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Comment by Azhar Shahzad on May 26, 2014 at 2:53pm

COST & MANAGEMENT ACCOUNTING (MGT402)
ASSIGNMENT NO. 01
DUE DATE: MAY 30, 2014
MARKS: 20
ASSIGNMENT:
Dawood Manufacturing Company is very much concerned about its workers and has prepared a weekly payroll summary from its pay roll register which is as follows:

Worker Type Normal Working Hours Over time Hours Wage Rate
(Rs. Per hour)
A Indirect 42 7 15
B Indirect 42 --- 11
C Direct 42 5 9
D Direct 42 6 12

Workers are paid for working beyond their normal working hours at higher rate than normal rate. They are paid 1.5 times for first 4 overtime hours and 2 times for next overtime hours. Company has the policy to deduct 7% as provident fund contribution and 3% as contribution for group insurance. Worker B & D have also subscribed for trade union membership. Subscription fee is Rs.310 per worker. Income tax deductions are Rs.250, Rs.60, Rs. 120 & Rs.170 for worker A, B, C & D respectively. Company has granted loans to worker A & C; loan deductions are Rs.300 & Rs.100 respectively.
Required
1) You are required to calculate gross pay, deductions, net pay and distribution as direct and indirect labor by preparing a payroll work sheet. (4 x 4 Marks)
2) Payment of high wages to workers does not necessarily mean high cost of production. Do you agree with the statement? Support your answer with logical argument. (4 Marks)

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