Deck 3: Accounting for Labor

Question 1

The payroll summary for EVB Inc. for the period August 3 - 10 is as follows: The entry to record payroll would be:

Answer 1

A
The entry to record the payroll would be:

Question 2

If the amount of overtime premium is to be charged to all jobs worked on during the period as a result of random scheduling of jobs, the debit will be to:

A)Factory Overhead.
B)Payroll.
C)Work in Process.
D)Accrued Payroll.

Answer 2

A
By charging the overtime premium to factory overhead, all jobs worked on during the period share the cost.

Question 3

The file that serves as a basis for reporting payroll information to governmental agencies and preparing Form W-2 is the:

A)labor time record.
B)payroll record.
C)employee's earnings record.
D)labor cost summary.

Answer 3

C
The employee's earnings record is a cumulative record of employee earnings needed to calculate payroll taxes. It also serves as the basis for reporting salary and wage information to government agencies.

Question 4

Under a modified wage plan, an employee working an eight-hour day earns $.40 for each finished unit and is guaranteed $20 per hour as a minimum wage. At what level should the daily quota be set?

A)160 units
B)400 units
C)500 units
D)640 units

Question 5

All of the following are characteristics of hourly wage plans except:

A)They provide no extra recognition for doing more than the minimum required.
B)They are easy to apply.
C)They establish a definite rate per hour for each employee.
D)They encourage employees to sacrifice quality in order to maximize earnings.

Question 6

The Dehl Company payroll for the first week in January was $12,000. The amount of income tax withheld was 12 percent and the FICA, state unemployment, and federal unemployment tax rates were 8 percent, 5 percent, and 1 percent, respectively. The amount of the employees' withholding taxes are:

A)$1,680.
B)$2,400.
C)$1,440.
D)$3,120.

Question 7

David Andrews works at the Neal Company where he makes $12 per hour with "time-and-a-half" for overtime. For the week ended January 8, David worked 45 hours as follows: Job 417
34 hours
Job 532
11 hours
Assuming the overtime was due to priority scheduling for Job 532, how much will be charged to Job 532?

A)$147
B)$132
C)$198
D)$162

Question 8

Under a modified wage plan, Jim Phillips works an eight-hour day and earns $.50 for each finished unit he produces in excess of 200 units. However, he is guaranteed $12.50 per hour as a minimum wage. His production this week was a follows: What were Jim's total earnings this week?

A)$500
B)$510
C)$495
D)$515

Question 9

Under a modified wage plan, Jim Phillips works an eight-hour day and earns $.50 for each finished unit he produces in excess of 200 units. However, he is guaranteed $12.50 per hour as a minimum wage. His production this week was a follows: How much was the make-up guarantee paid to Jim this week?

A)$10
B)$5
C)$15
D)$12.50

Question 10

An employee regularly earns $12 per hour for an 8-hour day with time-and-a-half for overtime hours. Assuming that the employee works a 10-hour day, the amount of overtime premium is:

A)$36.
B)$18.
C)$12.
D)$6.

Question 11

The file for each factory employee that shows the time the employee spent on each job, as well as time spent as indirect labor is the:

A)labor time record.
B)payroll record.
C)employee's earnings record.
D)labor cost summary.

Question 12

Idle time should be treated as follows:

A)It should be recorded along with the reason for it, and charged to Factory Overhead.
B)It should be charged to the job from which the employee took a break.
C)It should be documented and the employee should not be paid for that time.
D)It should be allocated to the various manufacturing departments and the supervisors should decide how to handle it.

Question 13

The departmental responsibilities of the payroll function include all of the following except:

A)Reviewing the labor hours on the time record for accuracy.
B)Summarizing the period's payroll data.
C)Keeping a record of earnings for each employee.
D)Computing deductions and withholdings for each employee.

Question 14

An analysis of total labor costs into work in process and factory overhead components is recorded on a(n):

A)Labor cost summary.
B)Payroll record.
C)Individual production report.
D)Employee earnings record.

Question 15

All of the following personnel would be classified as indirect labor except the:

A)machinist.
B)supervisor.
C)fork lift driver.
D)plant janitor.

Question 16

Under a modified wage plan, an employee earns $.75 for each finished unit and is guaranteed $10 per hour as a minimum wage. If the daily quota is 100 units, on a particular day when an employee completes 85 units and works 8 hours, the amount of the make-up guarantee will be:

A)$80.00
B)$72.25
C)$16.25
D)$5.00

Question 17

The payroll summary for EVB Inc. for the period August 3 - 10 is as follows: The entry to record the payment of earnings to the employees would include:

A)A debit to payroll for $105,000.
B)A credit to wages payable for $80,600.
C)A debit to wages payable for $80,600.
D)A credit to cash of $105,000.

Question 18

A wage plan based solely on an employee's quantity of production is known as a(n):

A)Modified wage plan.
B)Hourly-rate plan.
C)Incentive wage plan.
D)Piece-rate plan.

Question 19

At a plant where car doors were manufactured, all of the following would be classified as direct labor except:

A)Machinists.
B)Assembly workers.
C)Maintenance personnel.
D)Painters.

Question 20

Wage plans that encourage employees to work harder and earn more by producing a high level of output are known as:

A)Modified wage plans.
B)Salary wage plans.
C)Piece-rate plans.
D)Hourly-rate plans.

Question 21

Daktari Enterprises' Schedule of Earnings and Payroll Taxes for April is as follows: Assuming overhead is a result of the random scheduling of jobs, the entry to record and distribute the employer's payroll taxes would include:

A)A debit to Factory Overhead for 14,950.
B)A debit to FICA Expense of $10,560.
C)A credit to Payroll of $132,000.
D)A debit to Work in Process for $11,050.

Question 22

Management of the Von Machine Company requests that you calculate the effect of two different wage payment plans upon employee earnings and also on the unit labor cost of Product A.
The following information is available:
(1)
The hourly rate is $9.00.
(2)
The labor rate per piece of Part X, if the employee is paid on a piece-rate basis, is $.30.
Ten pieces of Part X are required for one unit of Product A. The plant works a 6-day week and an 8-hour day, totaling 48 hours per week. No overtime premium pay is to be considered in your analysis.
During a selected week, the following pieces of Part X were produced: An agreement with the union requires a minimum rate of $6.50 per clock hour be paid to employees.
a.Calculate the labor cost each day of the week for an employee under:(1)the hourly-rate plan.(2)the piece-rate plan.
b.If the company could anticipate a steady production level of 250 units of Part X each day, which plan would you recommend to the company's management? Why?

Question 23

Which of the following items relating to direct labor employees might be charged to specific jobs in work in process rather than factory overhead?

A)Make-up guarantee
B)Idle time
C)Shift premiums
D)Fringe benefits

Question 24

The payroll for the week ended January 8 is $15,000 with 15 percent withheld for employee income taxes and 8 percent for FICA taxes. The total amount of taxes to be remitted by the employer for this payroll would be:

A)$2,250.
B)$1,200.
C)$3,450.
D)$4,650.

Question 25

Joel Williams works at Allentown Company where he assembles components for small appliances and earns $16 per hour with "time-an-a-half" for overtime. During the week ended July 25, Joel worked 43 hours as follows: The amount of Joel's wages that will be charged to the Work in Process account, assuming that the overtime worked was due to a rush order on the FASB job is:

A)$560
B)$608
C)$584
D)$680

Question 26

Western Industries pays employees on a weekly basis on Tuesday for the week ended the previous Friday. Employees' compensation is earned evenly each day over a 5-day work week. This year, April 30 fell on Thursday. Payroll costs for the week ended May 1 follow: Excluding payroll taxes, how much of the accrued payroll at April 30 should be charged to Factory Overhead?

A)$17,500
B)$26,000
C)$14,000
D)$34,000

Question 27

John Elton, who is classified as direct labor, earns $1,000 per week and is entitled to four weeks of vacation and 10 holidays each year. How much should be accrued for his vacation each week?

A)$76.92
B)$80.00
C)$83.33
D)$40.00

Question 28

Of the following taxes, the only one that the employer pays in entirety is:

A)State income tax.
B)State unemployment tax.
C)FICA tax.
D)Federal income tax.

Question 29

Western Industries pays employees on a weekly basis on Tuesday for the week ended the previous Friday. Employees' compensation is earned evenly each day over a 5-day work week. This year, April 30 fell on Thursday. Payroll costs for the week ended May 1 follow: Excluding payroll taxes, what amount should be accrued to the payroll account for the period ended April 30?

A)$57,500
B)$46,000
C)$42,500
D)$34,000

Question 30

Jay Vato works at Batwing Industries from midnight until 8:00 AM. His normal wage rate is $17 per hour, while Ben Phillips, who does the same job from 8:00 AM until 4:00 PM makes $15 per hour. Since Ben and Jay have the same seniority within the plant, the difference in pay is due to a(n):

A)overtime premium.
B)production bonus
C)make-up guarantee.
D)shift premium.

Question 31

An accrued expense such as Wages Payable can best be described as an amount:

A)Paid and not currently matched with earnings.
B)Not paid and not currently matched with earnings.
C)Not paid and currently matched with earnings.
D)Paid and currently matched with earnings.

Question 32

Joel Williams works at Allentown Company where he assembles components for small appliances and earns $16 per hour with "time-an-a-half" for overtime. During the week ended July 25, Joel worked 43 hours as follows: The amount of Joel's wages that will be charged to Factory Overhead assuming the overtime is due to the random scheduling of jobs is:

A)$120
B)$152
C)$40
D)$128

Question 33

Daktari Enterprises' Schedule of Earnings and Payroll Taxes for April is as follows: Assuming overtime was the result of random scheduling of jobs, the entry to distribute payroll would include:

A)A debit to Payroll for $132,000.
B)A credit to Wages Payable for $114,800.
C)A debit to Factory Overhead for $35,000.
D)A debit to Work in Process for $85,000

Question 34

Toshlin issues financial statements June 30th. If payroll was $30,000 through June 30th and wages were to be paid on July 5, what is the correct journal entry on June 30th? Assume FIT = 15%, FICA = 8%, SUTA = 6%, FUTA = 1%,

Question 35

Harmony Company has accrued payroll costs of $50,000 for the period May 28 - 31 as follows: Other Information: (a) The FICA rate is 8% of the first $100,000 of wages. None of the employees has reached this maximum.
(b) The company is responsible for state and federal unemployment taxes on the first $8,000 of wages. All of the employees have previously reached this maximum.
(c) Payroll taxes are spread over all jobs.
What entry would be necessary to accrue payroll taxes for the period of May 28 - 31?

Question 36

The entry made in November to reverse the entry that was made to accrue October payroll would be:

A)Debit - Wages PayableCredit - Cash
B)Debit - Wages PayableCredit - Payroll
C)Debit - Factory OverheadCredit - Payroll
D)Debit - PayrollCredit - Wages Payable

Question 37

Features of a 401(k) plan include all of the following except:

A)Pension benefits are based on past earnings and length of service with the company.
B)The employer may match a certain portion of the employee's investment.
C)Taxes are deferred on wages invested in the plan.
D)Investments may be made in company stock, mutual funds or other investment vehicles.

Question 38

The Dehl Company payroll for the first week in January was $12,000. The amount of income tax withheld was 12 percent and the FICA, state unemployment, and federal unemployment tax rates were 8 percent, 5 percent, and 1 percent, respectively. The amount of the employer's payroll taxes are:

A)$3,120.
B)$1,440.
C)$ 720.
D)$1,680.

Question 39

John Elton, who is classified as direct labor, earns $1,000 per week and is entitled to four weeks of vacation and 10 holidays each year. How much should be accrued for his holiday pay each week?

A)$38.46
B)$40.00
C)$46.67
D)$130.00

Question 40

A factory worker earns $500 per week and will receive a $2,000 bonus at year-end, a 2-week paid vacation, and 5 paid holidays. The combined amount of the accruals for bonus, vacation, and holiday pay in the weekly payroll would be:

A)$20.00.
B)$70.00.
C)$40.00.
D)None of the above.

Question 41

A direct laborer in a factory earns $1,000 each week. In addition, she will receive a $2,500 bonus at year end, a two-week paid vacation, and seven paid holidays.
Prepare the entry to distribute her wages and the costs and liabilities related to bonus, vacation, and holiday pay. (Round all amounts to two decimal places.)

Question 42

The Tidle Manufacturing Company uses a job order cost system. Factory wages are paid on a straight hourly basis with indirect labor getting $8.50 an hour and direct labor getting $10.00 an hour.
During the week of January 7, the following hours were worked: Salaries and wages are paid weekly, with administrative salaries totaling $16,500 and salesperson's salaries totaling $12,200.
The following deductions are to be considered: Prepare journal entries to record:
a.The payroll.
b.The payment of the payroll.
c.The payroll distribution.
d.The employer's payroll tax expense.

Question 43

Tacy Company's Schedule of Earnings and Payroll taxes for the period ended March 28 - 31 to be paid April 5 follow: Prepare the journal entries to:
(a) Accrue the payroll in the appropriate period
(b) Distribute the accrued payroll in the appropriate period
(c) Recognize related accrued employer's payroll taxes in the appropriate period assuming payroll taxes are spread over all jobs produced.

Question 44

The Wagner Company's Schedule of Earnings and Payroll Taxes for May is summarized as follows: (a) Prepare the journal entry to distribute payroll under each of the following scenarios:
(1) Overtime resulted from priority scheduling of Job 3bX for which the company received a rush order.
(2) Overtime resulted from random scheduling of jobs.
(b) Prepare the journal entry to record and distribute the employer's payroll taxes.

Question 45

Ken Astor is a factory worker at Flox Co. earning $27.00 per hour. Astor is eligible for five paid holidays and six weeks vacation and is paid "time-and-a-half" for overtime. Astor's earnings so far this year are $45,000.
Tax rates are as follows:
Employee income tax 15% on all earnings
FICA 8% on first $100,000 of earnings
FUTA 1% on first $8,000 of earnings
SUTA 4% on first $8,000 of earnings
Assuming Ken worked 46 hours this week, calculate the total expense to Flox Co for this weeks, wages, payroll taxes and fringe benefits.

Question 46

Jerrod Sampson is paid $10 an hour for 40 hours a week, with time-and-a-half for overtime and double-time for Sundays and holidays. Overtime premium is charged to Factory Overhead.
Using the labor-time record below:
a. Compute Jerrod's total earnings for the week.
b. Present the journal entry to distribute Jerrod's total earnings.SUTA = 4%, FUTA = 1%, FICA = 8%, FIT = 10%

Question 47

Tyler Jacob is paid $15 per hour for a 40-hour work week with time-and-a-half for overtime, which is not charged to specific jobs. For the week of March 4 - 10, Tyler's labor time record was as follows: Other Information:
Tyler's year-to-date wages as of March 3 were $7,500. He contributes $20 weekly for his health insurance premiums.
Current tax rates in effect are: FIT withholding rate - 10%; FICA - 8% on the first $100,000 of wages; SUTA - 4% on the first $8,000 of wages; and FUTA - 1% on the first $8,000 of wages.
(a) Calculate Tyler's gross and net pay.
(b) Prepare the journal entries necessary to
(1) Record Tyler's payroll
(2) Pay Tyler's payroll
(3) Distribute Tyler's payroll to the appropriate accounts
(c) Calculate the employer's payroll taxes and prepare the journal entry to record them employer's portion of payroll taxes

Question 48

Becky Graham earns $15 per hour for up to 300 units of production per eight-hour day. If she produces more than 300 pieces per day, she will receive an additional piece rate of $.40 per unit. A summary of her work week follows: (a) Determine Graham's earnings for each day and for the week.
(b) Prepare the journal entry to distribute the payroll for the week.

Question 49

The following payroll summary is prepared for the Sothern Manufacturing Company for the week ending March 29: Payroll taxes and insurance are to be computed as follows: Prepare the general journal entries to:
a.Record the payroll.
b.Pay the payroll.
c.Distribute the payroll to the appropriate accounts.
d.Record the employer's share of payroll tax expense. (All of the employees work in the factory.)

Question 50

Payroll records for selected employees of Tomco Industries for the forty-sixth week of the year are as follows: Employees are paid time-and-a-half for overtime.
Employer payroll tax rates are as follows:
FICA: 8% of first $100,000 of salary or wages
FUTA: 1% of first $8,000 of salary or wages
SUTA: 4% of first $8,000 of salary or wages
Calculate:
(a) Total gross payroll for the selected employees.
(b) Total employer payroll taxes for the selected employees.