AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.
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Transcript of AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.
![Page 1: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/1.jpg)
AAT Level 3Labour
Overtime/Equivalent Units/Bookkeeping
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AAT Level 3
Labour Costs – Assessment Criteria
2.1S Record cost information for material, labour and expenses in accordance with the organisation’s costing procedures
2.2S Analyse cost information for material, labour and expenses in accordance with the organisation’s costing procedures
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Cost Card
Direct Materials+Direct Labour+Direct Expenses
= PRIME COST+ Production Overheads
= PRODUCTION COST+ Non Production Overheads
= TOTAL COST
Start with 3 DIRECT costs
Then 2 lots of OVERHEADS
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Direct & Indirect Labour
Cleggs Ltd build and sell vintage bicycles. Define the terms below and give examples based on Cleggs Ltd
Can be associated with the product
Cannot be associated with the product
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Time Keeping Records
How do you record your time/activity at work?
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Methods of Payment
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Methods of Payment
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 249 Paul (B) 49 250 George (A) 2 250 John (D) 107 250 Ringo (C) 74 Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
Cost the two jobs
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20
249 Paul (B) 49
250 George (A) 2
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49
250 George (A) 2
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40
250 George (A) 2
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
250 George (A) 2
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74 7.20
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74 7.20 532.80
Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74 7.20 532.80
1298.20 Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74 7.20 532.80
1298.20 Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity
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Job Employee HoursHourly basic rate
Total per employee Job total
249 George (A) 14 8.20 114.80
249 Paul (B) 49 7.40 362.60
477.40
250 George (A) 2 8.20 16.40
250 John (D) 107 7.00 749.00
250 Ringo (C) 74 7.20 532.80
1298.20 Rates of pay:Grade Basic rateA £8.20B £7.40C £7.20D £7.00
You have been given the following information from the timekeeping records of Billie Jeans:
Activity – Time Rate
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The EXTRA amount paid over
and above the normal rate, for overtime hours
OvertimeOvertime Payment Overtime Premium
The TOTAL amount paid for hours worked
above the normal contracted hours
Employee paid time + half for overtime
Overtime payment Overtime premium(i.e. time AND half) (i.e. the ‘half’)
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OvertimeEmployee paid time + half for overtime
Overtime payment Overtime premium(i.e. time AND half) (i.e. the ‘half’)
David is paid £8.20 per hour for a standard 40 hour week. Last week he worked 45 hours.
What is the gross pay showing OT payment?
Basic hours 40 x £8.20 = £328.00Overtime PAYMENT 5 X (£8.20 X 1.5) £61.50
£389.50
What is the gross pay showing the OT premium?
Basic hours 45 x £8.20 £369.00Overtime PREMIUM 5 x (£8.20 x 0.5) £20.50
£389.50
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Activity - OvertimeEmployee paid time + half for overtime
Overtime payment Overtime premium(i.e. time AND half) (i.e. the ‘half’)
Nick is paid as follows:
Basic pay for 6 hours shift each day from Monday – FridayAdditional hours from Monday – Friday are paid at time + half
Saturday contracted to work 3 hours for basic pay with extra hours paid a t double time
Sunday hours are all paid at double time
Use template provided
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Employees weekly timesheet for week ending 12 December
Name: Nick Brown Cost Centre Machining
Employee Number: Y4791 Basic pay per hour £12
Hours spent on:
Day ProductionIndirect
work NotesBasic Pay£
Overtime premium
Total pay £
Monday 6 21-3 cleaning machinery
Tuesday 2 49-1 training
course
Wednesday 8
Thursday 6
Friday 6 1
2-3 Health & Safety
training
Saturday 6
Sunday 3
Total 37 7
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Activity - NicolaNicola works for Highland Knits operating one of their industrial knitting machines. She is works from 9am to 5pm with one hour for lunch. She earns £7.50 per hour. Overtime hours are paid at time + quarter. Complete the table below:
Answer next slide
In your notebooks
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Activity - Nicola
60.00
8 hours x £7.50
1.88
Overtime is:Time + ¼ Overtime Premium is £7.50 ÷ 4 = 1 x £1.875 – rounded to £1.88
61.88
Nicola works for Highland Knits operating one of their industrial knitting machines. She is works from 9am to 5pm with one hour for lunch. She earns £7.50 per hour. Overtime hours are paid at time + quarter. Complete the table below:
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Practice Activity Bolyn Ltd(see OT sheet)
Answer next slide
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Practice Activity Bolyn Ltd(Answer)Bolyn Ltd
Anne
To be used later
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours
Long PJ 5 1.5 hours
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Draw in your notebooks
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours
Long PJ 5 1.5 hours
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Short PJ6 item x 2 hours x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Short PJ6 item x 2 hours x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Long PJ5 item x 1.5 hours x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Long PJ5 item x 1.5 hours x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour
Nightshirts 6 2 hours
Total for week 26
Onesies12 item x 1 hour x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours
Total for week 26
Onesies12 item x 1 hour x Rate £7.50 p/h
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours
Total for week 26
Onesies12 item x 1 hour x Rate £7.50 p/h
![Page 41: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/41.jpg)
Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours
Total for week 26
Nightshirts6 item x 2 hour x Rate £7.50 p/h
![Page 42: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/42.jpg)
Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours 90.00
Total for week 26
Nightshirts6 item x 2 hour x Rate £7.50 p/h
![Page 43: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/43.jpg)
Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours 90.00
Total for week 26
Nightshirts6 item x 2 hour x Rate £7.50 p/h
![Page 44: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/44.jpg)
Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours 90.00
Total for week 26
![Page 45: AAT Level 3 Labour Overtime/Equivalent Units/Bookkeeping.](https://reader035.fdocuments.us/reader035/viewer/2022062322/5697bfa81a28abf838c99673/html5/thumbnails/45.jpg)
Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours 90.00
Total for week 26
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Paid per unit usually based on a specified time to complete
Example: Nigel Garage works for Kip U who design and sell nightwear. He is paid £7.50 per standard hour of production. His production levels for week 26 are shown in the table below. Calculate the total amount earned per item and his gross pay for the week.
Item Number produced
Standard time allowed per unit
Amount Earned
£
Short PJ 6 2 hours 90.00
Long PJ 5 1.5 hours 56.25
Onesies 12 1 hour 90.00
Nightshirts 6 2 hours 90.00
Total for week 26
326.25
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Methods of Payment
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ExampleStandard rate per hour £4.50Guaranteed minimum per week 35 hours
Actual production: 10 units @3 hours per unit. Calculate the weekly pay.
10 units x 3 hours = 30 hours pay30 hours x £4.50 = £135 < GMPSo pay for the week is £157.50
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ActivityStandard rate per unit £3.00Guaranteed wage per 8 hour day£28.00
Monday 12 unitsTuesday 14 unitsWednesday9 unitsThursday 14 unitsFriday 8 units
Calculate the weekly wage:Answer next slide
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ActivityStandard rate per unit £3.00Guaranteed wage per 8 hour day £28.00
Monday 12 units 12 x £3 = £36.00Tuesday 14 units 14 x £3 = £42.00Wednesday9 units 9 x £3 = £27.00Thursday 14 units 14 x £3 = £42.00Friday 8 units 8 x £3 = £24.00
Calculate the weekly wage: £176.00(£36 + £42 + £28 + £42 + £28)
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Methods of PaymentDay rate based on hours worked
PLUSBonus based on quantity produced or time saved
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Example – Nick
Day rate £4.50 x 8.5 = £38.25Std time for 15 units is 15 x 40/60 = 10 hoursTime taken = 8.5 hours
Time saving = 1.5 hoursBonus = 1.5 x £4.50 x 60% £4.05Pay for the day = £38.25 + £4.05 = £42.30
Hours worked – 8.5 Hourly rate is £4.50
Units take 40 minutes eachBonus rate is 60% of hourly rate for each hour savedCalculate pay for the day.
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Activity – EdEd has worked 7.5 hours and produced 60 units. His hourly rate is £10.00 and a bonus of £5 per hour is paid for time saved. Standard time for 6 units is 1 hour.Calculate pay for the day.
Answer on next slide
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Activity – Ed
Day rate £10 x 7.5 = £75.00Std time for 60 units = 10 hoursTime taken = 7.5 hours
Time saving = 2.5 hoursBonus = 2.5 x £5 = £12.50Pay for the day = £75 + £12.50 = £87.50
Ed has worked 7.5 hours and produced 60 units. His hourly rate is £10.00 and a bonus of £5 per hour is paid for time saved. Standard time for 6 units is 1 hour.Calculate pay for the day.
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Equivalent UnitsGoods that are work in progress for materials &
labourYou produce marmalade6000kg produced and sent to be bottled.1000kg are WIP (40%) for LabourCalculate the total equivalent units
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Equivalent Units
6000kg
400kg
1000kg x 40%
6400kg
Goods that are work in progress for materials & labourYou produce marmalade
6000kg produced and sent to be bottled.1000kg are WIP (40%) for LabourCalculate the total equivalent units
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Example - CED Ltd(See sheet)
CED Ltd have forecast the following information for next week: The piecework rate will be £0.60 per completed unit. The target for production is 2500 units and a bonus, equal to 40% of the piecework rate, is payable for equivalent units of production in excess of this. 2700 units will be complete next week and the closing work in progress is expected to be 50 units, which will be 50% complete with regard to labour. No opening work in progress was expected at the start of the week. Calculate the EUP with regard to labour for next week. What will the bonus payable (£)?
We need to pick out the relevant information
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Summary of information for CED Ltd
Piecework rate = 60p PER COMPLETED UNIT
Bonus rate = 40% of 60p for units >2500 = 24p2700 units will be complete next week
Closing WIP 50 units x 50% completeEquivalent to 25 complete units (50 x 50%)
2700 + 25 = 2725 less 2500 = 225 over target
So bonus is 225 x 24p = £54
Production target is 2500 units
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Worked example(See sheet)
£3.70£7.40
74.00
51.80
59.20
51.80
66.60
303.40
11.10
0
3.70
0
7.40
22.20
85.10
51.80
62.90
51.80
74.00
325.60
Katherine Aragon
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Worked Example continued:Equivalent Units
are:500 ltrs x 60% = 300
2800 litres
168.00
Bonus Payable:2800 ltrs x 0.06 = 168.00
325.60
168.00
493.60
2500 + 300 =
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Bookkeeping for Labour Costs
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Bookkeeping for Labour Costs
Wages Control (WAC)
Gross Wages (GW Expense)
Total cost of employing staffHow its distributed
Total cost of employing staff
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Bookkeeping for Labour Costs
Wages Control (WAC)
Wages Month/Year £XXX
WIP
Gross Wages (GW Expense)
This may be split between direct &
indirect, production & non production
Production OH (Indirect)
(Direct)
Non Production OH (Indirect)
Employer NI
Employer Pension Cont.
Total cost of employing staff
Bank (Net Pay)
HMRC (EE & ER NI + PAYE)
Pension Cont. EE & ER
Other payments made on behalf of EE
How its distributed
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Bookkeeping for Labour CostsWages Control (WAC)
WIP - Direct
Production OH (ID)
Non Production OH (ID)
Employer NIEmployer Pension Cont.
Bank (Net Pay)
HMRC (EE & ER NI + PAYE)
Pension Cont. EE & ER
Other pmts made on behalf of EE
WIP
Production OH
Non Production OH
X
X
X
How its distributed
Total cost of employing staff
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Worked Example
Bank
82500Wages CONTROL Account
82500
PAYE & NI deductions 27500
27500
Wages CONTROL Account
Wages CONTROL Account
84700
84700
Wages CONTROL Account
25300
25300
WIP (Direct Labour)
Production OH (Indirect)
Remember the Wages Control is always one side of the journal
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Activity
WIP (Direct) 220000Production (Indirect) 58000
Non production (Indirect) 2000
Bank 200000HMRC Payable 50000Welfare 30000
280000
280000
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WIP 220000
Wages Control Account 220000
Wages Control Account 58000
Wages Control Account 2000
Production Overheads 58000
Non Production Overheads 2000
Wages Control Account 200000
Bank (Net Pay) 200000Wages Control Account 50000
HMRC Payable 50000Wages Control Account 30000
Welfare 30000
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Practice Activities(See sheet)