training schemes and a well-understood career or promotion ladder
    • Improving the content of jobs to create job satisfaction
    • Proper planning so as to avoid redundancies
    • Investigating the cause of an apparently high labour turnover
      1. All of the above
      2. (I) (VI) and (VII) only
      3. (I) and (II) only
      4. None
  50. A key objective of the personnel department is to retain staff. Each time an employee is replaced, the business incurs direct costs of:
    1. Advertising and selection
    2. Administering departure and replacement
    3. Both A&B
    4. None
  51. The wages of pieceworkers and the labour cost of work done by them is determined from what is known as a:
    1. Piecework ticket
    2. Operation card
    3. Both A&B
    4. None
  52. Some employees will leave their job and go to work for another company or organisation. Sometimes the reasons are unavoidable. Identify the unavoidable/uncontrollable reasons:
    1. Illness or accidents
    2. A family move away from the locality
    3. Marriage, pregnancy or difficulties with child care provision, Retirement or death
    4. All of the above
  53. Labour turnover is a measure of the number of employees leaving/being recruited in a period of time expressed as a percentage of the total labour force.
    1. Correct
    2. Incorrect
  54. Responsibilities of the payroll department include the following.
    • Preparation of the payroll and payment of wages
    • Maintenance of employee records
    • Summarising wages cost for each cost centre
    • Summarising the hours worked for each cost centre
    • Summarising other payroll information e.g. bonus payment, pensions
    • Providing an internal check for the preparation and payout of wages
      1. All of the above
      2. (I) (II) only
      3. (i) (II) and (V) only
      4. None
  55. In order to establish the labour cost involved in products, operations, jobs and cost centres, which of the following documents are used?
    1. Clock cards
    2. Idle time cards
    3. Job cards, Payroll
    4. All of the above
  56. For what purpose analyses of labour costs are used for:
    1. Charging wages directly attributable to production to the appropriate job or operation
    2. Charging wages which are not directly attributable to production (e.g. Idle time, Wages costs of supervisors or store assistants)
    3. Both A&B
    4. None
  57. Effective labour cost control is achieved through different tools including
    1. Analyzing the targeted production
    2. Preparing labour budget and standardizing labour cost per unit
    3. Monitoring output, quality, wastage ratios, rework cost due to bad workmanship
    4. Wage incentive systems
    5. All of the above

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