Deck 3: Accounting for Labor

Question 1

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 12-hour day,the total amount of overtime premium is:

A)$72.
B)$48.
C)$24.
D)$6.

Answer 1

C

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

Question 3

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.

Answer 3

A

Question 4

What is the purpose of the following journal entry? DR Payroll
CR FICA Taxes Payable
CR Employee Income Tax Payable
CR Wages Payable

A)To record payroll for the period.
B)To accrue payroll at the end of the period.
C)To record payroll taxes for the period.
D)To distribute payroll for the period.

Question 5

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 as follows: How much was the make-up guarantee paid to Jim this week?

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

Question 6

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

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

Question 7

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

A)Contributory plans.
B)Salary wage plans.
C)Incentive wage plans.
D)Hourly-rate plans.

Question 8

Under a modified wage plan,an employee earns $1.55 for each finished unit and is guaranteed $18 per hour as a minimum wage.If the daily quota is 96 units,on a particular day when an employee completes 90 units and works 8 hours,the amount of the make-up guarantee will be:

A)$18.00
B)$9.00
C)$4.50
D)$13.50

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 as follows: What were Jim's total earnings this week?

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

Question 10

Under a modified wage plan,an employee working an eight-hour day earns $.50 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)320 units
C)400 units
D)640 units

Question 11

When recording payroll:

A)the debit to Work In Process must equal the total direct labor charged to jobs in the subsidiary job cost ledger.
B)the debit to Factory Overhead must equal the total indirect labor cost charged to jobs in the subsidiary job cost ledger.
C)the payroll record summarizes the direct labor and indirect charges to the department for the period.
D)the labor cost summary is prepared from the employees' earnings records.

Question 12

How should idle time be accounted for?

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

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 14

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

A)Machinists.
B)Assembly workers.
C)Supervisor.
D)Painters.

Question 15

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 16

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 17

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.

Question 18

Which of the following would not be included on a payroll record?

A)The employees' gross earnings.
B)Amounts withheld from the employees' earnings.
C)Which jobs should be charged for the employees' time.
D)The amount of overtime paid to the employees.

Question 19

David Andrews works at the Neal Company where he makes $10 per hour with "time-and-a-half" for overtime.For the week ended January 8,David worked 45 hours as follows: Assuming the overtime was due to priority scheduling for Job 532,how much will be charged to Job 532?

A)$147
B)$ 25
C)$110
D)$135

Question 20

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 21

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 22

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 23

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?

A)Factory Overhead 4,000 FICA Tax Payable 4,000
B)Payroll Tax Expense - Sales 400 Payroll Tax Expense - Administrative 400
Work in Process 3,200
FICA Tax Payable 4,000
C)Payroll Tax Expense 4,000 FICA Tax Payable 4,000
D)Payroll Tax Expense - Sales 400 Payroll Tax Expense - Administrative 400
Factory Overhead 3,200
FICA Tax Payable 4,000

Question 24

Which of the following is not true about the cost of a factory employee's pension plan?

A)It is incurred when paid to the employee during his/her retirement.
B)It should be accrued systematically over the period of an employee's active service.
C)In some cases,it may be partially offset by contributions made by employees.
D)It may be charged to general and administrative expenses under the premise that the existence of a pension plan is beneficial to the company as a whole.

Question 25

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 26

The Fiesta Royale Corporation payroll for the first week in January was $14,000.The amount of income tax withheld was 20 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)$4,760.
B)$3,920.
C)$2,800.
D)$5,100.

Question 27

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 28

John Elton,who is classified as direct labor,earns $1,000 per week and is entitled to three weeks of vacation and 5 holidays each year.How much should be accrued for his holiday pay each week?

A)$21.00
B)$40.41
C)$20.41
D)$1,000.00

Question 29

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 30

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 31

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 32

The payroll summary for EVB Inc.for the period August 3 - 10 is as follows: ​ These wages were paid on August 15.
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 33

Harrison Carter,who is classified as direct labor,earns $800 per week and is entitled to two weeks of vacation and 10 holidays each year.How much should be accrued for his vacation each week?

A)$48.00
B)$50.00
C)$32.00
D)$35.68

Question 34

Martin Printing pays employees on a weekly basis on Friday for the week ended the previous Friday.Employees' compensation is earned evenly each day over a 5-day work week.This year,March 31 fell on Tuesday.Payroll costs for the week ended April 3 follow: Excluding payroll taxes,what amount should be accrued to the payroll account for the period ended April 30?

A)$51,360
B)$76,440
C)$191,100
D)$114,660

Question 35

The Dehl Company payroll for the first week in January was $10,000.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)$2,600.
B)$1,200.
C)$1,300.
D)$1,400.

Question 36

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

A)Payroll 105,000 FICA Payable 8,400
Employees Income Tax Payable 15,600
Union Dues Payable 400
Wages Payable 80,600
B)Work in Process 80,000 Factory Overhead 25,000
Payroll 105,000
C)Factory Overhead 80,000 Selling and Administrative Expense 25,000
FICA Payable 8,400
Employees Income Tax Payable 15,600
Union Dues Payable 400
Wages Payable 80,600
D)Payroll 105,000 Wages Payable 105,000

Question 37

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 38

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 39

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 40

Toshlin issues financial statements on June 30.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 30? Assume FIT = 15%,FICA = 8%,SUTA = 6%,FUTA = 1%,
​

A)No entry is required.​
B)Payroll 30,000 Wages Payable 30,000
​
C)Payroll 30,000 Federal Income Tax 4,500
FICA Taxes Payable 2,400
Wages Payable 23,100
​
D)Payroll 30,000 Federal Income Tax 4,500
FICA Taxes Payable 2,400
SUTA 1,800
FUTA 300
Wages Payable 21,000

Question 41

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.

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

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 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

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 46

Management of the Robinson Manufacturing 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 B12.
The following information is available: Ten pieces of Part 1567 are required for one unit of Product B12.The plant works a 5-day week and an 8-hour day,totaling 40 hours per week.No overtime premium pay is to be considered in your analysis.
During a selected week,the following pieces of Part 1567 were produced: An agreement with the union requires a minimum rate of $10.00 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 1567 each day,which plan would you recommend to the company's management? Why?

Question 47

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 48

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 49

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 50

For a factory worker,all of the following are charged to Factory Overhead except:

A)the shift premium paid because the worker works the "graveyard" shift.
B)the payroll taxes related to direct labor time.
C)the overtime premium paid as a result of a "rush" job stipulated by the customer contract.
D)the make-up guarantee paid because the employee did not reach the quota set forth in a modified wage plan.

Question 51

Patrick Poplin is a factory worker at Ingram Inc.earning $15.00 per hour.Patrick is eligible for ten paid holidays and three weeks vacation and is paid "time-and-a-half" for overtime.He is also eligible for a $700 bonus at the end of the year.Patrick's earnings so far this year are $7,000.
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 Patrick worked 48 hours this week,calculate the total expense to Ingram Inc.for this week's wages,payroll taxes and fringe benefits.

Question 52

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